Do You Need a Legal Entity to Do Business in Vietnam?
The short answer: not always - but there are cases where it cannot be avoided. There are many ways to invest in Vietnam, each with its own advantages and limitations, so it is important to select the method that fits your company's business and investment objectives.
When Establishing a Legal Entity Is Mandatory
In cases such as building a local manufacturing plant, engaging in real estate business, or setting up a sales base serving the domestic market, establishing a legal entity may be mandatory.
The Downside of Establishing a Legal Entity
The drawbacks must also be taken into account: setting up a legal entity generates costs and an administrative and operational burden; and if the business does not go well, dissolution procedures must be carried out - which is far from simple.
For this reason, companies should seriously weigh the necessity of establishing a legal entity against their level of market understanding, the feasibility of the business plan, and whether they have reliable staff, partners, and advisers in place.
The Risks of Nominee Investment Structures
One practical reality worth knowing: in sectors where the authorities are more likely to intervene - such as restaurants, hotels, and entertainment services - many investors opt for nominee arrangements, using the name of a Vietnamese individual. This structure carries considerable legal risk, particularly in the context of the new beneficial ownership regime, and calls for extremely careful consideration.
Preparation Checklist
Clarify your business objectives to determine whether establishing a legal entity is mandatory.
Assess the operating and administrative costs against the benefits of establishing a legal entity.
Review how well you understand the market and whether you already have reliable partners and personnel in Vietnam.
Carefully weigh the legal risks if you are considering a nominee investment structure.
Consult a lawyer to select the investment method best suited to your company.