We refer with thanks to your email from which we were requested to advice on possibilities of setting up a wholly foreign invested company (hereinafter referred to as “FIC”) for web and software development, design in Hanoi, Vietnam. Therefore, we are grateful to set our legal services proposal for your review and consideration as follows:
1. BRIEF SUMMARY OF BACKGROUND AND OUR COMMENTS
1.1. SETTING UP WHOLLY FOREIGN INVESTED COMPANY
The establishment of a FIC in Vietnam requires an Investment Certificate from the licensing authority. Depending upon the location of the company, the licensing authority may be the Provincial People’s Committee (for companies located outside industrial or export processing zones) or the provincial Industrial and Export Processing Zones Management Authority (for companies located in industrial or export processing zones).
We would like to clarify that the procedure for establishment of a FIC in Vietnam generally takes a rather long time in comparison with other countries in the region. Our practical experiences show that although the total time for establishment of a foreign invested company as stipulated under Vietnam Investment Law 2005 is only 45 days, the actual process may take a longer time due to that the competent authority must consult other relevant offices to evaluate the investment project.
Under Vietnam Law on Investment, for incorporating a foreign invested company (Hereinafter referred to as “FIC”), you are required to propose an Investment Project initially to obtain Investment certificate. The relevant licensing authorities shall evaluate the legitimacy and the feasibility of such Investment Project to determine on granting of the Investment Certificate on the following basis:
a. the legal framework including Vietnam’s WTO Commitments, Vietnam Investment Law, Vietnam Enterprise Law, Regulations applicable to specific industries as well as the master economic development plan of the city or province that the FIC shall register its head-office.
b. Your financial ability, investment capital to put in the Investment Project, facilities and human resources serving the implementation of such investment project in Vietnam.
c. Head office of the FIC should be in line with master plan of the City.
1.2. INTRODUCTION TO SOFTWARE DEVELOPMENT IN VIETNAM
It is our understanding that you are now considering possibilities of setting up a foreign invested company for developing software in Vietnam.
Vietnam Government is now creating best supports for foreign investor making investment in software industries. Accordingly, FIC manufacturing software can enjoy Corporate Income Tax (“CIT”) Exemption in 4 years, Deduction of CIT up to 50% in 9 years after completing period of tax exemption and favored CIT Rate of 10% in 15 years.
With the respect to capital required for FIC operating in the Software Industries, Vietnam Law does not stipulate any minimum capital rate. However, according to our experience, you should consider an amount of 100,000USD (One hundred thousand US Dollar). The foreign investor can complete capital contribution within 36 months from the establishment of FIC in case FIC is structured under the form of Limited Liability Company. Despite of that, competent authority may suggest Foreign Investor to complete its capital contribution within 12 months from the establishment of FIC.
3. SCOPE OF WORKS
With regards to the establishment of FIC in Vietnam, our scope of work shall be as follows:
3.1.Preparation of the application documents:
Notifying application documents required in accordance with Vietnamese law;
Drafting application documents required for submission purpose;
Liaising with Client to discuss the draft application documents;
Amending the application documents based on your comments;
Obtaining preliminary comments from the licensing authority on the draft application documents;
Finalizing the application documents following comments from the licensing authority; and
Translating the final version of the application documents into Vietnamese for execution.
3.2.Licensing procedures:
Submitting the application dossier to the licensing authority on your behalf;
Monitoring and following up with the relevant authorities on the approval process;
Keeping you updated on the developments and additional requirements, if any; and
Assisting you in obtaining the investment certificate.
3.3.Post-licensing procedures: Upon the issuance of the investment certificate, the FIC shall be required to carry out immediate administrative procedures.
Our services include:
Obtaining the seal of the FIC ;
Obtaining the FIC’s tax code; and
Placing an announcement on the establishment of the FIC in the newspaper.
4.The roadmap for the incorporation of the FIC for web and software development and design can be described in following steps as follows:
Preparing the application dossier: We shall collect necessary information and documents from you. A list of required documents is detailed described in the Annex A of this Proposal. Upon receipt of necessary information and documents from you, we shall translate documents from English into Vietnamese and prepare the application dossier under the standard forms. The initial drafted application dossier shall be sent to you for your comments. Then, after updating the application dossier based on your comments, we shall obtain the preliminary comments from the competent authority and send the finalized application dossiers for you to sign and seal. We anticipate that this phase shall be completed within 07 working days.
Submission of application dossier: Within 02 working days from receipt of duly signed and sealed application dossier, we shall submit the application dossier to the competent authority. It shall take about 45 days from submission of application dossier to the competent authority for the provincial licensing authority to grant the Investment Certificate. In some case the process can be longer as it takes time to consult relevant Ministries such as Ministry of Industry and Trade, Ministry of Planning and Investment, and the Ministry of Finance.
Post licensing: Within 13 working days we shall complete the post licensing procedures such as publishing the FIC in News Paper, obtaining seal and tax code registration.
