Did you know that starting an IT company in Vietnam is increasingly popular amongst foreign investors? With its rapidly growing IT sector, which reached nearly $158 billion in revenue last year, Vietnam is becoming one of Southeast Asia’s top technology hubs.
In this article, we’ll walk you through the essential steps of establishing your IT company in Vietnam. We’ll cover key advantages, legal requirements, and other practical considerations to help you navigate this expanding market.
An Overview of the Vietnamese Tech Industry
Vietnam’s IT sector continues to experience steady growth, supported by competitive labor costs, skilled technical talent, and a government-led innovation ecosystem. Here are the advantages of setting up your operations in key IT sectors in Vietnam:
1. Software Development– Vietnam offers cost-effective software development services without compromising quality. With a growing pool of skilled developers, your company can access custom applications and enterprise-level software solutions at competitive rates.
2. AI and Machine Learning– The country combines cost-effective technical talent with government-backed initiatives to foster AI adoption. This drives a growing demand for cutting-edge healthcare, finance, and manufacturing solutions, positioning the country’s workforce as a global collaborator in AI-driven projects.
3. Cloud Services– With the rapid adoption of digital solutions, Vietnam’s cloud market is also expanding significantly. Your company may benefit from a growing local customer base and the government’s emphasis on data localization and cybersecurity, creating opportunities for scalable and secure cloud service offerings.
4. Fintech– Vietnam’s fintech ecosystem is built on a steady pipeline of IT graduates and widespread adoption of digital payments. This fuels innovative blockchain, digital banking, and financial solutions from the sector, making it a fintech hotspot in the region.
5. Digital Content– Vietnam has a growing digital content industry, with notable contributions to educational tools, mobile apps, and entertainment services. With a cost-effective production environment and a skilled workforce, you can develop high-quality content for both regional and global markets, while keeping operational costs competitive.
Government Initiatives Targeting IT Companies in Vietnam
Vietnam is actively developing its IT sector through a series of targeted government initiatives and policies designed to attract foreign investment. These efforts align with the nation’s broader goal of becoming a leading digital economy by 2030. Key benefits for IT companies in Vietnam include:
- Government Incentives for operating in the tech sector– Vietnam supports IT investment through various government-backed incentives, including:
- Tax holidays for new tech companies.
- Reduced corporate income tax rates.
- Import duty exemptions for specific tech equipment.
- Investment into Local Digital Infrastructure– The country has made significant investments in digital infrastructure, including the development of industrial parks and tech hubs in key cities like Ho Chi Minh City, Hanoi, and Da Nang. These locations specifically provide IT companies the means to thrive, with access to high-speed internet, competitive data storage costs, and advancing 5G networks.
- Expansion of Special Economic Zones (SEZs) – SEZs provide substantial advantages to tech companies, including ready-built facilities, streamlined administrative processes, and preferential leasing terms. Additionally, current foreign direct investment (FDI) policies provide transparency and ease of entry for IT investors, making it simpler to establish operations.
How to Set Up an IT Company in Vietnam
Key Requirements for Registering Your IT Company
Establishing your IT company in Vietnam requires adherence to the country’s Foreign Investment Law and the Law on Enterprises. Below is an overview of the essential requirements you’ll need to meet, as well as industry restrictions on ownership to keep in mind before registering a foreign-owned entity:
- Foreign Ownership: Vietnam allows 100% foreign ownership in most IT-related sectors, including software development, AI, fintech, and electronic gaming. However, certain regulated sectors still have specific restrictions such as:
- Banking: Foreign investors can now hold 100% ownership in existing foreign banks. However, they are not permitted to establish new commercial banks.
- Insurance: Foreign investors may own 100% of insurance companies, but require specific licenses from the Ministry of Finance (MOF) to operate.
- Minimum Capital: While there is no fixed capital requirement, tech businesses such as data centers or telecom services often require higher capital. For software development or outsourcing, you must demonstrate that your investment covers operational needs and meets approval standards.
- Registered Legal Entity: As a foreign investor, you can register your IT company in Vietnam as a limited liability company (the most common option), joint-stock company (JSC), or branch office.
- Registered Business Address: A registered business address is mandatory for company registration in Vietnam. Alternatively, Emerhub can also assist in setting up a virtual office address if you don’t require an office space.
