In recent years, purchasing shelf companies in emerging markets such as Vietnam has gained significant popularity among investors. This approach allows you to quickly enter the market with an already established business model, existing clients and assets. Emerging economies such as Vietnam offer many opportunities due to their dynamic growth and attractive business environment.
A dormant enterprise in this purview is a commercial entity that is already functional and possesses an entrenched framework, thus simplifying the accession procedure for a nascent proprietor. Such establishments may offer considerable advantages, including truncating the duration requisite for initiating a commercial endeavor and mitigating the perils entwined with commencing a fresh enterprise from inception.
This treatise constitutes an exhaustive compendium on the procurement of a pre-established enterprise in Vietnam. The discourse meticulously scrutinizes the paramount facets of this procedure, encompassing preliminary undertakings for the acquisition, methodologies for scouring and electing an apt establishment, juridical and pecuniary intricacies of the exchange, as well as the ensuing phases post-acquisition and amalgamation of the procured venture. This manuscript aspires to furnish systematized and utilitarian counsel for financiers inclined to capitalize on the prospects proffered by the Vietnamese marketplace.
Economic and investment attractiveness of Vietnam
Vietnam demonstrates significant economic and investment attractiveness due to a number of macroeconomic factors. The country continues to show strong gross domestic product (GDP) growth in 2024. The country's GDP is projected to grow at 6-7% per annum, one of the highest growth rates in the Southeast Asian region. This steady growth is supported by strong development in key economic sectors such as manufacturing, exports and services.
Vietnam's economic stability is strengthened by political stability and reform policies. Government authorities have stepped up efforts to improve the business environment in an effort to stimulate private sector growth and development. Infrastructure projects in Vietnam are actively developing: new transport routes are being built, ports and airports are being modernized, which helps to simplify logistics and reduce operating costs for companies.
Vietnam is a fairly attractive location for external investment for several reasons. Firstly, the country shows political stability, minimizing risks for long-term investments. Secondly, the tax system creates favorable conditions for starting a business from scratch and purchases of already operating companies in the jurisdiction of Vietnam. The standard income tax rate is 20%, with additional tax incentives provided in certain industries, such as high technology and scientific development.
Vietnam also supports foreign investors through government initiatives aimed at improving the investment climate. Programs offering tax holidays, subsidies and incentives for new investments help attract capital and technology investment.
Key indicators of Vietnam's investment attractiveness include the level of foreign direct investment (FDI), which reached approximately $30 billion in 2024, as well as high scores from international rating agencies.
Industrial clusters such as electronics, textiles and agriculture also contribute significantly to attracting capital investment. Vietnam is actively developing these clusters, which improves the business environment through specialization and concentration of resources, thereby increasing the attractiveness of the market for investors.
Thus, economic stability, government support, favorable tax regimes and intensive infrastructure development contribute to the high investment attractiveness of Vietnam. These aspects make the country desirable for acquiring local shelf companies and developing businesses.
Examination of the quandary between procuring an extant corporation and instituting a nascent enterprise in Vietnam
When contemplating the prospect of embarking upon a commercial venture in Vietnam, capitalists frequently encounter a quandary: to acquire a pre-existing enterprise or establish a nascent one. Both avenues possess their idiosyncrasies, temporal demands, and advantages. Let us scrutinize the matter. The genesis of a fresh enterprise in Vietnam encompasses myriad phases: determining the juridical configuration of the entity, drafting foundational charters, enlisting with the fiscal authorities, and procuring requisite permits. The temporal span of this endeavor may fluctuate from a handful of weeks to several lunar cycles, contingent upon the intricacies of the corporate framework and the alacrity of governmental machinations.
For a new business, it is also necessary to recruit staff, arrange office space and establish work processes. These tasks require significant time investments and resources, which can become an obstacle to the speedy launch of activities.
For start-up businesses, it will take time to build a customer base and establish business relationships, which can be a labor-intensive and time-consuming process, especially in a highly competitive market.
Advantages of acquiring an existing business before creating a new organization:
- Saving startup time. The main advantage of acquiring an existing business is to speed up the process of starting activities due to the availability of already completed documentation, licenses and established infrastructure.
