Vietnam Business Setup: GEOS Guide for Global Expansion

This article is apart of our weekly series associated with the The Global Subsidiary Index. The series is designed to help businesses identify the best countries for establishing a subsidiary based on key operational factors. GEOS provides a data-driven ranking of jurisdictions worldwide, assessing across 40+ criteria to bring you insights into global expansion opportunities.

Each country on the index is scored on an overall score out of 100, with each individual criterion out of 5 or 10. Higher scores indicate a more favorable environment for businesses. By leveraging these insights, companies can make informed decisions on where to establish a legal presence.

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Vietnam is no longer just a low-cost destination. It’s grown into a rising tech hub, generatingUS$158 billion in digital revenue and supporting more than 73,000 tech companies in 2024.

For anyone looking to grow their business in Vietnam, the country now ranks among the world’s top exporters of smartphones, electronics, and software services, showing its growing role in global supply chains.

Backed by initiatives like “Make in Vietnam” and the upcoming Law on Digital Technology Industry, Vietnam’s business climate is becoming more stable and innovation-focused. Global companies can tap into skilled talent, competitive costs, and a booming consumer base, while GEOS keeps regulatory hurdles under control.

Why Should Foreign Investors Expand to Vietnam?

Vietnam is one of Southeast Asia’s fastest movers. The economy is booming, the workforce is young, and costs are still low. From factories to tech hubs, opportunities for business in Vietnam are growing quickly, making this an exciting business journey .

Southeast Asia’s Rising Economy

Vietnam holds a GEOS Global Subsidiary Index Score of 55.2, making it one of Southeast Asia’s most attractive investment destinations. As part of the Asia-Pacific region, Vietnam benefits from regional economic growth and increasing interest from foreign individuals as an investment destination.

Growth is fast, the workforce is young, and manufacturing is competitive. But investors must also navigate regulatory opacity, fragile banking, and infrastructure gaps.

The Population Score is 4/5. Vietnam is the 16th most populous country in the world, with one of the highest population densities. A young population drives both labor supply and consumer demand. Wages remain low, but the workforce is relatively skilled. This supports strong performance in:

• Textiles and footwear
• Electronics and assembly
• Other labor-intensive industries

At the same time, the economy is shifting toward higher-value manufacturing and services.

Fast GDP Growth

The GDP Growth Score is 5/5, reflecting one of the fastest-growing economies worldwide. Vietnam recorded +7.1% GDP growth in 2024, supported by exports in electronics and manufacturing.

Growth is expected to stay high at around 6% annually in 2025–2026. Key drivers include manufacturing strength, infrastructure investment, and moderate inflation. Risks remain, especially from US trade policies, since nearly 30% of exports go to the American market.

Vietnam’s participation in free trade agreements has played a significant role in boosting economic growth and making the country more attractive for investment.

Stable but Risky Politics

The Political Risk Score is 4/5. Vietnam’s one-party system provides stability, and leadership continuity is likely through 2026. Still, investors face challenges such as inconsistent regulatory interpretation, corruption, and weak judicial effectiveness. 

Improvements are visible, as shown by its rising rank in the Heritage Index of Economic Freedom, but business freedom and investment transparency continue to lag.

Electronics Dependence

Finally, the Industry Diversity Score is 3/5. Vietnam’s economy leans heavily on electronics, textiles, and footwear. Certain industries, such as these, are more prominent in Vietnam and are subject to specific regulatory requirements.

For anyone starting or expanding a business in Vietnam, this reliance on electronics matters. Electronics alone make up more than 40% of exports. The sector drives growth but also leaves the economy vulnerable to global demand shifts. Diversification into higher-value industries is underway, though it’s still developing.

Choosing the Right Business Structure

Picking the right business structure is one of the first big steps for foreign investors entering Vietnam. The three most common options are a limited liability company (LLC), a joint stock company, and a representative office. Each comes with its own advantages depending on your goals, scale, and industry.

An LLC is often the go-to choice for small and medium-sized businesses because it’s flexible and straightforward to manage. For bigger ventures—or those looking to raise capital from multiple shareholders—a joint stock company makes more sense since it allows for share issuance and easier ownership transfers.

A representative office, on the other hand, is best suited for foreign companies that want to test the waters, run market research, or build relationships without diving straight into commercial activities.

Capital and Funding Requirements

Understanding capital and funding is another key part of starting a business in Vietnam. While most sectors don’t set strict minimum capital requirements, foreign investors still need to show they have the investment capital to support operations until the business can stand on its own.

