Changes to Vietnam Company Registration Procedures
On 15 October 2020, the Vietnam Government released Decree 122/2020/ND-CP (“Decree 122”) regulating the procedures for company registration in Vietnam, and incorporating initial labour usage declaration, Social Insurance registration and tax invoice usage registration.
The Decree links these initial registration steps in one process under the one company registration application. The registration procedures for a company branch and representative office are also covered by Decree 122.
Following the issuance of the Decree 122 by the Agency for Business Registration (being part of the Ministry of Planning and Investment), the Government also issued Official Letter no. 117/DKKD-NV (“Official Letter 117”) to assist with implementing Decree 122 on amendments to the process of registering a company in Vietnam.
These two new legal documents cover several changes in the current licensing procedures for companies in Vietnam, as discussed below.
Changes to the licensing (company incorporation) process
Pursuant to the Decree 122, there are 4 key changes for investors:
- The company’s Social Insurance Code will be the same as its Business Code (ie, the company registration number), along with being its Tax Code;
- A notarised copy of the Enterprise Registration Certificate of a company is not required to be provided for submission to the Department of Labour, War Invalids and Social Affairs (“DoLISA”) or the Vietnam Social Insurance Agency for registrations.
- The application form for enterprise, branch or representative office registration will include information on (i) labour usage declaration, (ii) Social Insurance submission method and (iii) tax invoice usage method registration. These data sets are submitted to the enterprise registration authority, and will be automatically shared with the other relevant authorities.
*In accordance with Official Letter 117, companies established before 15 October 2020 who would like to convert their business type are not required to complete the above supplemental information when applying for the conversion entity.
- The effect of the Decree is that the following Vietnamese authorities are to co-ordinate and support the implementation of the changes in the licensing process:
- The Department of Planning and Investment (specifically the Business Registration Division)
- The Tax Department
- The Social Insurance Agency
- The Department of Labour, War Invalids and Social Affairs
Tax & accounting regulatory changes
In the application documentation for company establishment, investors are required at the commencement to choose the form of tax invoice they will use. This differs under the previous law, where they would undertake these procedures after obtaining the investment and enterprise registration certificates (IRC & ERC). Investors can choose from:
- Self-invoice printing
- Order printing invoices
- Using electronic invoices
- Purchasing invoices from the Tax Authority
Labour and social insurance regulatory changes
Decree 122 stipulates that the company registration includes the initial labour usage declaration. However, companies should check with their provincial Labour Department to confirm whether they will also have to submit Form 5 under Circular 23/2014/TT-BLDTBXH. When companies execute labour contracts with its employees, they will still need to submit Form 5 with details of each employee to the Labour Department.
The Enterprise, Branch or Representative Office Tax Code will also be used as Social Insurance Codes, and under the Decree companies are also required to register their payment method for Social Insurance (monthly, half-yearly, or annually) when submitting the application documentation for establishing the entity in Vietnam.
However, only companies operating in agriculture, forestry, fishery and salt industries with salary payments based on production are entitled to select the option of submitting Social Insurance half-yearly or annually. Therefore, in practice, businesses operating in Vietnam, other than those operating in the sectors aforementioned are required to register the Social Insurance submission method as “monthly payment”.
Enterprise registration regulatory changes
Due to the new regulations, application forms for company registrations in Vietnam have changed to reflect the process of recording the additional information, including:
- Registration forms for company establishment
- Notice forms for Branch/Representative Office registration
Investors will need to ensure they utilise the new/updated forms
Conclusion
The new Decree provides a foundation for further information sharing between authorities, but at the same time it does not make significant changes. Investors and companies should be cautious with these new provisions as existing post-establishment processes/requirements still remain such as labour declaration and/or invoice issuance announcement.
