Expanding to Vietnam

Expanding to Vietnam

Whether you're an aspiring entrepreneur or a well-established business looking to explore the vibrant Vietnamese market, there are numerous essential factors that demand a thorough comprehension to steer clear of potential challenges. Here, you will discover in-depth insights into every aspect of expanding your business into Vietnam – from the prerequisites for establishing a business to the complexities of overseeing personnel and human resources. This page acts as your all-encompassing guide, offering the vital details needed to make knowledgeable decisions when entering the Vietnamese market.

How to set up a business in Vietnam?

Vietnam, a dynamic Southeast Asian nation, beckons entrepreneurs with its burgeoning economy, skilled workforce, and strategic location. But before you plant your entrepreneurial flag, a well-charted course is key. Here's how to navigate the Vietnamese business landscape and land on your feet:

Things to consider for starting a Company in Vietnam:

Business Plan:  Expanding to Vietnam's vibrant market requires meticulous planning. Analyse thriving sectors, assess competitor strengths and consumer preferences, and leverage market research reports to quantify demand. Delve deeper with customer surveys and online trend analysis to uncover untapped opportunities. Be mindful of legal requirements and navigate cultural nuances with respect. This thorough exploration, not a cursory glance, will pave the way for a successful and sustainable Vietnamese venture.

Sales Channel and Logistics: From bustling online bazaars to established distribution networks, Vietnam's sales channels are a buffet of opportunity. Choose between tapping into the vast reach of online marketplaces or partnering with seasoned distributors for regional penetration. Local sales agents offer invaluable market insights, while domestic logistics providers ensure seamless product delivery. To build a robust supply chain, mix and match online, offline, and expert partnerships, crafting a tailor-made path to Vietnamese success.

Local Labor Market Insights: In Vietnam, a young, tech-savvy workforce offers potential, but understanding local salary expectations and unique benefits like Lunar New Year bonuses is key. Research regional wage variations and common benefits packages, including healthcare and paid leave, to attract and retain top talent. Adapting to your Vietnamese staff's values and cultural norms will further boost employee satisfaction and loyalty.

Networking & Support: Vietnam's supportive startup scene offers a network of allies to help you thrive. Connect with local business groups like Vietnam Business Network International (VBNI) or the Saigon Business Association (SBA) for valuable mentorship and networking opportunities. Leverage chambers of commerce like EuroCham Vietnam or AmCham Vietnam for industry-specific insights and government liaisons. Don't miss out on government initiatives like the National Startup Support Program, offering funding and incubation support for qualifying businesses. By plugging into this supportive ecosystem, you'll gain invaluable resources and connections to navigate the Vietnamese market with confidence.

Cultural and Language Considerations:  Navigating Vietnam's dynamic business landscape requires understanding its rich cultural tapestry. Prioritise respecting elders, addressing them with appropriate titles, and employing courteous greetings like "Xin Chào." Punctuality is key, and attire should err on the side of conservative. Embrace the nuanced communication style, where indirectness and avoiding blunt criticism foster trust. Learning basic phrases like "Cảm ơn" (Thank you), “Không có chi” (You’re welcome), and "Không sao" (It's okay) demonstrates appreciation and humility. Remember, relationships in Vietnam are built over time, so patience and genuine connection are paramount. By honouring these cultural cornerstones, you'll cultivate positive interactions and pave the way for a successful Vietnamese venture. 

Infrastructure and Resources Vietnam's entrepreneurial spirit welcomes new ventures with open arms. Modern co-working spaces and established business districts offer flexible options, while emerging neighbourhoods present trendy, cost-effective choices. Reliable utilities, convenient transportation, and readily available financial services ensure a smooth operational backdrop. Remember, careful location planning and respecting local customs pave the way for success. Explore, connect, and flourish in Vietnam's vibrant market environment.

