ADVISING ON PROCEDURES FOR ESTABLISHING A SOFTWARE COMPANY IN VIETNAM

The world is undergoing the Fourth Industrial Revolution, marked by transformative and comprehensive changes in industries through the integration of advanced technologies such as artificial intelligence, the Internet of Things, big data, cloud computing and robotics. These advanced technologies are all controlled and managed by software. Consequently, recent years have witnessed the emergence and remarkable development of software companies worldwide, and Vietnam is no exception to this trend. The establishment of new software companies has become a significant demand for many individuals and organisations involved in investment and business. However, establishing a software company in Vietnam requires thorough preparation and strict compliance with legal regulations. Therefore, in the following article, we will provide advising on the procedures for establishing a software company in Vietnam to help individuals and organisations with this need easily follow and implement.

1. Conditions for establishing a software company in Vietnam

A software company can be understood as a company that carries out software-related activities, specifically the design, production and provision of software products and services, including the production of packaged software; produce software according to orders; embedded software production; software outsourcing activities and activities of providing and implementing software services. [1]

Activities of designing, manufacturing, and supplying software products and services are generally not included in the list of conditional business and investment business lines, except for some specific activities such as trading in disguised software used for audio, video recording and locating or trading software belonging to cyberinformation security products and services must meet the business conditions prescribed by law and carry out procedures to apply for a corresponding business license.

In addition, according to the provisions of the Law on Corporate Income Tax, enterprises doing business in the field of software product manufacturing will receive intensive related to corporate income tax (“CIT“) rates[2]. Note that if a software company wants to receive CIT incentives, its products must be on the list of software products according to the regulations of the Ministry of Information and Communications[3], and meet the conditions on the software manufacture process according to Circular 13/2020/TT-BTTTT.

In case of establishing a foreign-invested software company in Vietnam, investors must meet market access conditions of software production and business lines for foreign investors. According to Vietnam’s Schedule of Commitments on Services when joining the WTO, foreign investors are allowed to establish foreign-invested companies in the field of software production and business and there is no limit on the capital contribution ratio of the foreign investor.

2. Procedures for establishing sofware company in Vietnam

Preparation of dossier for establishing a software company

The founder of a software company has the right to choose the type of enterprise prescribed in the current Law on Enterprise that suits his or her business model, including partnerships, and liability limited company or joint stock company. Accordingly, each type of enterprise will have its own establishment registration dossier with different types of documents. However, in general, the enterprise establishment registration dossier will have some typical documents as follows: [4]

• Application form for enterprise registration. When filling out information in the Application for enterprise registration, special attention should be paid to the business lines of the enterprise. For software companies, some related business lines that enterprise can consider registering include: Wholesale of computers, peripheral devices and software (4651), Retail of computers, peripheral devices, software in specialised stores (47411), Software publishing (5820), Computer programming (6201), Computer consulting and computer system administration (6202). [5]
• Company’s charter;
• List of members (for a partnership or a multi-member limited liability company) or List of founding shareholders; list of shareholders who are foreign investors (for a joint stock company);
• Copies of the personal legal documents of the owner/partnership members/limited liability company’s members/ individual shareholders;
• Copies of the organisation’s legal documents for owners/members/shareholders who are organisations;
• Copi(es) of personal legal documents of authorised representative(s)/legal representative(s) of the owner/members/shareholders who are organisations and the power of attorney appointing the authorised representative(s);
• Investment registration certificate for foreign investors according to the provisions of the Law on Investment.

Submitting dossier for establishing a software company

The legal representatives of the company or authorised person shall register the establishment of a software company with the Business Registration Authority by the following methods:

• Submit directly or via postal service

Step 1: The company submits the dossier to the Business Registration Office where the company’s headquarters is located.

Step 2: After receiving the enterprise registration dossier, the Business Registration Office will issue a Receipt of the dossier submission to the applicant[6] and accurately and completely enters information in the enterprise registration dossier, check the validity of the dossier and upload digitised documents in the enterprise registration dossier into the National Enterprise Registration Information System.[7]

Step 3: Within 03 working days from the date of receipt of valid dossier, the Business Registration Office issues an Enterprise Registration Certificate or issues a Notice requesting amendments and supplements to enterprise registration dossier in case the dossier need to be amended or supplemented.[8]

• Submit online

Currently, most provincial Business Registration Offices require enterprises to register their enterprises online. The procedure is carried out according to the following steps:

Step 1: Enterprises access the National Enterprise Registration Portal https://dangkykinhdoanh.gov.vn, select Electronic Enterprise Registration and then choose one of two registration methods: use Public digital signature or use of Business Registration Account. Connecting public digital signatures and registering enterprises’ accounts can be carried out according to the Instructions for registering and using accounts on the National Enterprise Registration Portal of the Agency for Business Registration.

