Vietnam Eases Enterprise Registration: Decree 1
- The Vietnamese government recently issued Decree 01/2021/ND-CP, enforcing new regulations on enterprise registration in Vietnam.
- The Decree aims at simplifying registration procedures for businesses, hence promoting further enterprise establishment and foreign investment in Vietnam.
- With robust economic development and growth in foreign investment, it is expected that the Vietnamese government is likely to continue issuing amendments on enterprise regulations in order to develop domestic corporations as well as to attract more foreign investors in Vietnam in the future.
The Vietnamese government recently issued Decree 01/2021/ND-CP (Decree 1) on new regulations and changes regarding enterprise registration and notification of enterprise information, which came into effect on January 4, 2021. Decree 1 replaces Decree 78/2015 and aims at streamlining the formation processes of businesses and promote investment.
Complex procedures and regulations in business establishment have been causing undue obstacles for market entry process for investors, which negatively influence foreign investors’ interest and further investment opportunities in Vietnam. Thus the Vietnamese government is prioritizing business regulation amendments in order to improve national economic development and investment activities.
Decree 1 highlights
Vietnam Briefing explores the key highlight changes of Decree 1:
Enterprise code integration
The enterprise ID number is not only a tax code, but can also be used as a code to participate in social insurance. The Decree also combines the branch office code, representative office code, and tax code of an enterprise into one number.
With this new regulation, businesses only need to remember a distinct code when working with other businesses, tax, or insurance regulators.
Exemption of hard copy document requirements
When registering an enterprise online, no hard copy of documents are required.
Before Decree 1/2021 came into effect, an enterprise had to submit additional hard copy documents to the registration agency to compare with the electronic version. This requirement had to be done within 30 days after an enterprise registered online and was notified. After the comparison of the hard copy version and the electronic version, the registration agency would issue the registration certificate.
While this was done to prevent document tampering, it was unnecessarily complex and time-consuming. Thus, Decree 1 simplifies procedures for businesses and demonstrates a positive signal for digital transformation and the establishment of a more business-friendly e-government system.
Appeals allowed if enterprise name registration rejected
If the business disagrees with the authorities on the decision to refuse registration of the enterprise’s expected name, the business can appeal and file an administrative lawsuit.
Before the Decree came into effect, the authorities’ rejection decision could not be appealed. Therefore, this change in the policy clarifies the fundamental rights of businesses and investors, ensuring that the decisions of the registrar are evaluated independently, objectively, and impartially.
Fees refund in case of unsuccessful registration
When registering for enterprise certification, the enterprise is required to pay a fee of 100,000 VND (approximately US$4) for publishing contents of enterprise registration even before receiving the results from authorities. In the past, if a business is unsuccessful in registration, the law did not specify whether the enterprise was entitled to a refund for the publishing contents fee.
Under Decree 1, enterprises are eligible to be reimbursed for the publishing contents fee. The amended regulations clarify and eliminate the previous confusing gaps in enterprise law, establishing favorable conditions for investors.
Procedures for change in tax calculation method
Previously, in case a business conducted changes in tax registration (including tax calculation method), they would have to inform the Business Registration Agency (BRA), which would transfer the amended information to the tax authority.
Decree 1 states that when an enterprise changes their tax calculation method, they are obliged to follow procedures directly with the tax authority, instead of having to go through the BRA and wait for them to transfer the information to the tax authority.
This amended regulation under Decree 1/2021 eases businesses’ operations and provides them a more efficient process when conducting changes in the tax calculation method.
Simplified regulations ease administrative procedures for investors
The Vietnamese government has demonstrated positive encouragement for both domestic and foreign enterprises by issuing Decree 1 to simplify previous complicated regulations.
With increasing enthusiasm for foreign investment into Vietnam, Vietnam is expected to continue to build on its image as being an attractive investment destination in Southeast Asia in the coming years, with the Vietnamese government likely to issue more amendments to ease business procedures in the future.
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