Local Partnerships:  Navigating Vietnam's dynamic business landscape can be both thrilling and complex. To ensure a smooth and successful journey, consider partnering with a seasoned local expert. These consultants offer invaluable guidance on everything from business setup and licensing to navigating cultural nuances. They act as your on-the-ground GPS, connecting you to the right resources, demystifying regulations, and bridging the communication gap.

How to Set up a Company in Vietnam?

Establishing a business in Vietnam necessitates a well-defined plan. Here's a quick guide to help you through the company setup procedure:

  • Business Structure: Choosing the right business structure is crucial for any venture in Vietnam, and navigating the options can be complex. Here's a breakdown of the four main types:
    • Limited Liability Company (LLC):
      • Most popular for foreign investors.
      • Offers limited liability to shareholders (their risk is limited to their investment).
      • Can have one or multiple members (individuals or companies).
      • Relatively simple and flexible to set up.
    • Joint-Stock Company (JSC):
      • Suitable for large-scale or public operations.
      • Capital divided into shares, allowing for easier fundraising through share issuance.
      • Requires more complex setup and regulations compared to an LLC.
    • Partnership:
      • Two or more individuals or companies join forces in a shared business venture.
      • Profits and losses are shared based on predetermined agreements.
      • Can be a limited liability partnership (limited risk) or a general partnership (unlimited risk).
    • Representative Office:
      • Not a separate legal entity, but an extension of a foreign company.
      • Cannot directly engage in commercial activities, only market research and liaison.
      • Useful for initial market exploration before setting up a full-fledged business.
  • Registration Process: We know your next question is how to register a company in Vietnam. The registration process in Vietnam involves the following steps.
    • Step 1: Pre-investment approval (if required)
      • Large investment projects need approval from the Vietnamese government before starting the registration process.
      • Projects that typically require approval include construction projects, infrastructure projects, and projects in sensitive areas.
    • Step 2: Investment registration certificate (IRC) application
      • All foreign-owned investment projects need an IRC to invest in Vietnam.
      • Required documents include an application form, a project proposal, financial statements, legal papers, and a lease agreement.
      • Processing time is 15 days, but may be longer for projects outside WTO guidelines.
    • Step 3: Enterprise registration certificate (ERC) application
      • All new businesses in Vietnam need an ERC to operate.
      • Required documents include an application form, company charter, board member list, legal representative list, and appointment letters.
      • Processing time is 3 days.
    • Step 4: Post-licensing procedures
      • Once the IRC and ERC are issued, you need to complete additional steps before starting operations, such as:
        • Seal carving
        • Bank account opening
        • Labour registration
        • Business licence tax payment
        • Charter capital contribution
        • Public announcement of company establishment
  • Local Regulations: Navigating the legal landscape of Vietnam is essential for any successful venture. Here's a breakdown of key considerations:
    • General Business Laws:
      • Foreign Investment Law: Regulates foreign investment in Vietnam, outlining permitted sectors, investment procedures, and incentives.
      • Enterprise Law: Provides the legal framework for establishing and operating companies in Vietnam, including types of companies, registration, and governance.
      • Labor Law: Sets minimum wage, working hours, overtime, and social security regulations for employees.
      • Intellectual Property Law: Protects trademarks, patents, copyrights, and other intellectual property rights.
    • Compliance:
      • Regular reporting: Companies must file annual financial statements, tax returns, and other reports with relevant authorities.
      • Permitting: Depending on your industry, specific licences and permits may be required to operate.
      • Labour practices: Ensuring compliance with labour laws regarding hiring, wages, benefits, and workplace safety is crucial.
    • Industry-Specific Regulations:
      • Certain industries require additional approvals and specific regulatory compliance. For example, the banking sector has stricter regulations than retail.
      • Research your specific industry: Consult with legal professionals or industry experts to understand relevant regulations and licensing requirements.
  • Taxation: Navigating Vietnam's dynamic tax scene is key to a thriving business. Here's the latest info on corporate tax rates, enticing incentives, and essential tax obligations:
    • Corporate Tax Rates:
      • Standard Rate: Most businesses face a 20% corporate income tax (CIT) on their profits.
      • Special Rates: Specific industries have varying rates:
        • Oil & Gas: from 32% up to 50%.
        • Agriculture: As low as 10%.
        • Technology & Software: Enjoy preferential rates depending on criteria.
      • New Investments: Companies in prioritised industries (e.g., renewable energy, advanced manufacturing) may qualify for a 0% CIT rate for initial years.
    • Tax Incentives:
      • Investment Incentives: Vietnam offers attractive tax breaks for foreign investors in priority sectors:
        • Tax holidays of up to 15 years.
        • Reduced CIT rates of 10% to 15%.
        • Import duty exemptions for machinery and equipment.
      • Regional Incentives: Certain regions with difficult economic situations, offer additional tax breaks to attract investment.
      • Startup Ecosystem: Several programs provide tax benefits and funding support for qualifying startups.
    • Tax Obligations:
      • Quarterly Prepayments: Make estimated tax payments every quarter based on projected profits.
      • Annual Filing: Submit your annual tax return within 90 days of the financial year end.
      • VAT and Other Taxes: Be aware of Value Added Tax (VAT) on goods and services (generally 10%), along with potential excise taxes and payroll taxes depending on your industry and activities.
  • Banking & Finance:  Conquering Vietnam's financial landscape starts with opening a business bank account. Choose a reputable bank offering Direct Investment, Current, or Loan accounts based on your needs. Compare fees, services, and language support. Leverage available financial services like trade finance, cash management, and investment banking. Embrace FinTech solutions and explore government funding programs for a thriving Vietnamese venture. Remember, research, planning, and professional guidance are your keys to financial success in this dynamic market!

