Ease of Doing Business Rank: 70
Vietnam is a country in Southeast Asia.
China lies to the north, Laos and Cambodia lie to the west and the South China Sea to the south and east.
The official language of Vietnam is Vietnamese spoken by the majority of the population. It is also the second language of many ethnic minority groups. English has also grown in popularity as a second language.
Minority languages include French, Chinese, Khmer and various highlander languages.
The 2020 population estimate is 97.34 million.
Ho Chi Minh City is the largest city (8,636,899), followed by Hanoi (7,781,631) and Haiphong (2,351,820).
The top industries in Vietnam are electronics, textiles, machinery, footwear, transportation products, wood products, seafood, steel, crude oil, pepper, rice and coffee.
The Times World University Rankings includes two Vietnamese universities in the top 1,000 in the world.
The Legatum Prosperity Index ranks Vietnam’s educational system 76th out of 167 countries.
The most common type of business entities in Vietnam are Joint Stock Company, Multi-Member Limited Liability Company, Single-Limited Liability Company, Partnership and Private Enterprise.
The overwhelming majority of businesses are in the form of a Single-Limited Liability Company.
Vietnam offers a foreign tax credit for taxes paid abroad up to the amount of corporate tax payable.
The country also offers tax incentives in encouraged sectors and locations based on project size. Encouraged sectors include education, healthcare, sport and culture, high tech, environmental protection, scientific research, software and infrastructure development, agricultural and aquatic product processing and renewable energy.
Encouraged locations include specific economic areas, high-tech zones, certain industrial zones and troubled socio-economic areas.
Major manufacturing projects of more than VND 6 trillion may qualify for corporate tax incentives providing they generate sufficient income and jobs. Incentives extend for 15 years if they produce internationally competitive goods and meet revenue and employment qualifications.
Large manufacturing projects involve investment capital of VND 12 trillion or more, disbursed within five years of licensing. The government prioritizes high-tech, IT, the automotive industry and textiles.
Companies may enjoy either a 10% rate for 15 years or a 20% rate for 10 years, depending on the industry and location. Education, health and other social sectors pay 10% for the entire life of the project.
Vietnam also offers tax holidays and reductions on qualifying investments from the year of first earning profits for a period of 4 years. Thereafter, companies pay 50% of the applicable tax rate for 9 years. These incentives apply to companies producing particular products or operating in the social sector, within difficult socio-economic areas.
Small and medium enterprises may also enjoy a lower corporate tax rate. The country also allows qualifying businesses to set up a tax deductible R&D Fund with a maximum 10% appropriation of annual profits before tax.
Vietnam includes several cities conducive to business such as the capital of Hanoi, Ho Chi Minh City, Can Tho, Da Nang and Hai Phong.
Ho Chi Minh City is the financial center of the country.
Vietnam is a culturally diverse country with 8 UNESCO World Heritage Sites. The site of My Son was a significant Hindu religious center between the 4th and 14th centuries with numerous temples devoted to the god, Shiva.
Ho Chi Minh City, formerly Saigon, is the largest city in the country. It offers culture, commerce, French colonial landmarks, restaurants, nightlife and shopping. The city includes several museums dedicated the Vietnam War and subsequent reunification.
The Mekong Delta is also known as Vietnam’s Rice Basket as it feeds more than a third of the country. Its maze of canals and streams include colorful floating markets and fish farms. Onshore you’ll find sugar cane plantations, fruit orchards and rice paddies.
Hue is a city on the Perfume River in Central Vietnam. It was once the seat of the Nguyen dynasty and includes a sprawling complex called the Citadel with impressive palaces, ornate temples and highly-decorative walls and gates.
Hoi An, a 2,000-year old city on the South China Sea, was once the center of the Champa Kingdom. The Old Town includes historic architecture, traditional wooden houses and countless textile shops.
Hanoi’s Old Quarter includes largely intact Asian and French colonial architecture despite the bombings of the Vietnam War. Notable buildings include the Grand Opera House, the Presidential Palace and Saint Joseph Cathedral.
When most people think of Vietnam, images of Ha Long Bay come to mind. This iconic group of 2,000 jungle-covered islands features limestone outcrops jutting out of crystal clear aqua waters. The islands are dotted with lakes, sinkholes, caves and grottoes favored by snorkelers and scuba divers.
Archeological evidence suggests people were growing rice in North Vietnam at least 2,000 years ago. In the 2nd century BC, Chinese conquered the northern region and ruled until the 10th century.
However, many uprisings against Chinese domination occurred and at times Vietnam was independently governed under various other powers. In 938, North Vietnam ousted all foreigners, formed their first dynasty and became an independent state.
In the south, the Hindu kingdom of Funan near the Mekong River became a powerful jade and silk trading state between India and China until the 6th century. The Champa also flourished in the central region. Vietnamese forces began conquering these civilizations from the 10th century onwards.
Mongols invaded Vietnam several times in the 13th century, but the Vietnamese prevailed. In 1407, China tried to regain control of North Vietnam, but the Vietnamese resisted their rule. By 1428, they’d driven the Chinese out.
By the 17th century, two rival Vietnamese families governed the north and the south. Rebellion in the 1770s eventually led to unification in 1786 under the Nguyen dynasty. China tried to occupy Vietnam again, but was driven back. By 1802, Vietnam was a strong united kingdom.
