Wholly Foreign-owned Enterprises and Joint Ventures in Vietnam Compared
For investors looking to make forays into Vietnam, choosing between a wholly foreign-owned enterprise (100% FOE) and a joint venture (JV) can have significant implications, as both have their pros and cons. This article explores these two types of enterprises, their limitations and their licensing procedures.
We first detail which of the 11 service sectors have been opened to WFOEs, and which remain limited to JVs under the WTO Schedule of Specific Commitments in Services of Vietnam. Then, as 2012 will be a year of significant change in limitations on foreign ownership, a table in this article guides investors as to what to expect this coming January, as well as what is on the horizon in 2014. Some service sectors will see increases in capital contribution limits for the foreign partner, while others will be opened entirely to WFOEs. More importantly, this article discusses restrictions and prerequisites in liberalized sub-sectors that continue to create hurdles to foreign investment.
To help foreign investors get their businesses off to a good start, the Vietnamese government has also introduced a generous 10% corporate tax rate for enterprises engaged in certain industries or located in specific geographical areas, economic zones, and high-tech parks. Included is a list of applicable regions and economic zones, as well as details on other tax exemptions and reductions.
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