- Access to a ready-made client base and established business connections. When purchasing an operating enterprise, investors immediately gain access to established customer relationships and reputation, which allows them to quickly begin work and begin generating income.
- Already established business procedures. The acquired firm has working processes and methods of operation, which reduces the dangers associated with developing new techniques and avoids many of the difficulties encountered in implementing them from the very beginning.
- Obtained licenses and permits. A company that is already operating has all the required licenses and permits for its activities, which eliminates the need for a lengthy procedure for obtaining them and fulfilling all the criteria for launching a new enterprise.
- Financial documentation and history. Acquired businesses typically have strong financial records and a record of their operations. This allows potential investors to more accurately analyze the financial position of the organization and assess its prospects.
- Reputation and market position. Buying a company with an already established image and market presence often looks preferable to creating a new brand. This can provide a competitive advantage and help you capture a market niche faster.
The choice between purchasing an existing business and starting a new organization in Vietnam is determined by a number of aspects, including time commitment, strategic objectives and risk tolerance. Acquisition of an existing company in Vietnam provides benefits such as a faster start-up process, an established clientele and working business procedures. However, starting a new company may be more attractive to those who want to start at an early stage and have full control over all operations. Careful analysis and evaluation of different approaches will allow you to make the most informed choice.
Vietnamese legislation governing corporate activities
Vietnam has several laws governing corporate operations that define business standards, including the rights and obligations of foreign investors. The main provisions cover aspects of ownership, control and general legal regulation of the corporate sphere.
The Company Law, enacted in 2020, is the key document that sets the criteria for the organization, management and closure of businesses in Vietnam. In addition to it, the Law on Foreign Economic Activity, the Law on Foreign Direct Investment and various regulations covering specific aspects of business activity also apply.
Foreign Investment Ownership Policy
In Vietnam, foreign investors are allowed to own companies in most sectors of the economy, but there are restrictions in certain areas. In general, foreign investors can own up to 100% of a company's shares, unless this conflicts with specific industry regulation requirements. For example, in sectors related to national security or strategic resources, there are restrictions on foreign ownership.
Control and management rules
Vietnamese law requires that at least one director of a company be a Vietnamese citizen. This condition is aimed at ensuring control over the actions of the enterprise and compliance with the internal legislation of the country.
Foreign investors have the right to appoint managers and executive directors, but are required to satisfy the legislative criteria for the presence of representatives of local residents in the directorate. In addition, it should be taken into account that key decisions, including changes to the organization's charter, sale of shareholdings or liquidation proceedings, must receive approval from shareholders and may require additional approval from Vietnamese regulatory authorities.
Rules for buying and selling companies
Before executing the acquisition of an extant enterprise in Vietnam, it is paramount to undertake a meticulous scrutiny that assesses the juridical and pecuniary facets of the entity’s operations. Following the consummation of the transaction, it is imperative to juridically legitimize the conveyance of proprietorship entitlements and effectuate requisite alterations within the governmental registration frameworks.
Basic legal forms of doing business in Vietnam
In Vietnam, investors have a choice of various legal forms for the implementation of commercial tasks, each of which has its own parameters and advantages.
Limited Liability Company (LLC), or OOO, is one of the most commonly used structures for entrepreneurship in Vietnam. This model allows limiting the liability of owners to the amount of their investment in the capital of the enterprise. An LLC can be created by one person or a group of persons, and the number of founders should not exceed fifty. Ease of management and the ability to adapt to different business conditions make this form attractive to entrepreneurs. In Vietnam, registering an LLC does not require an authorized capital, which makes it easier for new investors to get started. The management of the company is carried out by one or more directors, while significant changes in the company's activities are subject to approval at a general meeting of participants.
Joint Stock Company (JSC) is a more complex structure suitable for companies seeking to raise capital through the issue of shares. In this form of business, the share capital is divided into shares, which can be freely transferred or sold. To establish a JSC, at least three shareholders and an authorized capital of at least 10 billion Vietnamese dong ($400 thousand) are required. This form of legal entity facilitates the influx of capital investments and the issue of shares, which is especially important for large-scale corporations aimed at increasing their presence in the market. However, managing a JSC involves greater complexity, requiring regular shareholder meetings and mandatory publication of financial reports.