How do I go about manpower and human resources?

Building a successful B2B venture in Vietnam involves not just securing the right market fit, but also navigating the nuances of managing manpower and human resources (HR). Here's a comprehensive breakdown of key aspects to consider:

Work Permits & Visas: Before setting up your business in Vietnam, understanding the work permit and visa landscape is crucial. Let's delve into the essentials to ensure a smooth transition for your team.

Types of Visas and Work Permits in Vietnam:

  1. Entry Visas:
    • E-visa: to be granted to foreigners in a form of a separate paper for 1 to 3-month length of stay, both for tourism and business trip purposes. This type of visa is not eligible for applying for a Work Permit. 
    • Business visa (DN1): to be granted to foreigners who work with other businesses and organisations with legal status in accordance with the laws of Vietnam. After entering Vietnam with a DN1 visa, foreigners are allowed to apply for a Work Permit.
    • Business visa (DN2): to be granted to foreigners who come to Vietnam to offer services, establish a commercial presence or perform other activities under international treaties to which Vietnam is a member. DN2 visa holders are eligible to apply for a Work Permit. 
  1. Work Permit: is considered as the highest legal basis to ensure the legal conditions for foreigners to legally work in Vietnam, except for few cases that are subject to be exempted from the Work Permit as prescribed by law.

    Duration of a work permit shall be granted according to the employment contract and/or up to 02 years.

    Major Requirements:  
    1. Bachelor’s Degree (Must be relevant to the applied job position) – must be translated (T) into Vietnamese and be authenticated (A) and legalised (L) at Vietnam Embassy in the contractor's home country. Scan copy of original one + original L/A/T hard copy must be submitted.
    2. Work Experience – at least 5 years working experience in the specialised line as trained and suitable with the work position which expat is expected to work in Vietnam.

    Work Permit exemption:
    Pursuant to Clauses 3, 4, 5, 6, 7 and 8 Article 154 of the Labor Code 45/2019/QH14 and Article 7 Decree No. 152/2020/ND-CP, if the foreigners are meet with one of the scenarios, they may be eligible for Work Permit exemption in Vietnam.

    Eligible foreigners for Work Permit exemption must apply for Certificate of Work Permit exemption from the Labor Department.

