This guide provides an overview of the general statutory compliance requirements that apply to Vietnam private limited companies.
Note: That there has been amendments to the Companies Act which are not reflected on this page yet. To view the updated information.
Each Vietnam company must appoint a local resident company secretary. The company secretary must have the requisite knowledge and experience to discharge the functions of a company secretary.
Each Vietnam company must have a registered office address in Vietnam which must be open and accessible to the public during normal office hours.
Local Resident Director.
A Vietnam company can have any number of local and foreign directors. However, the company must have at least one director who is ordinarily resident in Vietnam i.e. Vietnam Citizen, Vietnam Permanent Resident, or a person who has been issued an Entrepreneur Pass or Employment Pass. Any person above the age of 18 years may be appointed as a director. However, certain individuals e.g. bankrupts, are disqualified from holding director positions.
Financial Year End.
Each Vietnam company must fix its financial year end. If the company is a subsidiary company, its FYE must coincide with the financial year end of the holding company. Otherwise the choice of the company’s FYE date is left for the company to decide.
Appointment of Auditors.
Each Vietnam company shall appoint an auditor within 3 months from the date of incorporation, unless it is exempted from audit requirements. A private company, in order to qualify for the audit exemption, must satisfy at least two of the three conditions for each of the two preceding financial years:
- Total annual revenue for the financial year of not more than $10 million.
- Total assets for the financial year of not more than $10 million.
- Number of employees for the financial year not more than 50.
In the case of group companies, the member of the group must qualify as small company, as well as the whole group being a small group. This means that the group must satisfy at least two of the three criteria on a consolidated basis in each of the two preceding years. A group also includes the ultimate holding company and that would include a group where the ultimate holding company is a foreign company.
The eligibility for exemption for existing companies will be decided based on a company meeting the qualifying criteria in the first or second year from which the amended regulation comes into effect - FY 2015 or 2016. As for companies that are incorporated after the regulation became effective, the exemption status will be determined based on them meeting the criteria in their first two fiscal years after their establishment.
Goods and Services Tax Registration.
Also known as Value Added Tax in many other countries, Goods and Services Tax is a consumption tax that is levied on the supply of goods and services in Vietnam and the import of goods into Vietnam. Goods and Services Tax is an indirect tax, expressed as a percentage (currently 7%) applied to the selling price of goods and services provided by Goods and Services Tax registered business entities in Vietnam. As a Goods and Services Tax registered entity, you are required to submit a return to the tax authorities based on your accounting cycle, normally on a quarterly basis.
Goods and Services Tax registration is required only if the company falls under the following:
- The turnover is more than S$1 million for the past 12 months - known as the retrospective basis - OR.
- There is a reason to expect that the turnover will exceed S$1 million for the next 12 months - known as the prospective basis.
Intended activities of your company may or may not require a business license. If your company requires a license, you must apply for and obtain the necessary approval before commercing target business activities. Fortunately, only a few types of business activities require a business license in Vietnam.
Each Vietnam company must keep such accounting and other records as are necessary to explain the transactions and financial position of the company and to allow a profit and loss account and a balance sheet to be prepared. The accounting records must be kept for 5 years after the completion of the transactions or operations to which they relate. Each director has the right to inspect accounting records of the company at any time.
A Director shall disclose to the company:
- Any material personal interest they have in a matter which relates to the affairs of the company.
- Any other interest which the Director believes is appropriate to disclose in order to avoid an actual conflict of interest or the perception of a conflict of interest.
Notification of Changes.
Each time a change occurs in the particulars of the company or to its officers, the change must be lodged with the Accounting and Corporate Regulatory Authority within the stipulated timeframe. Failure to do so will incur penalties.
Company Registration Number Disclosure.
The Vietnam Companies Act requires every company to have the registration number - in addition to its registered name - on all business letters, statements of account, invoices, official notices and publications.
Since 1 January 2009, all entities that are registered in Vietnam, have been issued a Unique Entity Number as its identification number. As a result, entities will now enjoy the convenience of having a single identification number for interaction with the Government, such as filing of corporate tax returns, applying for permits or submitting their employees’ CPF contributions. Unique Entity Number replaces all other identification numbers issued to them by different government agencies. Existing companies will retain their Accounting and Corporate Regulatory Authority Registration Number as their Unique Entity Number.
Annual Filing Requirements.
Each Vietnam company must file Annual Return with Accounting and Corporate Regulatory Authority and Annual Tax Return with the Inland Revenue Authority of Vietnam.