All types of business structures have certain advantages and limitations. You should choose a structure based on the goals of your activities and the characteristics of the proposed operations in Vietnam.
Procedure for acquiring an already operating company in Vietnam
Purchasing a ready-made company in Vietnam requires several important steps. It begins with negotiations and ends with the preparation of legal documents confirming the conclusion of the transaction. To minimize risks and ensure the legality of the process, detailed preparation and careful verification of all details of the company's activities are necessary.
Deal stages
- Negotiations and preliminary agreementAt the incipient phase, prospective vendors and purchasers parley, deliberating pivotal facets of the exchange, encompassing stipulations of conveyance, chronology, and expenditure. It is crucial at this juncture to attain a provisional concord, which may be formalized in the guise of a Missive of Intent (MOI). This epistle is not obligatory, yet aids in chronicling the rudimentary provisions of the accord.
- Due DiligenceAfter reaching a preliminary agreement, the due diligence process begins, which includes a comprehensive review of the company. This process is usually divided into three main aspects:
- Assessment of the financial position of the enterprise. A study of an organization's financial statements for previous years, including balance sheet data, income and expense statements, and tax reports. The purpose of this assessment is to analyze the economic stability of the organization and identify potential economic threats.
- Examination of covenants and undertakings. Scrutiny of all extant contractual undertakings of the entity, encompassing tenancies, labor pacts, debt covenants, and other compacts. This enables the discernment of potential juridical and pecuniary perils linked to the organization’s engagements.
- Scrutinizing juridical probity. Appraising the legal standing of the enterprise, encompassing ascertaining its proper registration, the possession of all requisite warrants and authorizations, and detecting latent juridical contentions or infractions. It is paramount to affirm that the enterprise is devoid of unresolved litigations or other judicial entanglements.
- Finalization of a barter and conveyance accordUpon culmination of the procedural assiduity and corroboration of the practicability of the accord, the entities commence the formulation of the conclusive acquisition and divestiture covenant. The pact must unambiguously delineate all stipulations of the concord, inclusive of remuneration, delivery stipulations, incumbencies of the entities, and any peculiar clauses. To guarantee the juridical legitimacy of the covenant and to ascertain its enactment, attestation by a scrivener is requisite. Vietnamese scriveners authenticate documents and affirm the veracity of the signatories’ autographs within the compact. This phase is indispensable to ascertain the concord adheres to juridical statutes and statutory ordinances and will be acknowledged as cogent in the eventuality of a dispute.
- Registration of changes in government agenciesRegistration of changes after the acquisition of an enterprise in Vietnam Immediately after the conclusion of the contract for acquisition of a ready-made business in Vietnam the corresponding changes should be formalized in the relevant government agencies. This requires filing a corresponding application with the Vietnamese Ministry of Planning and Investment (MPI) to update the ownership and management details in the official registration data. In addition, it is important to notify the tax service about the transfer of ownership rights and make appropriate adjustments in the tax accounting of the enterprise.
The process of transferring ownership of a business in Vietnam
Transfer of ownership of an enterprise in Vietnam is a procedure that requires careful preparation and compliance with legal procedures.
Preparation of documents
The initial stage is to prepare all the necessary documentation for the change of ownership. To do this you will need:
- Agreement on transfer of rights to shares - an agreement confirming the transaction between the buyer and seller. The contract specifies all the terms of the sale, including the price, number of shares, and transfer date.
- Minutes of the general meeting of shareholders or participants ‒ if the organization is a joint-stock company or LLC it is necessary to hold a meeting of shareholders (or participants), at which the transformation in the ownership structure will be approved and new owners will be appointed.
- Request to change registration information ‒ an application to the Ministry of Planning and Investment (MPI) with a request to update the information about the owners in the official register.
- New edition of the company's charter ‒ if changes in the charter are related to a new structure of shareholders or participants, an updated version of the charter is required.
