Past iadvisory Questions and Answers: Vietnam

What is the average salary when hiring a local in Vietnam? How much is rental in Hanoi? What are the cost and procedures related to setting up a business in Vietnam? Find out what our iadvisors say regarding these cost issues when doing business in Vietnam.

We are a card manufacturer and want to set up a representative office in Hanoi, Vietnam. Please advise on,

a) The payout for Health and Social Insurance and personal income taxes for locals.
b) The average cost of a representative office legal representative that will be employed for this case.
c) The average salary of a local.
d) The rental payout. How much is the rental?
e) Any other information that I need to take note of?

My advice as follows,

a) 5% of salary for Social Insurance (SI) and 1% for Health Insurance (HI) to be paid by the staff; 15% SI and 2% HI shall be contributed by the employer. Personal Income Tax for local shall be imposed at the progressive tax rates with rate bands from 10% to 40%;
b) Average salary for Chief Representative should be up to USD1,000 for locals and USD2K to 3K for expat;
c) Average salary for RO locals should be from USD300 to USD800.
d) Rental rates in Hanoi ranges from USD25 to USD50 per m2 per month.
e) A Rep Office is not subjected to any taxes in Vietnam, except for Personal Income Tax for locals and expats. It is however, required to submit its annual activities report to the licensing authorities.

We are an IT services company, and would appreciate if you could advise us on the following:

1. How do we set up a 100% Foreign Owned Subsidiary? In terms of related costs, rough timeline, and procedures.
2. How do we get started within the shortest possible time?

Generally for a 100% foreign owned company, the required documents needed to apply for the Investment Certificate includes (but not limited to):

• Letter of application for investment licence;
• Charter of the company;
• Documents stating the legal status and the financial capacity of the foreign and the Vietnamese parties;
• Feasibility study;
• Joint Venture Agreement between foreign investors and local partner (for the cases where a joint venture is by laws required to be set up);
• Documents relating to the transfer of technology and report on environmental impact (if any/applicable);
• Legal documents concerning office lease/housing and/or land rental/ownership.

The timeline is around 2-3 months (inclusive of document preparation time). Consulting fees for services to obtain the license is USD4,000 to USD5,500.Given your intended business in Vietnam, you should set up your company only either in Hanoi or HCMC.

Consultants can usually assist clients to get started within 2 months.
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