In practice, most new businesses in Vietnam start with an investment capital range of about USD 25,000 to 40,000, though the exact figure depends on the business structure and industry.

Some sectors—like education, finance, and real estate—require higher minimum capital and face closer scrutiny from local authorities. Before launching, investors need both an investment registration certificate and an enterprise registration certificate, which call for clear documentation of capital contributions and available financial resources, and may require prior approval .

Planning ahead for capital needs not only keeps you compliant but also sets your business up for steady growth. By assessing your financial capacity early and matching it with the requirements of your chosen structure, you can simplify the incorporation process and build a stronger foundation for your business in Vietnam.

Business Planning for Vietnam

A solid business plan is the foundation for success when entering the Vietnamese market. Before starting a business in Vietnam, it’s important to do thorough market research to understand consumer preferences, competition, and emerging trends. This preparation helps you shape a strategy that fits the unique character of the market.

Your plan should lay out clear objectives, define your target audience, and map out your marketing approach and financial projections. It also needs to factor in the regulatory landscape and broader economic conditions in Vietnam.

Think carefully about the business structure that best supports your goals, and make sure your plan covers capital needs, compliance, and operational challenges. Registering a business in Vietnam gives you access to a growing economy, a skilled workforce, and an investment-friendly climate.

With the right mix of research, a well-built plan, and a structure that fits your strategy, foreign investors can make the most of business in Vietnam and tap into the country’s fast-moving opportunities.

Tax & Regulatory Environment

Vietnam’s corporate income tax (CIT) is 20%. The corporate income tax rate makes it competitive in Asia. Oil, gas, and mineral projects pay more, between 25% and 50%. The corporate tax rate applies to most businesses, and understanding corporate tax is essential for both foreign and local investors to ensure profitability and compliance.

Incentives reduce rates to 10%, 15%, or 17% for priority sectors, R&D, and economic zones. A draft CIT law expected in 2025 may change how these incentives are applied. The system scores 6/10, offering good opportunities but with some complexity.

• Standard CIT: 20%
• Higher rates: 25–50% for oil, gas, and minerals
• Incentives: 10–17% for priority industries

Accounting has to follow local standards and be done in Vietnamese. Annual tax returns are required, with adjustments from accounting profit to taxable profit. Companies must also file value added tax returns as part of their ongoing tax obligations. In addition, businesses are required to pay a business license tax annually to maintain legal status. There are no provincial or local corporate taxes, which makes things a bit simpler.

Still, most foreign companies rely on local accountants to stay compliant. Companies must also prepare and submit annual financial statements in accordance with Vietnamese regulations. This area scores 6/10, showing the system works but needs careful attention.

Compliance Pressure

Companies must file reports regularly, and penalties for mistakes can be severe. Companies with investment are also required to submit regular investment reports as part of their compliance obligations. The system scores 3/5, reflecting clear obligations but tough consequences.

Compliance now extends beyond tax:

• Vietnam Data Law (2024): requires data classification, local storage of sensitive data, and approvals for cross-border transfers.
• Personal Data Protection Law (PDPL): effective in 2026, adding new rules on consent and personal rights.

Together, these rules expand compliance into both finance and digital operations as part of a progressive agreement .

Licensing Requirements

Licensing is the most difficult area. Retail and distribution need extra approvals. Professional services such as law, accounting, medicine, and architecture require ministry-specific licenses. Each ministry has its own process, often leading to delays and higher costs. This earns a 2/5 score, showing licensing remains a major challenge.

After obtaining the necessary licenses, businesses must also complete post licensing procedures to ensure operational and legal compliance.

How Long Registration Takes

Registering a company in Vietnam usually takes about 1–2 months. This period covers the enterprise registration certificate (ERC), business licenses for conditional sectors, and tax registrations. You’ll also need a business registration certificate to open a corporate bank account in Vietnam, an essential step for running a business in Vietnam. Delays often happen if paperwork is incomplete or translations aren’t accepted.

Foreign investors file through the Department of Planning and Investment (DPI), and in some industries, ministry approval is also required. The process is still more paperwork-heavy than in many ASEAN countries, but recent reforms have helped shorten timelines. As part of registration, you’ll need to prepare and submit incorporation documents to secure the necessary approvals before starting business in Vietnam.

Resident Director Requirement

Every company needs at least one legal representative who lives in Vietnam. This person doesn’t have to be a citizen, but they must have a local address. Legal representatives have the authority to act on behalf of the company in all legal matters, including company registration and ongoing compliance requirements. Many foreign firms solve this by appointing a nominee director or a trusted local manager.

