Procedures for establishing a foreign-invested garment manufacturing company in Vietnam

1. General regulation

- According to Vietnam's investment law, the textile and garment manufacturing industry is on the list of industries with investment incentives in Vietnam and is not on the list of industries with limited market access for foreign investors. Therefore, foreign investors are allowed to establish 100% foreign-owned companies in the field of garment manufacturing in Vietnam.

- Regarding investment capital: Investors must demonstrate their financial capacity and experience in the registered investment field/industry to ensure the ability to implement the project. Vietnamese law does not stipulate the minimum and maximum capital for foreign-invested companies operating in the garment manufacturing sector. Investors can base on the business scale, expected financial plan to decide on a reasonable total investment capital/charter capital of the company.

- Regarding investment location: Investors need to note that the location of the company's headquarters must be suitable to the scale, production capacity and land use planning of the locality if renting land for production.

- Regarding investment incentives: Investors can enjoy investment incentives in the following forms:

• Corporate income tax incentives, including applying a corporate income tax rate lower than the normal tax rate for a limited period or for the entire duration of the investment project; tax exemption, tax reduction and other incentives according to the provisions of the law on corporate income tax;
• Import tax exemption for imported goods to create fixed assets; imported raw materials, supplies and components for production according to the provisions of the law on export tax and import tax;
• Exemption or reduction of land use fees, land rent, land use tax;
• Accelerated depreciation, increasing the deductible expenses when calculating taxable income.

2. Process of establishing a company doing business in garment manufacturing industry

To invest in garment manufacturing business in Vietnam, foreign investors need to carry out the following procedures:

For direct investment – ​​Foreign investors establish foreign-invested garment manufacturing companies in Vietnam:

• Apply for an Investment Registration Certificate;
• Apply for an Enterprise Registration Certificate;
• Carry out the procedures after establishment, including: engrave the seal, announce the seal sample to the National Business Registration System; declare initial tax; track electronic invoice’s order and issuance notice.

For indirect investment - Foreign investors purchasing shares or capital contributions to a garment manufacturing company in Vietnam:

• Carry out the procedures for registration of capital contribution, share purchase/capital contribution to a garment manufacturing enterprise established under the laws of Vietnam.
• Carry out procedures for changing the contents of business registration/adjusting the Enterprise Registration Certificate of the enterprise in which the foreign investor registers to contribute capital, purchase shares/capital contributions and carry out procedures for declaring and paying taxes (if any);
• Carry out procedures for changing the contents of investment registration/adjusting the Investment Registration Certificate of the enterprise in which the foreign investor registers to contribute capital, purchase shares/capital contributions if this enterprise is a foreign-invested enterprise and has been granted an Investment Registration Certificate.

Please note that: Depending on the province/city where the foreign investor invests, the procedures may vary according to the policies and requirements of the investment registration agency of that province/city.