    Duration of the Certificate shall be granted according to the employment contract validity and/or up to 02 years.
  1. Long-term Visas: Replaces the short-term entry visa and simplifies long-term stays (1 to 5 years). Obtained after securing a Work Permit.

    There are 3 types of long-term visa for foreigners:
    • Temporary Resident Card (TRC): Obtained after securing a work permit.
      The law does not require foreign individuals to obtain a TRC, however foreign individuals often choose to do so, considering the substantial benefits and convenience a TRC brings. Validity of TRC is up to 2 years and not exceed expiry date of their Work Permit.
    • LD1: to be granted to foreigners who come to work in Vietnam with Certificate of Work permit exemption.
      Validity of LD1 is up to 2 years and does not exceed the expiry date of their Certificate. 
    • LD2: to be granted to foreigners who obtained a Work Permit. Validity of LD2 is up to 1 year maximum.

Not all foreign professionals need to jump through the permit hoops. The good news is, specific exemptions exist for certain in-demand fields like: Doctors, Engineers, IT Specialists & Teachers under certain conditions. Now, for the main quest: obtaining the coveted work permit. Here's the roadmap:

  • Employer submits the application. Make sure the permit aligns with the employee's job description and qualifications.

Employee gathers the necessary documents, including:

  • Employment contract
  • Educational certificates
  • Proof of medical fitness
  • Passport photos
  • Pay the processing fees.
  • Await the Ministry of Labor, Invalids and Social Affairs (MOLISA)'s decision. This usually takes around 15-30 days.

Visa Application Process:

  • Once the work permit is approved, employees can apply for the appropriate visa (work visa, TRC) at a Vietnamese embassy or consulate abroad.
  • Provide additional documents like passport photos and travel insurance.
  • Processing times may vary depending on visa type and location.

Payroll Administration: Mastering Vietnam's payroll dance requires a blend of precision and cultural grace. Navigate the tax tango with an understanding of local regulations, social security steps, and health insurance rhythms. Technology can be your trusty partner, guiding you through calculations and reports with ease. Embrace Vietnamese as your language of choice, building bridges with authorities and staff alike. Expert advice from local accountants or HR pros is a priceless investment, smoothing wrinkles in the process. Remember, flexibility is key – adapt to changing melodies and cultural nuances with a smile. With dedication and a dash of Tet celebration spirit, you'll be waltzing through Vietnam's payroll like a seasoned professional! Moreover you can consider payroll outsourcing in Vietnam as your option.

Social Security Management: In Vietnam, employers are responsible for contributing to three social security funds on behalf of their employees: social insurance, health insurance, and unemployment insurance. Here's a breakdown of the specifics:

  • Social Insurance: Social insurance offers a financial parachute if life throws curveballs like sickness, maternity, work-related injuries, retirement, or even death. Employers take care of 17.5% of this bill (capped), while employees contribute 8%.
  • Health Insurance: Health insurance keeps your employees and their loved ones healthy by covering medical expenses like hospitalisation, outpatient care, medications, maternity care, and even preventive services. Employers chip in 3% of your salary (capped), and employees top it off with 1.5%.
  • Unemployment Insurance: Unemployment insurance provides a financial cushion to employees while they hunt for new opportunities. This safety net costs both the employer and employee 1% of the salary (capped at regional minimum wage). Unemployment insurance is applicable for local employees only, and not applicable for foreign employees.

Vietnam Employment Act: Compliance with the essential employment laws in Vietnam is necessary to fuel a successful B2B business journey. Here are some key provisions of the Vietnam Employment Act that you should comply with.