Step 2: Enterprises submit information declaration dossier, download electronic documents, sign and authenticate registration documents via the electronic information network and pay fees and charges according to the process on the National Enterprise Registration Portal. After completing the submission of  the dossier, you will receive a Receipt of enterprise registration dossier via the electronic information network.[9]

Step 3: In case the application is valid, within 03 working days from the date of receiving the application, the Business Registration Office will issue the Enterprise Registration Certificate. In case the dossier does not meet the conditions, the Business Registration Office will send a notice via electronic information network to the enterprise to request amendments and supplements to the dossier.

Step 4: Enterprises can request to send the Enterpise Registration Certificate through the public postal service.

Enterprises that register their business electronically are exempt from the registration fee[10] but will have to pay a fee for publishing the enterprise registration content on the National Enterprise Registration Portal at a rate of 100,000 VND/time.

3. Procedures for establishing a foreign-invested software company in Vietnam

To establish a foreign-invested software company, investors need to carry out the following procedures:

Step 1: Applying for Investment Registration Certificate

The investor submits 01 dossier to apply for an Investment Registration Certificate to the Department of Planning and Investment or the Management Board of industrial parks, export processing zones, high-tech zones, and economic zones where the company plans to locate its headquarters. The dossier includes the following documents[11]:

• An application form for implementation of the investment project;
• Documents on the investor’s legal status such as Business Registration Certificate/Establishment Certificate or other relevant documents for investors who are organisations; passport for individual investors;
• Documents proving the investor’s financial capacity, including at least one of the following documents: the investor’s 02 most recent financial statements; commitment to financial support from the parent company; commitment to financial support from financial institutions; guarantee of the investor’s financial capacity; other documents;
• Investment project proposal;
• Documents determining the right to use the location to implement an investment project;
• Other documents related to the investment project, conditions and capacity requirements of the investor according to the provisions of law (if any)

The investment registration authority issues an Investment Registration Certificate to the investor within 15 days from the date of receipt of valid documents when the project meets the following conditions:[12]

• The business lines are not prohibited;
• There is a physical location for implementing the investment project;
• The project is complied with the master plans of the state;
• Meeting the conditions of investment rate per land area prescribed by the Provincial People’s Committee and approved by the Standing Committee of the Provincial People’s Council (if any), the number of labour used (if any);
• Meeting market access conditions for foreign investors.

Step 2: Applying for an Enterprise Registration Certificate

After being granted the Investment Registration Certificate, the Company carries out  enterprise establishment registration procedures as detailed in section 2.

Understanding company establishment procedures not only helps individuals and organisations legally establish software enterprises in Vietnam, but also optimises operating processes, minimises legal risks and saves costs. From preparing documents, submitting documents to receiving the establishment registration certificate, each step requires meticulousness and understanding of current legal regulations. Hopefully the above article on Advisingon procedures for establishing a software company in Vietnam will help enterprise carry out company establishment procedures quickly and legally.

The above is an overview of Advisingon procedures for establishing a software company in Vietnam. If you have difficulties in finding a Law Firm to advise and support in the relevant legal field, please contact us. Phuoc & Partners is a professional consulting firm established in Vietnam and currently has nearly 100 members working in three offices in Ho Chi Minh City, Hanoi and Danang. Phuoc & Partners is also rated as one of the leading consulting firms specialising in business law in Vietnam that has leading practice areas in the legal market such as Labour and Employment, Taxation, Merger and acquisition, Litigation. We are confident in providing customers with optimal and effective service.

[1] Article 9.1 Decree 71/2007/ND-CP

[2] Article 13.1(b) Law on Corporate Income Tax

[3] Appendix I Circular 20/2021/TT-BTTTT

[4] Article 19, 20, 21, 22 Law on Enterprise 2020

[5] Appendix I Decision 27/2018/QD-TTg

[6] Article 32.3 Decree 01/2021/ND-CP

[7] Article 32.4 Decree 01/2021/ND-CP

[8] Article 33 Decree 01/2021/ND-CP

[9] Article 44, Article 45 Decree 01/2021/ND-CP

[10] Article 5.3 and List of fees, charges for business registration according to Circular 47/2019/TT-BTC

[11] Article 36.1 Decree 31/2021/ND-CP

[12] Article 36.3 Decree 31/2021/ND-CP