During the 19th century, the French gradually overtook Vietnam. By 1883, North and Central Vietnam became a French protectorate. However, Vietnamese nationalism and interest in communism grew. By 1930, Vietnam had a communist party spearheaded by Ho Chi Minh from China.
During World War II, Germany defeated France and forced them to accept Japanese troops in French Indo-China. Vietnamese Communists, or Viet Minh, fought the Japanese and by 1945 controlled parts of North Vietnam. Nonetheless, Japan had administrative control of the country.
When Japan surrendered that same year, it created a power vacuum. Ho Chi Minh called for an uprising and the August Revolution ensued. This resulted in communist control over most of Vietnam.
In 1945, Ho Chi Minh declared Vietnam’s independence. However, after the war the territory south of the 16th parallel went to the British. Only the north went to the Nationalist Chinese.
The French army took control from the British. Ho Chi Minh favored the French over the British and signed a treaty with them. French troops would replace Chinese troops in the north for 5 years, providing the French recognized Vietnam as a ‘free state’.
However, the French would not relinquish control and Viet Minh and French troops fought for eight years. The U.S. sent military advisers to South Vietnam and supported the French financially. However, by 1954 the French realized they could not win the war.
They agreed to the temporary division of the country at the 17th parallel with free elections scheduled for 1956. The elections never occurred and Vietnam remained divided.
Ho Chi Minh introduced a Communist regime in the north and a Vietnamese prime minister ruled the south. The U.S. supported the South Vietnamese government. Demonstrations throughout the early 1960s eventually led to a coup in South Vietnam in 1963. In the north, the Vietcong fought to unite the entire country under communist rule.
In 1964, attacks on U.S. ships led to the Americans attacking North Vietnam. Substantial U.S. troops were in Vietnam the following year. The Vietcong launched an offensive on South Vietnam in 1968, leading to heavy American losses.
The U.S. eventually signed a ceasefire in 1973 and withdrew from the country, leaving the South Vietnamese to fight the Vietcong alone. By 1975, the South Vietnamese resistance had collapsed and Vietnam was united under Communist rule.
After the war, Vietnam lay in ruins and did not receive compensation. The U.S. imposed a trade embargo. By the late 1980s, the communist party was forced to adopt the idea of “a market economy with socialist orientation” due to the poor financial state of the country. This opened the door to capitalism and private investment during the 1990s.
In 1994, the U.S. lifted their trade embargo and Vietnam received assistance from international donors. The economy grew and the country became a major rice exporter.
By the 2000s, Vietnam had agreed to sell its state-owned companies. It struck a trade deal with the US and in 2006 was given membership in the World Trade Organization. This led to further foreign investment and aid.
Today, Vietnam remains under the rule of the communist party as a socialist republic. It operates under a state-planned and market economy. World Bank suggests Vietnam’s economic outlook is positive.
The CIA World Factbook suggests most Vietnamese identify as Kinh or Viet (85.7%), followed by Tay (1.9%), Thai (1.8%), Muong (1.5%), Khmer (1.5%), Mong (1.2%), Nung (1.1%), Hoa (1%) or other ethnicities (4.3%).
Most Vietnamese are either non-religious or practice folk religion (73.1%), followed by Buddhist (12.2%), Roman Catholic (6.9%), Cao Dai (4.8%), Protestant (1.5%), Hoa Hao (1.4%) and others (0.1%).
According to Forbes’ 2019 Best Countries for Business, Vietnam is 84th best country in the world for conducting business.
The 2019 Index of Economic Freedom rates Vietnam 128th globally and states, “To continue strong economic growth, Vietnam will need to reform state-owned enterprises, reduce red tape, increase business-sector transparency, and increase recognition of private property rights.”
World Bank’s “Doing Business” rankings rate Vietnam 70th for ease of doing business in the world.
Blueback Global provides a one-stop integrated solution to managing all aspects of your global operations. We can take the burden off you or your company’s internal resources by managing Entity Setup, Local Payroll, Accounting, Tax Reporting, HR Admin and Regulatory Compliance matters associated with operating in a foreign country. Our services are designed to be flexible and customized, so whether you are starting from entity registration, or have already registered but need support in setting payroll or hire employees, we can help at every point of the process.
The common scenarios that may give rise to the need for Blueback Global’s services include the following:
With our integrated approach, you can expect the following experience:
We have an initial complimentary meeting to discuss the scope, objectives and plans for your expansion plan into Vietnam. After this meeting, you can expect a follow-up proposal from Blueback Global within 1 to 3 business days, that outlines that the approach, scope of work and expected deliverables and outcome. Thereafter, our implementation team will then work closely with your team to register the local entity, set up payroll, accounting process, employee social security and benefits. We will then develop a mutually agreed timeline and approach for ongoing payroll, accounting, tax reporting and HR support. Blueback Global will set up a compliance calendar so that you know exactly what and when compliance items such as tax reporting and payroll returns are due. We will of course facilitate all of these, so you do not have to keep track of the compliance dates.
Our goal is to make the process as smooth, simple and successful as possible, and remove the anxiety of operating in a foreign location, to deliver a great customer experience.