Have you dreamed of starting a small business like a restaurant or consulting firm in Vietnam? This article will walk you through setting up a small business in Vietnam as a foreign entrepreneur or investor, and give you an idea of the cost of running some of the most common types of small enterprises.
Can foreigners set up a business in Vietnam?
Overview of industries that allow foreign ownership
Vietnam allows full foreign ownership of most lines of business. It is important to note, however, that certain industries such as tourism, advertising, and entertainment require a local Vietnamese partner. These restrictions are generally linked to managing the country’s economic and cultural development and promoting the domestic market in competitive industries.
The following industries in Vietnam allow 100% foreign ownership:
- Wholesale and retail trading
- Manufacturing
- Service
- Short-term training centers
- Food and beverage
- Information Technology
Emerhub helps you determine whether your planned operations allow for full foreign ownership. We’ll also help you navigate key compliance requirements, such as naming a director who is a resident of Vietnam to represent you (if you do not have Vietnamese residency).
What is classified as a small business in Vietnam?
Small businesses in Vietnam must meet the specific criteria that have been established by the government through Decree 80/2021/ND-CP relating to Small and Medium Enterprises (SMEs). The requirements vary depending on whether your small business is in the primary sector (Agriculture, industry, construction, forestry, fishery) or tertiary sector (services and trade) :
| Business sectors | Primary | Tertiary |
| Total employee count | 11 – 100 | 11 – 50 |
| Maximum annual revenue (VND) | 50 Billion | 100 Billion |
| Registered capital (VND) | 20 Billion | 50 Billion |
Emerhub’s local experts can help you determine how to optimize your small business in Vietnam. We can also assist you in ensuring corporate financial compliance with the most up-to-date regulations relating to your small business in Vietnam.
Cost of starting a small business in Vietnam
Minimum capital requirement in Vietnam for small businesses
Most lines of small business do not have a set minimum capital requirement in Vietnam. However, we recommend that your planned capital be reasonable and realistic. It should also take the expected costs and revenue into account. For example, if your company’s overhead is on the lower end, the capital does not have to be high.
When planning your capital, consider the following:
- Capital contribution is a tax-free method to invest in a company;
- If the company runs out of money it is possible to increase the capital, but this process can take up to 3 weeks;
Per current regulations, the company’s capital must be at least USD 130,000 for its founder and his or her dependents to be eligible for a residence permit. As the founder, you would be eligible for an investor visa but this visa does not apply to your dependents. Emerhub can help you determine the right type of long-term visa based on your small business in Vietnam.
How much does it cost to start a business in Vietnam’s popular industries?
The average cost for setting up a small business in Vietnam is subjective to the overall scale of your operations. Emerhub’s team of company registration advisors can help you determine the specific cost by assessing the requirements for your industry. Below you’ll find the average cost of starting a small business in foreign investors’ most commonly sought-after industries:
- Consulting and IT Services
- You can start a consulting, market research, or IT business on a small scale.
- The capital can be as low as USD 3,000 because they do not need a specific location.
- Wholesale and Retail Trading, E-commerce:
- This is also a good option if you want a smaller-scale, lower-cost business, as you do not need a physical store.
- The minimum capital for these businesses can range from USD 10,000 to 20,000.
- Restaurants:
- Restaurant location plays a huge role in the costs of this kind of business, as you will have to consider location rental fees.
- The minimum recommended capital to have in the food and beverage industry averages around USD 20,000.
- Language Schools and Training Centers.
- The minimum required capital for this business is calculated based on the amount of students, averaging roughly USD 900 per student.
- If the total number of students exceeds the estimate, the business owner can increase the capital.
- The location should have the necessary function rooms and enough space for teaching. The teaching area must allow each student to have 2.5m2 of space. You should also have a management office and a teachers’ room.
What are the business tax rates for small businesses in Vietnam?
The corporate income tax rate for most businesses in Vietnam is 20%, although certain industries such as education or training centers offer exemptions or reductions down to 5% depending on the region. On the other hand, companies that operate in energy or mineral resources pay anywhere from 32% to 50% depending on location.
After settling corporate income taxes, all founders in a company receive dividends on the net profit of the company. For companies with more than one founder, each must pay a 5% tax on their dividend. If you are the sole founder, then you do not need to pay additional taxes. If you have multiple companies, each dividend you receive is separate.
Emerhub’s compliance team can help you navigate Vietnam’s tax system as well as identify whether or not your small business may qualify for certain tax exemptions or reductions. To find out more about Vietnam’s business tax system, take a look at our post on corporate compliance which explores a year in the life of a foreign company.
How to start a small business in Vietnam
The process for starting a small business in Vietnam is relatively straightforward, as long as you understand the key requirements. Emerhub’s company registration service will ensure that your limited liability company is set up efficiently and we’ll navigate any licensing applications in your stead. We can also help you find a suitable property or virtual office for your business.
Our process is simple:
- We’ll set up an initial consultation where you can tell us about your planned business or investment in Vietnam. Our local experts will provide you with insights on the best way to set up your company.
- Our team will help draft the Articles of Association based on the information you provided and we will ensure that your company name is reserved.
- We will register your small business and physical or virtual address with the Vietnamese government.
- We will inform you once your company is registered and we can assist you in hiring local talent, as well as with securing local partners, if necessary.
If you want to start a small business in Vietnam, contact us today via the form below. One of our local experts will get in touch with you to get you on your way!
