Vietnam government passed the new law on Investment No. 67/2014/QH13 (New LOI) in 2014, and the new law on Enterprises No. 68/2014/QH13 (New LOE), which replace the previous laws as from July 1, 2015. Certain notable provisions of the new laws are asbelow.
● Requirements Capital: There is no requirements on foreign investment amount and registered capital in Vietnam. But registered capital can not less than 30% of total investment amount. The registered capital of encouraged/ large investment project can be reduced to 20%.
● Structure Foreign investors (company/ individual) can adopt one among following three structures when setting up company/ factory in Vietnam:
1. Direct investment by foreign company / individual;
2. Indirect Investment through one holding company (single holding );
3. Indirect investment through two holding companies (double holding ).
The 2nd and/or 3rd structure is widely used. There are some advantages through holding company:
1. Unlimited deferred offshore profits which can be used for re-investment;
2. Limited liability on overseas lawsuits (civil and criminal ), and financial liabilities against parent company.
The disadvantages of the single holding structure will occur when selling foreign assets, the parent company will be taxed for the profits. The parent company/individual will be exposed to unpredictable foreign risks and faces double-taxation problems. Therefore, the third structure - double holding is recommended.
● Procedures:
1. Setting up offshore holding company;
2. Collecting holding company documents;
3. Documents translation/ embassy notarization;
4. Checking proposed Vietnam company name;
5. Prepare the M&A and application form;
6. Evaluation of investment project by related authorities;
7. Issuance of the enterprise registration certificate;
8. Publish in newspaper gazette;
9. Seal registration, open bank account;
10. Tax, customs, and environmental protection registration.
Source: Quora
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