Change of founders and directors
Subsequent to the preparation of the documents, they advance to the protocol for effectuating alterations in the founders and directors:
- Metamorphosis of Founders. Should the metamorphosis of proprietors pertain to the founders, it becomes imperative to amend the records in the registry of founders of the institution. To effectuate this, a petition is filed with MPI accompanied by the minutes of the convocation, the revised charter, and other pertinent documents. In the eventuality of a metamorphosis of founders, stakes in the endowment capital are allocated to the LLC. The transaction is chronicled in a share acquisition and disposition contract, and the particulars are refreshed in the corporate registry.
- Alteration of Executives. The minutes of the plenary assembly of shareholders or stakeholders must encapsulate the resolution to appoint a new principal of the enterprise. It is paramount that the incoming administrator is inscribed with the MPI. You are required to tender revised particulars regarding the structure of the company’s governance to MPI. This encompasses a petition for the alteration of the administrator, stipulating their complete designation, office, and contact details. Amendments must be delineated in the company's corporate codices, such as the statute and other internal registries.
After completing all formalities, it is recommended to check that all changes are registered and reflected in official documents and registers. You should also make sure that tax authorities and other government agencies have updated company data in their systems.
The structure of the transaction from a legal point of view: drawing up a contract purchase and sale
Development agreements on the transfer of ownership of a company in Vietnam ‒ a key stage of the transaction, which requires a careful approach and accuracy. Correct drafting of the contract not only ensures the legality of the transaction, but also helps to protect the interests of both parties.
Key points of the purchase and sale agreement
Definition of parties |
The contract must clearly identify the parties to the transaction, including full names, addresses and contact information for the seller and buyer. If the parties are legal entities, their registration details and positions of authorized representatives should also be noted. |
Subject of the agreement |
The contract must clearly state, what exactly is the subject of the transaction. This may include shares, equity interests or other company property. The description should be sufficiently detailed to avoid possible disagreement. |
Cost and payment procedure |
The contract specifies the transaction amount, method and timing of payments. Payment arrangements may include partial or full advances, installment payments or other forms. It is important to record the conditions associated with possible price adjustments or surcharges, if any. |
Guarantees and obligations |
The parties must furnish assurances concerning the juridical status of the enterprise and the execution of commitments. The vendor customarily avouches that the entity bears no encumbrances, liabilities, or legal predicaments, and that all proprietorship of the equities or interests is transferable without constraint. The purchaser may also assume specific obligations, such as sustaining the enterprise at a designated echelon. |
Transfer procedure |
The concordat must delineate the procedure for the conveyance of property, specifically the temporal juncture of the conveyance, the protocol for the administration of documents and other requisite instruments. This pertains to the cession of equity, the revision of the register of proprietors, the transference of rights to intellectual property or other assets. |
Conditions for completing the transaction |
All termination provisions must be clearly stated in the contract, including the circumstances under which the transaction may be canceled or terminated. There should also be rules regarding compensation for damages or penalties for non-compliance. |
Privacy and data protection |
The inclusion of privacy protection provisions is essential to the protection of information related to acquisition of a Vietnamese company and internal company information. This may include agreements not to disclose findings during due diligence. |
Jurisdiction and dispute resolution |
The contract must contain provisions on the application of law and jurisdiction to resolve possible conflicts. It is necessary to indicate the judicial or arbitration bodies responsible for resolving disputes, as well as methods for resolving these disputes. |
Signing and certification of the contract |
Contract must be signed by authorized representatives of both parties. In Vietnam, a contract may need to be certified by a notary to ensure its validity and guarantee of performance. Signatures must be prepared by a notary, who will confirm the authenticity of the signatures and the compliance of the contract with the law. |
Due Diligence procedure when purchasing an existing business in Vietnam
Due diligence procedure for acquisition of an already operating enterprise in Vietnam is a fundamental step. This stage allows the new owner to become familiar with the current state of affairs in the organization, as well as identify possible problems and obligations. The audit is divided into several main segments:
Analysis of financial well-being
Financial fortitude appraisal is directed towards evaluating the economic robustness of an entity and encompasses several pivotal stages. Primarily, it is requisite to scrutinize the fiscal records of the entity, encompassing bookkeeping data and metrics of monetary exchanges over the preceding years. This entails perusing the ledger, profit and loss account, and liquidity statement.
