Vietnam is increasingly becoming an attractive destination for foreign investors in the technology and software sector. However, establishing a 100% foreign-owned software company is not merely about renting an office, hiring programmers, and starting to write code. Behind the scenes lies a series of legal procedures, investment conditions, licenses, and potential risks if the business is not well prepared from the outset. What conditions must foreign investors meet? Is the legal process really as “simple” as many advertisements claim? And what common mistakes often cause projects to be delayed or even fail to be implemented?
At first glance, software appears to be a “lightly regulated” industry, as it does not require statutory capital or complicated sub-licenses. In reality, however, foreign-invested enterprises (FDIs) in the software sector are still subject to strict regulations under investment law, enterprise law, and information technology–related regulations.
Under Vietnam’s WTO commitments and current laws, foreign investors are allowed to establish 100% foreign-owned software companies. Software production, software outsourcing, application development, and IT solutions are not included in the list of sectors with restricted market access for foreign investors.
However, the key issues lie in how the business lines are registered, the scope of operations, and whether the company conducts activities beyond pure software services (such as e-commerce, payment intermediaries, or user data processing). Incorrect business registration or inappropriate descriptions may result in repeated requests for amendment of the investment dossier.
Many investors believe that once the Enterprise Registration Certificate is issued, the company can immediately operate. In practice, for foreign-owned software companies, risks often arise from:
Registering business lines that do not match the actual business model
Failing to obtain an Investment Registration Certificate prior to incorporation
Failing to contribute capital fully and on time
Violating regulations on foreign employees and profit remittance abroad
Improper registration of tax, invoices, and investment capital accounts
These issues may not surface immediately but can later lead to penalties, tax reassessments, or obstacles to project expansion.
To ensure a smooth and sustainable implementation, investors must follow the proper legal sequence below.
This is a mandatory step for foreign investors. The investment application reflects the entire “legal concept” of the project, including investment objectives, scale, capital, location, duration, and labor demand.
At this stage, the licensing authority will assess:
Investor nationality
Proposed software business activities
Project feasibility
Compliance with planning and investment policies
Many applications are delayed due to vague project descriptions or the use of technical terms inconsistent with legal interpretation. This is where the role of a corporate lawyer becomes particularly important.
After obtaining the Investment Registration Certificate, investors submit an application for the Enterprise Registration Certificate. A 100% foreign-owned software company is commonly established as a single-member or multi-member limited liability company.
At this stage, the company must clearly determine:
A compliant and non-confusing company name
A lawful head office address (residential apartments are not permitted)
The legal representative
Accurately coded software business lines
Even minor errors may lead to repeated amendments and delay the investment timeline.
Completing incorporation procedures is not the end. In practice, many companies face serious legal issues due to overlooking post-establishment obligations.
Foreign investors must fully contribute the registered capital within the timeframe stated in the Investment Registration Certificate through a direct investment capital account opened at a Vietnamese bank. Late or incorrect capital contribution is considered a violation of investment regulations.
In addition, a 100% foreign-owned software company must:
Register a digital signature
Complete initial tax registration
Register or issue electronic invoices
Install company signage and complete labor procedures
During operation, foreign-owned software companies should pay close attention to:
Labor contracts with programmers and foreign experts
Work permits and temporary residence cards for foreigners
Data protection and intellectual property regulations
Tax obligations and profit remittance abroad
Non-compliance in any area may expose the company to inspections, penalties, or suspension of operations.
With extensive experience in advising and successfully implementing numerous projects involving 100% foreign-owned software companies, DEDICA Law understands that investors need more than just “sufficient licenses”—they need a secure legal structure for long-term development.
DEDICA supports clients by:
Advising on suitable investment structures and business lines from the outset
Preparing and submitting Investment Registration Certificate applications
Establishing software companies quickly and in compliance with regulations
Advising on capital contribution, taxation, labor, and post-establishment legal operations
Providing ongoing legal support as an outsourced legal department
Instead of navigating a complex legal system alone, investors can focus on product development and market expansion while DEDICA manages legal risks.
Are you facing a similar issue?
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