What is an FDI company? Regulations for FDI company in Vietnam 2025

Ready to tap into one of Asia’s most dynamic markets? Vietnam offers immense opportunities for foreign direct investment, but success starts with the right legal foundation. At Tran & Co., we simplify the process with a clear, step-by-step guide to setting up your FDI company in Vietnam from obtaining your investment license to completing tax registration. This comprehensive roadmap helps you navigate Vietnam’s investment laws confidently and launch your business smoothly, without costly delays.

1. Understanding the Fundamentals of FDI in Vietnam

1.1 What exactly is a Foreign Direct Investment (FDI) Company?

Under Vietnam’s Law on Investment, a Foreign Direct Investment (FDI) company, referred to as a “foreign-invested economic organization” is a business entity established in Vietnam with capital contributed by foreign investors. This typically involves a foreign investor holding a certain percentage of the charter capital of the Vietnamese entity.

This form of investment is distinct from Foreign Indirect Investment (FII), where investors purchase securities (like stocks or bonds) of a Vietnamese company without taking direct management control. FDI implies a long-term interest and a significant degree of influence over the enterprise’s operations.

1.2 The legal framework governing foreign investment 

The primary legal pillars are:

• Law on Investment: This is the principal law regulating all investment activities, setting out the forms of investment, market access conditions, investment incentives, and the procedures for investment projects.
• Law on Enterprise: This law governs the establishment, organization, management, and operation of all types of enterprise in Vietnam, including FDI companies.
• And relevant current Decrees, Circulars and guiding documents

1.3 Key advantages of an FDI company in Vietnam

• Tax Incentives: Vietnam offers attractive Corporate Income Tax (CIT) incentives, including exemptions and reductions for projects in specific sectors or geographical areas.
• Dynamic Market Access: Establishing an FDI company provides direct access to Vietnam’s rapidly growing domestic market and its strategic position as a manufacturing and export hub in Southeast Asia. 
• Improving Business Climate: The government consistently works to improve the legal framework and streamline administrative procedures, creating a more favorable environment for foreign investors. 

2. Step-by-step guide to establishing FDI company in Vietnam

The process of establishing an FDI company in Vietnam is a three-stage licensing procedure that requires careful preparation and strict adherence to legal timelines

2.1. Stage 1: Investment Registration Certificate (IRC)

What is the IRC?

The IRC is the primary license for the investment project itself. It is the official approval from the Vietnamese government for a foreign investor to implement a specific project in Vietnam

Dossier Requirements for IRC Application

• Application form for the project implementation;
• Legal documents of the investor: A copy of the passport for an individual investor or a copy of the Certificate of Incorporation (or equivalent) for an organization.

Note: These foreign documents must undergo consular legalization.

• Project proposal (objectives, scale, capital, location, duration)
• Proof of financial capacity: This can be an audited financial statement from the last two years or a bank balance confirmation. 
• Lease agreement or evidence of land use right, or site arrangement 

The Application an Approval Process

• Submit to the Department of Planning & Investment (DPI) in the province where the project is located
• Processing time is typically 15 working days from a valid dossier
• The national Foreign Investment Information System is used for initial online declaration, then a physical dossier follow-up

2.2. Stage 2: Enterprise Registration Certificate (ERC/Enterprise Registration Certificate)

What is the ERC?

After receiving the IRC, the next step is to obtain the ERC. This certificate officially establishes the legal entity (the company) in Vietnam, granting it legal status.

Dossier Requirements for ERC Application:

• An application form for enterprise registration.
• The company’s Charter (or Articles of Association).
• A list of founding shareholders (for a joint-stock company) or members (for a limited liability company).
• A certified copy of the newly issued IRC.
• Legal documents of shareholders/members and legal representatives (if any).

The Application and Approval Process

• The dossier is submitted to the Business Registration Office within the same DPL. The standard processing time is 03 working days from the receipt of a valid dossier

2.3. Critical Post-Establishment procedures

Opening a Direct Investment Capital Account (DICA)

Obtaining the ERC is just the beginning. To become fully operational, your new company must complete several key post-establishment steps:

• Make a Public Announcement: The company must publicly announce its establishment on the National Business Registration Portal within 30 days of receiving the ERC.
• Acquire a Company Seal: While a physical seal is no longer mandatory for all transactions, companies have the right to decide on the form, quantity, and content of their seal. It remains a common and recommended practice in business operations.
• Open a Direct Investment Capital Account (DICA): This is a mandatory special-purpose bank account. All capital contributions from foreign investors and subsequent profit repatriation must be processed through the DICA.
• Initial Tax Registration: The company must register with the local tax authority to obtain a tax code, declare and pay the annual business license tax, register for VAT methodology, and register to use electronic invoices. 

3. Case study: Phased licensing strategy for conditional business lines

The Clients Challenge: Restricted Business Lines for Foreign Investors:

A common challenge arises when a foreign investor, for instance, in the retail sector, wants to register multiple business lines. However, some of these activities are subject to specific conditions or are not yet fully open to 100% foreign ownership under Vietnam’s WTO commitments. Applying for all lines at once could lead to the entire application being stalled or rejected.

Our Strategic Solution & Legal Advisory

• First register only the core, unrestricted business lines to secure the IRC and ERC swiftly. This allowed the company to be legally established and begin preparatory work.
• In parallel, we prepared a separate, more detailed application to obtain the necessary sub-licenses for the conditional retail activities, carefully managing the client’s expectations regarding the timeline and potential hurdles.

The Outcome:

The client successfully established their company and began core operations without delay. The application for the restricted business line was processed on a separate track, avoilding a bottleneck for the entire project.

4. Call to Action: Partner with Us

Why Navigating Vietnam’s FDI Landscape Requires Expert Guidance?

The investment journey in Vietnam, while rewarding, is filled with legal complexities and procedural nuances. Without experienced guidance, investors can face unnecessary delays and risks.

Our FDI Legal Services:

At Tran & Co., we are more than just a service provider; we are your strategic legal partner. We offer a comprehensive suite of services designed to guide you through every stage of your investment:

• Full-service support for establishing an FDI company, from advisory on the optimal investment structure to representing you before state authorities to secure all necessary licenses
• In-depth Legal Due Diligence for M&A transactions.
• Advisory on corporate restructuring and investment expansion.
• Support with work permits, visas, and temporary residence cards for foreign experts and investors.
• Ongoing legal counsel to ensure compliance throughout your company’s operations.

Conclusion

If you aim to invest, expand, or restructure your business in Vietnam transparently and sustainably, Tran & Co. is here to guide you every step of the way. Contact our team today for a strategic consultation and receive a tailored legal roadmap designed to secure your long-term success in establishing an FDI company in Vietnam.

Contact information:

• Address: 34th Floor, Landmark 81, 720A Dien Bien Phu Street, Ho Chi Minh City, Vietnam.
• Hotline: +84 765 888 168
• Email: info@tranandcolaw.com
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