The rule ensures accountability but can be inconvenient if management is based outside Vietnam. With a score of 3/5, it’s a challenge, though one most firms manage with the right setup.

Paperwork and Legalization

Paperwork is one of the biggest hurdles, scoring 2/5. All foreign documents—passports, certificates of incorporation, and powers of attorney—must be legalized, translated into Vietnamese, and notarized locally.

In addition, preparing a company charter is necessary as part of the legal documentation for company formation, since the company charter outlines the internal rules, capital contribution schedules, and governance structure required for establishing an LLC or other business entity.

These steps add both time and cost. Legalizing shareholder documents alone can stretch the timeline by weeks. Some filings are now online, but originals are still required for licensing and tax registration.

Office Address Rules

Most businesses are required to have a registered business address and a physical location to register. Virtual offices aren’t accepted for most businesses. The space has to be zoned for commercial use, and the lease agreement is checked during registration.

However, service based businesses may have the option to use a virtual office as their registered address, depending on local regulations. This raises costs, especially for startups that would prefer co-working or virtual setups. Many companies use serviced offices to meet the requirement at lower cost. With a score of 3/5, it’s a manageable but real barrier.

Travel Still Required

Some steps still need a director or representative to be in Vietnam. Opening a corporate bank account almost always requires an in-person visit. Certain licensing steps also need original signatures. Additionally, producing and registering a company seal is a mandatory part of the company formation process.

Local representatives can handle some filings, but a fully remote setup isn’t possible. Reforms have reduced the number of visits, yet most companies should expect at least one trip. This area scores 3/5, showing a balance between flexibility and necessity.

Workforce & Employment Considerations

Vietnam’s 2019 Labor Code sets the framework for work. It covers both employees with contracts and workers without formal agreements. Key points include:

• Workweek capped at 48 hours
• Overtime limited to 40 hours a month, 200 a year (300 in some industries)
• Retirement age raised to 60 for women and 62 for men
• Sexual harassment now a legal ground for dismissal

The rules are clear but moderately complex. Employers need to stay on top of compliance. For foreign investors, understanding labor laws is essential to running a sustainable business in Vietnam, since workforce management directly impacts operations and long-term growth.

Hiring & Firing Rules

Contracts are either fixed-term (up to 36 months) or indefinite. If a fixed-term contract is renewed twice, it becomes indefinite. Notice periods depend on the type of contract:

• 3 days for seasonal
• 30 days for fixed-term
• 45 days for indefinite

Severance is usually half a month’s pay per year worked. Employers can dismiss for incapacity, redundancy, or misconduct, but procedures are strict. Errors can be costly.

Employment Costs

Running payroll means more than salaries. Employers contribute around 21.5% of gross pay:

• 17.5% to social insurance
• 3% to health insurance
• 1% to unemployment

Employees contribute too. From July 2025, foreign hires with contracts of a year or more must join social insurance. On top of that, benefits matter. Workers get annual leave, maternity and paternity leave, and public holidays. Tet bonuses (13th-month salary) are widely expected. Many companies also add perks like housing stipends, meal allowances, or private insurance.

Unions & Worker Rights

Unions play a strong role in Vietnam. Companies must engage with them in many industries. Since 2021, employees can also form independent workplace groups. International agreements like the CPTPP helped drive that change. 

Employers also need to consult representatives on pay schemes, even if they don’t need formal approval. Worker representation is strong and can’t be overlooked.

Foreign Work Permits

Vietnam attracts expats, but the system is strict. Standard work permits (LD visas) last two years and can be renewed once. After that, workers need a new permit. Some industries also cap foreign hires. 

Employers often cover extras like flights home, school fees, or relocation costs. They’re also responsible for insurance contributions when required. Skipping steps risks fines or hiring delays.

Talent Availability & Salaries

Vietnam is building a reputation as a digital leader. Strong talent, low salaries, and rapid digital transformation make it a prime spot for global business.

Talent availability stands out, especially in software development. Cities like Ho Chi Minh, Hanoi, and Da Nang supply a steady stream of skilled developers. Other roles are growing, but not at the same pace.

• Developer Talent Score: 5/5 — Excellent pool of technical talent
• Marketing Talent Score: 3/5 — Adequate but not deep
• Sales Talent Score: 2/5 — Still developing
• Finance Talent Score: 2/5 — Less mature compared to regional hubs
• Difficulty of Recruiting Score: 4/10 — Competitive for senior roles, but mid-level supply is strong
• Salary Benchmarking Score: 8/10 — Wages are low compared to global benchmarks, keeping costs attractive

These factors explain why outsourcing in Vietnam continues to grow. Companies can hire skilled teams without the heavy salary burden seen elsewhere.

