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Comparison of Business Types in Vietnam

Summary of entity types

A company can choose from several business types when entering the Vietnam market. Establishing a company typically needs moderate amounts of investment capital and can require several months to complete all steps in the process before the company becomes operational. The investment vehicles available, include those intended for an entirely foreign-owned enterprises, joint ventures, representative offices, and others.

Each of these types are explained in the Types of Business in Vietnam guide and is suggested reading. This guide, meanwhile, focuses on comparing the entity types only via the below:

  • Comparing the 6 Foreign Business Entity Types: Purposes, Pros and Cons;
  • Comparing Rep Office, Branch Office vs. LLC in Vietnam: What are the Practical Differences?

Comparing the 6 foreign business entity types: Purposes, pros and cons

To help you identify which type of investment entity may be worth further consideration, the below tables present each main entity type that can be setup in Vietnam, its primary purpose, and the most notable pros and cons.

Click on the FIE Structure Type to read further details about the entity.

Summary of 6 Type of Foreign Invested Enterprise

Type

Common Purpose

Advantages

Disadvantages

Representative Office

  • Non-separate legal entity
  • Market research
  • Liaison with overseas parent company

Easy registration procedure

  • Limited to certain industry sectors
  • Cannot conduct profit-making activities
  • Parent company bears liability

 

Limited Liability Company (see 100% Foreign-Owned Enterprise)

 

Separate legal entity

  • Liability limited to capital contribution
  • No restriction on the WTO committed scope of business
  • Cannot issue shares
  • Maximum of 50 shareholders

 

Joint-Stock Company
(see 100% Foreign-Owned Enterprise)

 

  • Separate legal entity
  • Intention to become a publicly traded company
  • Liability limited to capital contribution
  • No restriction on the WTO committed scope of business
  • Can issue shares and go public
  • Three or more shareholders required
  • Supervisory board required for most joint stock companies

Branch Office

  • Non-separate legal entity
  • Commercial activity within parent company’s scope

Can remit profits abroad

  • Limited to certain industry sectors
  • Parent company bears liability

Joint Venture

Partnership of companies or individuals for specific business purposes

Unconditional sectors not subject to specific capital requirements

  • Minimum contribution guidelines for domestic investors for industry-specific cases
  • Two to four months to set up

Public Private Partnership

Partnership between a foreign or domestic enterprise and a government entity for infrastructure development project purposes.

Government aggressively pursuing PPPs to develop infrastructure

  • Several PPP models
  • Investors unsure of returns

Comparing Rep Office, Branch Office vs. LLC in Vietnam: What are the practical differences?

The most common types of businesses that are setup by foreign investors, are

  • Representative Offices,
  • LLC’s and
  • Branch Offices.

Assuming that one of these types is right for your investment purposes, it will remain important to consider each for its different practical aspects, such as differences in structure, legal liability, statutory compliance requirements, time required to establish, types of activities it can engage in, and more. Below is a summary comparison of these factors for these more common types of business.

For further details about these entity types, click on the FIE Structure and read our Types of Business in Vietnam guide.

Comparison of Business Structures

 

RO

Representative Office

BO

Branch Office

LLC

100% Foreign-Owned Enterprise

Separate legal entity

No

No

Yes

Liability

Extension of parent company

Extension of parent company

Limited Liability

Naming of the Entity

Must contain the name of the parent company

Must contain the name of the parent company

Can be the same or different from parent company

Permitted Activities

 

Only market research and coordination.

 

No business activities that yield profit.

 

Commercial activity within parent company’s scope

Can be the same or different from the parent company

 

How many Weeks to Setup this Entity Type?

 

6 to 8 weeks

12 weeks

8 to 16 weeks

Is an Annual Tax Return filing required?

 

See Audit guide

No.

 

Companies required to declare all employees’ Personal Income Tax (read about PIT).

Yes

Yes

Audit required?

 

See Audit guide

 

Yes

Yes

Yes

Summary of Pros

Easy registration procedure

Can remit profits abroad

  • Limited liability to capital contribution
  • Freely engage in any registered business lines that are not banned by local laws

Summary of Cons

  • Cannot conduct revenue-generating activities
  • Parent company bears liability
  • Limited to certain industry sectors
  • Parent company bears liability
  • Cannot issue shares
  • Maximum of 50 shareholders

For more information on these entity types, please read the related guide sections below.

CHANGE SECTION

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