  • Written contracts are mandatory for all employment before starting an employment relationship. 
  • Contracts must stipulate details like job description, working hours, wages, leave entitlements, benefits, and termination clauses.
  • Probationary periods: some text
    • For the job of organisation management (CEO, CFO, Director): the maximum probation period is 180 days.
    • For jobs with professional titles that require professional or technical qualifications from college or higher: the maximum probation period is 60 days.
    • For jobs with professional titles that require intermediate professional qualifications, technical employees, and professional staff: the maximum probation period is 30 days.
    • For other jobs: the maximum probation period is 06 working days

Working Conditions:

  • Maximum working hours are 8 per day, 48 per week, with exceptions for specific sectors.
  • Overtime is permitted (up to 40 hours per month, 200 per year, but cannot exceed 4 hours per day). 
  • Annual leave: 12 days paid leave + additional days for seniority and public holidays.
  • Sick leave: Up to 30 days per year with a doctor's note.
  • Maternity leave: 6 months paid leave for childbirth.

Wages and Benefits:

  • Minimum wage varies by region and sector.
  • Social insurance contributions are mandatory for both employer and employee, covering healthcare, unemployment, and retirement.
  • Companies may offer additional benefits like health insurance, bonuses, and housing allowances.


  • Employers must have valid reasons for termination, such as poor performance that lead to serious damage to Employers, or restructure of organisations, or redundancy due to business lost.
  • Notice periods depend on contract length and employee seniority.
  • Severance pay or Compensation varies depending on the reason for termination. 


  • Discrimination based on nationality, gender, religion, or other protected grounds is prohibited.


  • Labour inspectors ensure compliance with employment laws.
  • Employees have the right to file complaints with the labour authorities or trade unions.

Other Employer Costs & Insurance: Beyond salaries, Vietnam's employment journey involves mandatory contributions to social security, health insurance, and unemployment funds. Training expenses and visa fees add to the dance, along with holiday bonuses. Professional liability insurance offers a safety net, while group health and property coverage provide essential protection. Partnering with a local expert helps navigate the intricacies, ensuring a smooth path to a satisfied and productive team. Remember, investing in employee well-being is the key to success in Vietnam. Step onto the dance floor with confidence, knowing your commitment to your team leads to a thriving venture.

Should I Set Up My Own Entity Or Outsource To A Local Expert?

Choosing between establishing your own entity or outsourcing to a local expert is crucial for your business venture in Vietnam. Handling HR and payroll matters independently in a foreign market can be intricate, underscoring the importance of leveraging the knowledge of a local specialist. Opting for outsourcing is not indicative of a lack of capability but a strategic decision to navigate the regulatory nuances and ensure seamless operations. Collaborating with a local expert allows you to save time, resources, and confidence in adhering to compliance practices. Direct your focus towards your business vision while they manage the complexities, paving the way for a successful venture in Vietnam.


Outsourcing HR & Payroll

Managing HR & Payroll In-House


Generally cheaper, especially for small teams. Payroll software and hardware expenses are avoided.

More expensive due to salary costs for in-house HR and payroll staff, plus potential software and hardware expenses.


Access to experienced HR and payroll professionals who specialise in local regulations and compliance.

Requires hiring and training qualified in-house staff with knowledge of local HR and payroll practices.

Time Commitment

Less time spent on HR and payroll tasks, freeing up internal resources for core business activities.

Significant time commitment to setting up and managing in-house HR and payroll functions.


Easier to scale HR and payroll services up or down as needed.

May be less flexible, especially with fixed-cost salaries for in-house staff.

Language and Cultural Understanding

Local experts better address language & cultural nuances

In house team may not have that level of expertise


Outsourcing provider handles compliance with local regulations and provides guidelines to ensure you remain in compliance.

Full responsibility for ensuring compliance with local HR and payroll regulations.

Innovare: Your Partner in managing Payroll, Compliance & More

Innovare, with its extensive partnership and network, can assist you with company setup, initial market research as well as manage your HR matters in a compliant manner for your new company. We recognize the challenges new businesses face as they embark on their entrepreneurial adventure. We can alleviate the burden of payroll, compliance, immigration and more from day one, allowing you to focus on growth with complete peace of mind. Think of us as your experienced guide, helping you clear the path, avoid the pitfalls, and reach your destination with success.

Contact us today to book a consultation and discuss your needs with our experts.