The subsequent phase involves scrutinizing your fiscal statements to ascertain their adherence to tax statutes. Analysis of fiscal reports aids in uncovering potential tax liabilities or infractions, which is crucial for circumventing prospective issues with the revenue authorities.
It is also imperative to appraise the company’s assets and encumbrances. This encompasses an examination of the firm’s possessions, such as edifices, apparatus, and intangible assets, alongside a scrutiny of fiscal obligations, including indebtedness and loans. This evaluation assists in ascertaining the true worth of the enterprise and uncovering potential perils for the prospective evolution of the initiative.
Legal expertise
Legal expertise is focused on assessing the legal status of an enterprise and its compliance with regulations. First of all, it is important to check the registration papers to confirm that all official documents of the enterprise, including the registration certificate, permits and articles of incorporation are in place. You should also check the documentation confirming the rights to the premises and other property.
Next, you need to review all current agreements and arrangements, including leases, employment contracts and credit arrangements. Reviewing these documents helps identify conditions that could impact a company's business operations or lead to legal disputes.
It is also necessary to analyze the legal proceedings in which the company is involved, if any, or have been in the past. This analysis allows us to identify potential legal threats and obligations, which can significantly influence transaction negotiations.
Operational check
An operational audit aims to thoroughly examine the current operations of an enterprise and its commercial processes. As part of the audit, it is important to examine commercial procedures and evaluate their effectiveness. This includes supply chain management, production facilities, product distribution and customer service. Such an analysis allows us to identify both the strengths and weaknesses of the organization.
In addition, it is necessary to analyze the base of customers and suppliers, carefully examining contracts with major partners. Assessing your relationships, including the sustainability and longevity of those relationships, will help you understand how reliable your current business relationships are.
Equally important is the issue of conducting an audit of the state of the company's infrastructure, which includes an assessment of physical infrastructure such as buildings, equipment and IT systems. This will enable you to determine whether capital investments or upgrades are required.
Human Resources
At purchasing an existing enterprise in Vietnam It is important to evaluate staffing. First of all, it is necessary to analyze employee employment contracts, examining their terms and obligations. It is important to identify the existence of collective agreements and possible labor disputes to avoid legal problems in the future.
You should also evaluate the company's corporate culture and organizational structure. This will help you understand how management is carried out and what relationships exist between employees. Assessing corporate culture is important for understanding the internal climate in the company and possible management problems.
Reviewing compensation and benefit programs is also important. Compensation and benefit programs should be reviewed to ensure they comply with regulations and do not create additional economic liability. This will help avoid unexpected financial stress after acquiring a business.
Carrying out a comprehensive audit in the field of human resources allows you to reduce potential threats and make an informed decision on the acquisition of a company. This approach helps protect the rights of the parties and ensures the successful completion of the transaction.
Valuation of a shelf company in Vietnam: main factors influencing the price
Determining the market value of a shelf company in Vietnam is a central element in the acquisition of a commercial property. This allows you to set an adequate price for the company while assessing various aspects. Key elements affecting a firm's pricing include industry, resources, and financial statements.
Scope of activity
The area of activity of the enterprise plays a key role in determining the market price. Significant elements to take into account:
- Dynamics and prospects of the sphere
An analysis of current changes and forecasts for the development of the sector are carried out. Changes in market conditions, whether up or down, can significantly affect a firm's valuation. For example, businesses in fast-growing areas such as information technology or alternative energy are often valued higher than organizations in stagnant or unprofitable industries.
- Competitiveness and market share
Study of the competitive environment and market share occupied by the company. Businesses with strong market positions and competitive advantages are usually valued higher.
- Regulatory regulation and legislation.
The influence of industry regulation and legislative acts on the activities of the enterprise is taken into account. Organizations operating in highly regulated environments may be forced to pay additional costs, which affects the determination of the market price.