At the same time, Vietnam’s digital economy is booming. It’s growing more than 20% each year, the fastest rate in Southeast Asia. By 2025, internet access will be faster and more secure. By 2030, the country plans full 5G coverage, which will provide tailored support for businesses . Programs are also training people in digital literacy so more citizens can benefit from the shift.

The government plays a big role. Its National Digital Transformation Program, launched in 2020, focuses on three areas: digital society, digital economy, and digital government. One result is the National Public Service Portal. With one login, citizens can access services across different levels of government. This reduces paperwork and saves time.

Industries are also transforming.

• Finance: Vietcombank uses AI and blockchain to speed up services. Letter-of-Credit transactions that once took days now take just 27 minutes.
• Healthcare: AI-powered systems are improving thyroid cancer diagnoses.
• Outsourcing: Vietnam’s software centers deliver high-quality solutions to global clients.

For international companies, Vietnam offers both talent and momentum. With clear goals, reliable outsourcing partners, and strong quality checks, expanding a business in Vietnam can deliver long-term success.

Corporate Income Tax, Financial & Banking Considerations

Vietnam’s financial system is improving, but it still creates hurdles for businesses. Banking is slow, rules are strict, and paperwork is heavy. These challenges affect how companies move money, stay compliant, and manage costs.

Branch offices and representative offices in Vietnam operate as extensions of the parent company, which means their financial and compliance activities, including those of a branch office, are closely tied to the parent company’s operations and obligations.

Financial Infrastructure

The financial infrastructure scores 2/5 because capital repatriation and foreign exchange remain bureaucratic. Profits can be difficult to move out of the country, and processes often take longer than expected. 

Commercial banks dedicate only 5–7% of their loan books to infrastructure, which restricts long-term funding options. New blended finance tools, like Vietnam’s first verified green project bond in 2024, show progress, but the system is still underdeveloped.

Heavy KYC Burden

KYC requirements score 2/5, reflecting the heavy burden of opening a business bank account. Paperwork is extensive, and directors are often required to be physically present. Compliance rules became stricter in 2023 with the new Anti-Money Laundering Law, which added:

• Broader KYC data requirements
• More oversight of politically exposed persons
• Faster reporting of suspicious transactions

These measures bring Vietnam closer to global standards but increase the workload for foreign businesses.

Expense Management

Expense management scores 2/5 because deducting expenses requires strict documentation. Invoices must be complete and accurate, and any errors can result in deductions being denied. This creates extra administrative work and forces companies to rely heavily on manual checks.

Outdated Government Portals

Government portal sophistication scores 2/5 since digital services remain limited. Many filings still require in-person submissions, which slows things down. The government plans to merge all provincial and ministerial portals into a single National Public Service Portal by 2026. The new system is expected to:

• Cut compliance costs by at least 30%
• Allow businesses to complete filings online
• Improve transparency and reduce processing times

For now, though, anyone running a business in Vietnam still deals with a paper-heavy system that adds both time and cost.

Immigration and Work Permits

Vietnam allows foreigners to work legally, but the process is not easy. The Immigration Complexity Score is 2/5, showing how much paperwork and approval are involved. Work permits require employer sponsorship and proof that the role cannot be filled locally. Foreigners working for any legal entity in Vietnam must obtain a work permit to comply with regulations.

A work permit is the official document that protects foreign employees’ rights and makes their work legal. To qualify, applicants must be over 18, healthy, have no criminal record, and meet the skill or experience requirements for the job.

Employers must apply at least 30 days before hiring. They file with the Ministry of Labor or the provincial People’s Committee to explain why a foreign worker is needed. Once approved, the work permit application takes about five working days if the documents are complete.

Requirements differ by role:

• Experts need a degree plus three years’ experience, or five years with a certificate.
• Technicians need at least one year of training and three years of work, or five years of experience.
• Managers and executives need proof of appointment and five years of relevant experience.

The application requires health certificates, criminal checks, diplomas, notarized passports, and consular-legalized documents. Fees range from VND 400,000 in Hanoi to VND 600,000 in Ho Chi Minh City, with some provinces charging more. Employers pay these costs.

Work permits last up to two years, depending on the contract or project. Without one, the penalties are serious. Employers face fines up to VND 75,000,000, while foreign workers risk fines and expulsion.

For now, the system adds friction to hiring international talent. It protects the local labor market but makes the process slow and document-heavy.

