10 Challenges and Solutions for Starting a Small Business in Vietnam for Expatriates
Building a small business in Vietnam offers immense market potential. However, as an expatriate, you will navigate investment regulations, residency/work permits, and tax and data compliance. Are you interested in learning more about the best way to open a small business in Vietnam? Here is a guide to the 10 biggest challenges and their practical solutions to ensure your journey is efficient and cost-effective.
Strategic Navigation: Overcoming Regulatory Hurdles and Business Operational Solutions in Vietnam
Establishing a solid business foundation in Vietnam requires patience with unique administrative procedures and precision in meeting federal legal compliance standards. To ensure your entrepreneurial journey goes smoothly, here is an in-depth analysis of the main challenges expats face and the practical solutions you can apply.
1. Choosing a Business Entity and Completing Initial Licensing (IRC/ERC)
Many expats confuse the Investment Registration Certificate (IRC) with the Enterprise Registration Certificate (ERC). For foreign investors, the IRC is generally issued first for the investment project, followed by the ERC, which acts as the “birth certificate” of the business entity.
Determine the best structure LLC (Limited Liability Company) or JSC (Joint Stock Company). Use the National Business Registration Portal to check names and upload documents. Note that as of July 1, 2025, eID accounts (VNeID) are used for online procedures.
2. Market Access (Negative List and Conditional Sectors)
Not all business sectors allow 100% foreign ownership. Decree 31/2021 introduced a Negative List and conditional sectors.
Screen your VSIC (Vietnam Standard Industrial Classification) codes against Decree 31/2021 and the Law on Investment 2020. If your sector is “conditional,” prepare proof of compliance (experience, capital, or additional approvals) before applying for the IRC.
3. Additional Permits for Trading and Retail
Foreign-invested enterprises (FIE) involved in buying and selling goods may need a Business License or retail outlet permits.
Map your activities (import, wholesale, e-commerce, or physical retail). Under Decree 09/2018, some wholesale activities no longer require a license, but retail outlets may still require an ENT (Economic Needs Test). Coordinate with the provincial Department of Industry and Trade.
Read Also: A Guide to Starting a Small Business in the UK for Beginner Expatriates
4. Investor Visas, Work Permits, and TRC
Vietnam’s investor visas (DT1–DT4) have different durations based on capital size. Furthermore, work permit regulations were updated in 2023, with new regulations effective August 7, 2025.
Choose a DT visa that aligns with the capital stated on your IRC/ERC (DT3/DT4 are common for small startups). For foreign managers/experts, ensure you follow the latest Ministry of Labor updates. Apply for a TRC (Temporary Residence Card) once your visa is active for long-term stay.
5. Capital Contribution and Banking/Forex Compliance
Company law requires capital contribution to be completed within 90 days of ERC issuance via a Direct Investment Capital Account (DICA).
Open a DICA at a licensed bank immediately after obtaining your IRC/ERC. Ensure the cross-border transfer follows the 90-day schedule to avoid fines.
6. Corporate Tax, E-Invoicing, and VAT
The standard CIT (Corporate Income Tax) rate is 20%. While the standard VAT is 10%, the government has extended a 2% VAT reduction (to 8%) for many goods/services until the end of 2026. E-invoicing is now mandatory nationwide.
Configure your e-invoicing system early. Review if your business qualifies for the 8% VAT rate and project your cash flow based on the 20% CIT.
7. Accounting, Auditing, and Reporting Deadlines
Almost all FIEs must be audited annually. Financial statements and tax finalization must be submitted within 90 days of the fiscal year-end.
Book an auditor by the beginning of Q4. Implement an accounting system following VAS (Vietnamese Accounting Standards) and maintain bilingual documentation.
8. Digital Compliance, Data Protection, and E-commerce
Businesses collecting customer data or selling online must comply with PDPD (Decree 13/2023), including incident notifications within 72 hours.
Create a privacy policy, obtain consent, and perform DPIA (Data Protection Impact Assessments). If operating an e-commerce site, register with the Ministry of Industry and Trade.
9. Protecting Trademarks and Intangible Assets
Vietnam follows a “first-to-file” system, meaning whoever registers a trademark first owns it, regardless of prior use.
File your trademark application with the Intellectual Property Office of Vietnam before launch. Alternatively, consider a Madrid Protocol filing designating Vietnam.
Read Also: 9 Success Tips: How to Start a Small Business in Turkey for Indonesian Expatriates
10. Local Adaptation and Professional Support
Vietnam is a dynamic market with frequently updated regulations. Success often depends on your ability to adapt to local business etiquette and administrative shifts.
Partner with local legal or tax consultants to bridge the gap between your business idea and smooth operations.
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