Assets
Definition of market company value in Vietnam largely depends on its assets. These include:
- Property facilities and technical equipment. The cost of real estate, production equipment, office equipment and other types of tangible property is determined. It is necessary to analyze the condition and calculate the remaining useful life of these assets to correctly assess their real value.
- Intellectual assets. The rights to trademarks, patents, copyrights and other forms of IP are assessed. These resources can significantly increase the value of a business.
- Inventory. The valuation of merchandise in repositories is appraised, and the existence of antiquated or recalcitrant stock is scrutinized, which may diminish the aggregate expenditure on resources.
- Accounts payable. An analysis of the amounts to be received from clients is carried out. A high level of such debt may signal possible problems with the financial stability of clients.
Economic indicators
Economic indicators play a key role in establishing the market value of an organization. They cover a number of important economic aspects, including profit and costs, cash availability, profitability measurement, debt and the application of multiplier techniques.
Profit and costs form the basis for determining the economic performance of a company. Analysis of financial data on profits and costs reveals total, operating and net income. Constant profit growth and high profitability significantly improve the market valuation of the company.
Cash availability reflects the ability of an enterprise to create cash resources. Positive and stable cash flow confirms financial health and makes the company more attractive to potential investors.
Profitability analysis involves looking at key ratios such as return on sales (ROS), return on assets (ROA) and return on equity (ROE). High values of these ratios indicate the effectiveness of asset management and the success of business operations.
Research into the company's debt and solvency is also of great importance. A high level of debt can increase risks and reduce the market value of a company. The key is to analyze the ratio of debt to income and resources of the company.
Animation methods allow you to calculate value based on the profit received, revenue or assets of the company. Common multiples include price/earnings (P/E), cost/sales (P/S), and price/book (P/B).
Taking into account all these aspects helps to establish the real price of the enterprise and make an informed decision on its acquisition, especially in the context of transactions in Vietnam. Correct assessment helps to minimize risks and successfully complete the transaction.
Prospective sectors for acquiring a commercial enterprise in Vietnam
Vietnam is a rapidly developing economic field with multiple investment prospects. Recently, some sectors of the economy have shown impressive growth and attracted the attention of international capitalists. Let's look at the most attractive areas for investment.
- Technology and Information Systems Sector
The technology and information systems sector in Vietnam is showing rapid growth due to the rise in the number of start-ups and innovative enterprises. Technologies related to artificial intelligence, blockchain, financial technology and cybersecurity are actively developing in the country. Major global companies and venture capital funds are showing interest in investing in technology startups, creating opportunities to acquire existing businesses in this area.
- Manufacturing sector
Vietnam continues to maintain its position as a key hub for industrial activity, most active in the textile and electronics industries. The attractiveness of the market for investors is due to low labor costs and favorable geographical location. Continuous improvements in infrastructure and logistics make the country ideal for investing in export-oriented manufacturing facilities.
- Service area
In Vietnam, the service sector, including hospitality, tourism, healthcare and education, is experiencing growth, driven by rising domestic consumption and influx of tourists. Continued development of infrastructure and rising living standards are increasing demand for high-quality services. Investors have the opportunity buy Vietnamese companies in these areas to take advantage of increasing trends and needs in the market.
- Energy industry and alternative energy sources
The energy production industry, particularly from alternative sources, is attracting the attention of both public and private investors. Vietnam is actively investing in the construction of solar and wind power plants, as well as in projects aimed at improving energy efficiency. Investing in enterprises in this segment opens up prospects for participation in large-scale and innovative projects.
- Agro-industrial complex
The agro-industrial domain in Vietnam harbors notable prospects for advancement owing to the advent of novel technologies and the revamping of production methodologies. There is a burgeoning fascination with organic commodities and agrarian innovations within the nation. Capital infusions in agribusiness enterprises may prove lucrative, particularly in light of the surging appetite for superior alimentary goods.
- Retail and consumer goods
The retail and consumables sectors in Vietnam are also captivating the notice of capitalists. The augmentation in the magnitude of the middle class and shifts in consumer predilections are fostering the proliferation of demand for a diverse array of merchandise and services. From this vantage, acquiring extant enterprises in the retail and consumables sector can be a lucrative stratagem for amassing wealth and proliferating in a nascent market.