Extra Steps for a Smooth Vietnam Business Setup

Beyond choosing a structure and registering, it’s important to should think about a few practical details that often get overlooked when doing business in Vietnam:

• Registered office address: Every company in Vietnam needs a valid business location. A physical location is usually required, though some service based businesses may get approval for a virtual office. Getting this right early avoids delays with local authorities.
• Corporate bank account: Opening a corporate bank account can be slow because of strict KYC rules. Having your incorporation documents and a local authorised representative in place makes the process smoother.
• Board members and governance: Companies with multiple board members need clear rules in their company charter to avoid disputes. This document guides how capital contributions are handled and how decisions get approved.
• Foreign ownership: While many sectors allow full foreign ownership, some industries still require a joint venture with a local partner or set limits on foreign investment. Checking these rules up front saves time and cost.
• Tax planning: Alongside the standard corporate income tax rate, some sectors qualify for tax incentives or tax exemptions. Planning around these from the start ensures you don’t overpay when you pay corporate tax later.
• Hiring locally: Once a new company is up and running, most businesses will need to hire employees. Understanding how the Vietnamese government enforces labor standards helps avoid compliance issues.

For any foreign investment project, staying aligned with prevailing regulations and building a clear strategy with company registration advisors keeps the incorporation process from dragging out. Done right, a foreign owned company can grow quickly in the Vietnamese market and even use Vietnam as a hub for expansion across the Asia Pacific region.

Unique Vietnam Expansion Insights

Expanding into Vietnam brings big opportunities, but it also comes with challenges. The economy is growing fast, the talent pool is deep, and regulations are shifting. Knowing the realities on the ground helps businesses plan with fewer surprises.

• Tech-Forward Workforce: Vietnam has become a hub for software development and IT services. Companies like FPT highlight how far the sector has grown, with $1B+ in software revenue and global clients. Universities now produce more than 57,000 IT graduates each year, many trained in AI, cloud, and big data. The talent is young, skilled, and affordable.
• Cultural Nuances: Business relies on trust. Personal introductions carry weight, and in-person meetings often seal relationships. Be punctual and treat business cards with care. Stay calm and avoid public disagreements. Long-term relationships matter more than quick wins.
• Foreign Ownership Rules: Most sectors are open to foreign investors. Sensitive areas like telecom and distribution still have caps or require joint ventures. Banking remains restricted, though new reforms allow higher stakes in distressed institutions.
• Banking Delays: Opening a corporate bank account takes patience. The process can stretch for weeks. Anti-money laundering checks are strict and often require the director to show up in person. Documentation must be exact, and foreign exchange transactions move slowly.
• Tet Holiday Impact: Business slows sharply during Lunar New Year. Offices shut down, supply chains pause, and decisions are put on hold. The holiday can last two weeks, with extra downtime before and after. Smart planning means securing approvals and shipments well ahead of Tet.

Vietnam offers huge potential for companies ready to adapt. The tech talent is strong, and the investment climate is opening up. But cultural expectations, banking delays, and holiday cycles can trip up the unprepared.

How GEOS Simplifies Your Expansion into Vietnam

Vietnam is a promising market, but Vietnam’s regulatory environment isn’t the easiest to navigate when setting up shop. Laws are detailed, paperwork stacks up quickly, and banking often moves slowly, but there are also opportunities for tax exemptions . GEOS helps clear the way so you can focus on building your business in Vietnam.

GEOS takes care of nominee director requirements, tax compliance, and corporate secretarial duties. It manages filings, keeps track of deadlines, and ensures your company stays aligned with local laws. By handling the details, GEOS makes operations smoother and compliance less stressful.

AI-Powered Global Expansion Support

At the center of this support is Geovanna, GEOS’s AI-powered digital assistant. Geovanna guides you through incorporation, payroll compliance, and banking oversight, all while helping you navigate Vietnam’s business environment and compliance requirements.

She cuts down on errors, saves time, and keeps your operations running cleanly. For companies new to Vietnam, that level of guidance can make all the difference.

Is Vietnam the Right Fit for Your Business?

Vietnam scores 55.2 on the GEOS Global Subsidiary Index. It’s cost-effective, rich in developer talent, and home to a fast-growing consumer base. Vietnam is becoming increasingly important as a regional hub for business and investment. At the same time, companies face regulatory hurdles and banking delays.

GEOS helps you weigh these factors and build a strategy that fits your business. With the right support, Vietnam can be a strong launchpad for regional growth.

📩 Contact GEOS today for a customized expansion strategy.

This article does not constitute legal advice.