Our team of experts can help ensure your IT business complies with Vietnam’s foreign investment laws and sector-specific regulations. We can handle the entire registration process in your stead– from choosing the right legal entity to securing approvals from respective authorities and preparing all essential documents.
Securing Mandatory and Sector-Specific Licenses
In addition to the standard Investment Registration Certificate (IRC), Enterprise Registration Certificate (ERC), and tax registration, certain regulated IT sectors require additional licenses. Emerhub can help you identify the necessary licenses based on an analysis of your intended operations, including:
- Telecommunications Service License: Required for telecom services involving network infrastructure. This is issued by the Ministry of Information and Communications (MIC), which regulates telecommunication services in Vietnam.
- Cloud Computing Service License: This is necessary if you provide cloud computing services and is also issued by the MIC who ensures your compliance with regulations related to data storage, security, and data localization.
- E-commerce Business License: Mandatory if your company engages in e-commerce activities and is obtained from the Ministry of Industry and Trade (MOIT).
- Content Distribution License: You’ll need to secure this license from the MIC and comply with the country’s content regulation standards if you plan to distribute digital content such as media, games, or even educational materials.
Additional Considerations When Setting Up an IT Company in Vietnam
Bringing in Foreign Talent for Your IT Company in Vietnam
Hiring foreign experts for your IT company in Vietnam can bring invaluable support to your team, but it requires navigating Vietnam’s labor laws and securing the proper visas and work permits. Here’s a quick overview of the key visa options available for foreign hires:
- LD1 and LD2 Visa (Labor Visa): For foreign employees in the private sector. The LD2 Visa also requires a work permit before issuance.
- DN1 and DN2 Visa (Business Visa): To conduct business-related activities such as setting up a company in the country. However, they do not allow employment unless a work permit is obtained.
- E-Visa: Permitted if your employee intends to visit prior to employment. However, we highly recommend that you arrange for a business visa to simplify the process of obtaining a work permit.
It’s important to note that foreign hires will have to meet specific qualifications to secure their visa and work permit. Emerhub’s relocation experts can assist you in selecting the right visa option aligned with your intended activities. For a more in-depth look into the visa and work permit regulations in Vietnam, refer to our complete Guide on Working in Vietnam as a Foreigner.
Ensuring Compliance with Vietnamese Labor Laws
Vietnam’s labor laws govern various aspects of employment, and your IT company will have to adhere to several key obligations to avoid costly penalties. Staying on top of these regulations, therefore, is essential to ensure smooth operations:
- Providing mandatory employee insurance
- Complying with payroll tax regulations
- Ensuring proper employment contracts and working hours
- Meeting employee benefit requirements
Emerhub simplifies compliance with Vietnam's labor laws by managing payroll, taxes, and employee benefits on your behalf. Trust our experts to handle the complexities while you focus on growing your operations in Vietnam.
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Frequently asked questions
1. Can foreigners fully own an IT company in Vietnam?
Yes, Vietnam allows 100% foreign ownership in most IT sub-sectors, including previously restricted sectors such as cloud services and data centers. This is following the revised Telecommunications Law effective July 1, 2024.
2. What are the advantages of setting up an IT company in Vietnam?
On top of its strategic location in Southeast Asia, Vietnam offers robust government incentives, a skilled workforce, and access to premium digital infrastructure. This environment has attracted international tech giants like Google and Amazon to establish operations and invest in local partnerships in the country.
3. Are there specific licenses IT companies must obtain?
Yes, IT companies will need additional licenses related to data protection, cybersecurity, and specific operational activities depending on their business model. If you’re unsure if your intended activities require additional licensing and approvals, our experts can help you evaluate and secure all requirements accordingly.
4. Are there government incentives for IT companies in Vietnam?
Yes, incentives include tax holidays, reduced corporate income tax rates, and exemptions from import duties on certain IT equipment to encourage foreign investment.
5. Why is Vietnam a strategic location for IT companies?
Vietnam's central location in Southeast Asia provides access to regional and global markets– from China, Japan, and South Korea, to Southeast Asia. The government’s pro-business policies, combined with a growing pool of skilled workers in IT and engineering, also make the country a prime destination for foreign IT companies looking to expand in the region.