Where to find a company to buy in Vietnam
And now the question that worries many is where to find a suitable enterprise to buy it? There are several options.
Agencies specializing in sale of existing businesses in Vietnam, play an important role in this sector. With extensive knowledge of the local market and a wide network of contacts, they provide access to numerous current offers that are often difficult to find on your own. These organizations carry out a preliminary selection of companies that meet the needs of clients and provide assistance in conducting negotiations and preparing the necessary documents. Agencies also help simplify the process of acquiring a business and minimize the associated risks.
Online platforms, including international and local business trading websites, have also become an important tool for finding companies ready for sale in Vietnam. These platforms allow investors to browse through various offers and sort them by criteria such as business size, sector of activity and financial performance. It is important to understand that despite the extensive selection presented on online platforms, you must independently verify information about companies and evaluate their reliability.
In Vietnam, consulting and law firms offer extensive support in the process of selecting and acquiring an established business. They provide specialized knowledge and analytical support, which helps to adequately assess market conditions and select the most profitable offers for purchase. These organizations also carry out a thorough analysis of purchase candidates, including an assessment of their legal status and financial results, which will reduce potential risks in the transaction process.
When selecting an organization, you need to take into account several significant criteria.
First, you should clearly establish your priorities and criteria for the business, including the size of the organization, the industry and its financial strength. This will help you focus on the most suitable options and avoid unnecessary proposals.
The second key point is to check the reputation of the seller and the past activities of the enterprise to prevent possible risks and difficulties. Finally, thorough research and verification of the accuracy of the information provided promotes an informed choice and ensures a successful transaction.
Fiscal imposition and bookkeeping upon the acquisition of a corporation in Vietnam
It is important to focus on tax obligations and accounting when purchasing a company in Vietnam. These factors are significant in the acquisition process and can have a significant impact on the financial benefits of the transaction. Familiarization with the local tax system and accounting standards is key to avoiding unwanted problems and to financially optimizing the transaction.
Taxation when purchasing a business
- Corporate levy on earnings. Vietnam enforces a corporate levy of 20% on the majority of enterprises. In the course of acquiring a business, it is imperative to scrutinize the fiscal encumbrances of the purchased entity, along with any potential tax exemptions. Meticulous examination of tax documents and liabilities will aid in discerning prospective fiscal hazards and avert unforeseen monetary detriment.
- VAT. In the country, the VAT rate is 10% for most services and product items. In the context of a business acquisition involving assets subject to VAT, it is important to consider the impact of this tax on the overall cost of the transaction and explore opportunities to offset the tax.
- Accounting. Vietnam applies the Vietnam Generally Accepted Accounting Standard (VAS), which is similar to international accounting standards. When purchasing a company, it is critical to check the compliance of accounting records with current local regulations and identify deviations from international standards.
Carrying out an audit and analyzing financial documents is something that you should pay special attention to when purchasing an existing business. An audit helps confirm the accuracy of financial information and can identify problems such as undervaluation of assets or overstatement of debts.
Companies in Vietnam must regularly submit tax and accounting documents. It is necessary to ensure that all documents have been submitted in accordance with the law and that there are no outstanding obligations.
After the acquisition, the organization needs to integrate accounting systems and procedures. This means consolidating financial information and adjusting accounting processes to meet the new owner's requirements.
Conclusion
The procedure of acquiring a pre-existing enterprise in Vietnam necessitates meticulous scrutiny and exhaustive groundwork. Executing due diligence, evaluating the fiscal robustness of the firm, validating juridical soundness, and scrupulously contemplating every facet of the transaction are imperative for the triumphant fruition of the acquisition.
In this context, the role of professional consultants becomes key. Consultants from IQ Decision provide valuable services that include assistance in searching and selecting a ready-made company, conducting comprehensive due diligence, assessing the value of a business, and transaction support. Expert opinion and experience help investors prevent common mistakes and ensure compliance with all legal requirements. The specialists from IQ Decision have a deep understanding of the Vietnamese market and its characteristics, which allows them to offer an individual approach to each client.