Which Form of Investment – Set up Branch or Set up Company in Vietnam?
Foreign entities can set up company in Vietnam or set up branch offices in Vietnam to carry out business
activities.
There are several main
different aspects between opening a branch office or establishing a
foreign owned company in Vietnam.
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1.Conditions
-Permits for
establishment of Vietnam-based branches of foreign enterprise shall each have a
valid term of five years.
-Foreign enterprise must choose between establishing a 100% foreign capital enterprise or forming a joint-venture with domestic investor or company.
2.Certificate
-The Branch office needs
to apply and obtain the operation license of a Branch;
-A foreign owned company will need to apply and obtain the investment certificate (“IC”) to operate in Vietnam.
3.Capital
-Optional, foreign
entity will decide how much money to invest in branch. The allocation
capital for branch is capital for the subordinate units.
-Mandatory, foreign entity will need to provide minimum capital as required by Vietnam Law in conditional investment area.
4.Obligation of owner
-For branch office in
Vietnam, owner takes full responsibility;
-For company, owner takes responsibility within the capital contributed into the company in Vietnam;
5.Other matters
-For branch office setting up in Vietnam, the procedure is less complicated compared to those for the establishment of a 100% foreign owned company; the branch office is able to carry out trading and some other activities as stipulated by Vietnam laws and the WTO commitments which Vietnam enters. The business lines of a branch have to be aligned with the business lines of the headquarter of the foreign entity.
-Setting up foreign owned company would be more complicated than the setting up of the branch office, however this form of investment has more flexibility and freedom as it is a stand alone Vietnam entity recognized under Vietnam laws.
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