ESTABLISHMENT OF A DIRECT FOREIGN CAPITAL COMPANY What is it?
Is a legal procedure that requires direct investors to establish a company to invest in Vietnam. After the legal papers are completed, the Investor will be called a Foreign-Invested Company. This form is called DIRECT Investment.
Basic legal basis:
- The Investment Law 2014 provides for the Law on Investment,
- The Enterprise Law 2014 provides for the Enterprise Law.
- Decree 118/2015/ND-CP stipulating and guiding investment registration procedures.
- Decree 108/2018/ND-CP stipulating and guiding the procedures for enterprise registration.
- Decision 27/2018/QD-TTg of the Prime Minister on Vietnam's economic sector system.
- Circular 16/2015/TT-BKHDT guiding investment registration procedures Circular 02/2019/TT-BKHDT guiding business registration procedures.
FOREIGN CAPITAL COMPANY DIRECT FOREIGN INVESTMENT FORESTABLISHMENT
Contribute capital/ buy shares
Investors buy back Shares/Contributed capital in the Company established in Vietnam. It can be a foreign invested company or a 100% company with Vietnamese capital. This form is called INDIRECT Investment.
Direct investors establish a company to invest in Vietnam. After the legal papers are completed, the Investor will be called a Foreign-Invested Company. This form is called Investment LIVE.
Establishment of a joint venture company
A form of cooperation by two or more parties to establish an enterprise in Vietnam. The form of a joint venture may be between a Vietnamese company and a foreign company cooperating under an agreement to share profits in proportion.
Investing in stocks/buying stocks
Is a form of investment that does not require Foreign Individuals or Organizations to invest in the form of establishing a company in Vietnam. Investors can choose to buy Securities/shares based on the Stock Exchange listed in Vietnam. This investment procedure is based on the Securities Law in accordance with the Law.
ACTIVITIES IN THE ESTABLISHMENT OF FOREIGN CAPITAL COMPANY DIRECTLY
📖 Field of business:
According to Clause 1, Article 7 of the 2014 Enterprise Law, it is stipulated as follows:
Article 7. Rights of enterprises: Freedom to do business in industries and trades not prohibited by law. Thus, enterprises are free to conduct business in all fields except those prohibited by Vietnamese law. However, for enterprises with foreign capital, in addition to complying with the Law on Enterprises, the Law on Investment is also applied.
Trade Agreement (WTO) between Vietnam and countries that are members of the World Trade Organization. Note: There are many areas where Investment is restricted and many other related documents apply.
Investors please contact through the forms that ABA Law supports for the best answer.
📖 Consultancy experience in ESTABLISHING FOREIGN CAPITAL COMPANY DIRECTLY:
- Based on the experience of specializing in consulting the establishment of foreign capital companies, the following areas are most chosen by investors:
- Manufacturing (all fields related to production and processing including Industry, food, garment...).
- Trade (all activities related to commerce such as wholesale and retail) Services (service activities such as Management Consulting, Information Technology, beauty care services such as Spa...).
📖 Education (investment in the form of educational centers such as foreign language teaching, tutoring services, life skills, study abroad counseling, etc.).
- Healthcare (medical-related services such as Hospitals, General - Specialty clinics, medical testing services, plastic surgery, Dentistry...).
- In the above fields, it is NOT a field where investors are entitled to preferential policies under Vietnamese law.
In order to enjoy tax incentives (VAT, Corporate Income Tax) when establishing a DIRECT FOREIGN CAPITAL COMPANY, the Investor must be based on at least the following criteria:
☑️ Land leased by the State for investment in difficult economic areas and remote areas.
☑️ Invest in Industrial Parks.
☑️ Invest in the field of Information Technology.
☑️ This preferential tax rate depends on the specified Economic Zones.
☑️ There are cases where you will enjoy good policies such as: VAT reduction for a certain period (maybe 10 years, 15 years) Corporate income tax exemption (for a limited time). For the field of Information Technology, VAT will be 0%.
For a free consultation about ESTABLISHMENT OF A DIRECT FOREIGN CAPITAL COMPANY please contact via Hotline 0938165817 ours.
