1. 100% Foreign-owned Factory : The minimum shareholder is one, but no more than 50. Factory can export and conduct domestic sales.

100% Foreign-owned Trading Company: As Vietnam joined WTO as the 150th member on Jan 11 , 2007. 100% foreign-owned trading company could be set up after Jan 1 , 2009.

Joint Venture Factory: The same as joint venture factory in China, it requires at least 2 shareholders. The foreign investor could hold the share up to 99%.

Contractual Forms: Investors are permitted to sign a BCC ( Business co-operate contract ) in order to co-operate in production and to share profits / products and other forms of business co-operation. The foreign share ratio can't exceed 70%.

Representative Office: It can deal with marketing, corresponding on behalf of parent company, except for carrying out business activities and issuing invoice in Vietnam. Foreign investors can set up as many independent rep. offices as needed. But the branches of rep. office are not permitted in Vietnam.

Branch: It can sell / purchase goods and carry out all kinds of business activities, no requirements on paid up capital. Yet, it is not allowed to set up currently.

The above types are approved by Center Investment Department or provincial civil committee and provincial industrial committee.

● Requirements
1. Minimum Registered Capital: There is no requirements on foreign investment amount and registered capital in Vietnam. But registered capital can not less than 30% of total investment amount. The registered capital of encouraged / large investment project can be reduced to 20%. We suggest the minimum registered capital shuold be no less than USD100,000 (about NTD3,100,000/ RMB710,000 ), so that it can be approved easily.

Paid-up Time and Methods: The capital should be paid up within 0.5-1.5 years. And can apply for another half year extension subject to conditions. There is no cash and machinery ratio limitation, and capital can paid-up by cash, machine and patent.

● Structure

Foreign investors (company / individual ) can adopt three structures when setting up company / factory in Vietnam as below:

1. Direct investment by foreign company / individual; 2. Indirect Investment through one holding company (single holding );
3. Indirect investment through two holding companies (double holding ).

Most foreign investors use the second / third structure as tax planning for parent company. There are some advantages through holding company:

Unlimited deferred period for offshore profits which can be used for re-investment (Taiwan companies are levied 10% on offshore profit, further tax will be levied when remitting back to Taiwan );

Limited liability, which can avoid the unlimited expand of overseas lawsuits (civil and criminal ),financial liabilities against parent company.

The disadvantages for the single holding structure is that when selling foreign assets, the parent company will be taxed for the profits. The parent company / individual will be exposed to unpredictable foreign risks and faces double-taxation problems. So we recommend using the third structure-double holding. It can keep offshore profits without taxation and remit profit back to parent company if needed.

● Procedures
01. Setting up offshore holding company;
02. Collecting holding company documents;
03. Documents translation/ embassy notarization;
04. Checking proposed company name;
05. Checking proposed company name;
06. Evaluation of investment project;
07. Issuance of Investment Certificate;
08. Publication in a newspaper;
09. Seal registration, open bank account;

Tax registration, customs registration, fire fighting,
environmental protection registration.

The new Corporate Income Tax law-CIT (No.14-2008-QH12) passed on 3 June 2008 and will be implemented on 1 January 2009. The new law reduce CIT form 28% to 25%. Preferential Tax Rates includes: 1. Business lines on the list of domains eligible for investment incentives ( 20% for 10 years) 2. Business lines on the list of domains eligible for special investment incentives (10% for 15 years). 3. Business established in industrial zones, high-tech zones or in areas with difficult socio-economic conditions ( 20% for 10 years) 4. Newly established business enjoys tax exemption for 2 years and 50% reduction for the following 2 years. Business lines on the list for incentives or located in difficult socio-economic conditions areas could further extend to 4 years exempt, 9 years 50%. Dividends paid by Vietnam business from after tax profits are not subjected to CIT.

Wholly foreign owned enterprise in Vietnam can't buy lands, yet is allowed to rent land / factory not exceed 50 years. The rental fee is about US$2-4.5 / (NT$200-460/ping). Investors can mortgage its equipments & land to Vietnam banks. According to law on land and other regulations. The major land use incentives are as below:

The term of land use shall not exceed 50 years, but projects with large amount of invested capital and a slow rate of capital recovery projects, in difficult socio-economic conditions can extend to 70 years.

Projects in incentive sectors and geographical areas shall be entitled to an exemption from payment of or a reduction of land rent and land use fees in accordance with the law on land and tax.

Investors can lease or purchase equipment and machinery either domestically or overseas.
● Import Machinery Equipments

When foreign companies import equipments, the standard should meet the requirements of regulations. The second-hand equipments should be maintained above 80% likely new (except on the forbidden list).

● Import Equipments Inspection

Equipments value & quality must be inspected before import and install. If the value after inspected is lower than the report value, the price will be re-adjusted by the result of inspection.

The import machinery inspection institutions are the national institution or the authorized foreign institution

● Machinery Equipments Rental

For large or high-tech investment projects, foreign enterprise can rent local/ overseas equipments according to the following regulations:

Foreign enterprise can rent equipments for production including accessories and molds.

Equipments must re-export out of Vietnam when the rental period expires. Foreign enterprise needs to implement tax obligations on behalf of leaser. Equipments rental fee can be included in production cost, yet, depreciation cost is not applicable on rental equipments.

Vietnam foreign companies can own / purchase foreign currencies as well as open bank accounts. Foreigners stay for more than one year in Vietnam can open bank accounts in foreign currencies. Foreign corporate / person can use foreign currencies for following purposes:
1. Pay for foreign goods and services fee;
2. Pay domestic credit institutions for company / personal loan and services fee;
3. Compensate for domestic / overseas loan;
4. Sell foreign currencies to financial institutions that are authorized to conduct foreign currency business;
5. Invest in securities or bonds;
6. Invest projects or remit to overseas;
7. Withdraw cash or transfer to pay for wages of foreign workers or traveling expenses, allowance.