When first investing in Vietnam, FDI enterprises often encounter a wide range of legal, tax, labor, and administrative risks. If these risks are not identified early, businesses can easily lose time, incur significant costs, and even miss valuable business opportunities. So what are the most common risks that foreign investors should pay special attention to?
Many foreign investors acknowledge Vietnam’s strong market potential, competitive labor costs, and stable political environment. However, quite a few FDI enterprises find themselves confused just a few months after commencing operations. The problem often lies not in the business model, but in hidden legal risks that were underestimated at the outset.
These risks usually do not arise immediately. At first, enterprises operate normally—signing contracts, recruiting employees, and implementing projects. Only when inspections occur, disputes arise with partners, or profit remittance abroad becomes difficult do the problems become apparent.
One of the most common risks for FDI enterprises is improper or incomplete investment registration and company establishment. Many investors believe that obtaining an Investment Registration Certificate is sufficient to operate, whereas in practice the process is far more complex.
In many cases, businesses operate in conditional sectors without obtaining all required sub-licenses, or their registered investment scope does not match actual activities. This can result in administrative penalties, mandatory project adjustments, or even suspension of operations.
More critically, when FDI enterprises seek to expand, increase capital, or change business lines, initial mistakes can become serious bottlenecks, causing adjustment procedures to take months.
Many foreign investors are not fully aware of regulations on foreign ownership ratios in specific industries. Some sectors impose ownership caps or special conditions, yet enterprises often apply experience from other jurisdictions without proper localization.
Late capital contribution, unauthorized contribution methods, or improper valuation of contributed assets may lead to tax reassessment or even violations of investment laws.
While initial risks relate to investment procedures, the operational phase involves more complex legal issues. This is when many FDI enterprises begin to feel the true cost of legal compliance.
Taxation is always a major concern for FDI enterprises. However, many unintentionally face transfer pricing risks due to insufficient understanding of Vietnam’s related-party transaction regulations.
Service agreements, intercompany loans, or royalty payments to overseas parent companies without proper transfer pricing documentation can easily lead to tax assessments. Enterprises may face tax arrears, penalties, and late payment interest.
In addition, many FDI enterprises struggle with tax refunds, tax credits, or profit repatriation due to accounting and tax systems that were not properly structured from the beginning in line with Vietnamese regulations.
Differences in culture and labor law are also major pitfalls for FDI enterprises. Many apply international-standard labor contracts, internal rules, and policies without adjusting them to comply with Vietnamese labor laws.
As a result, when labor disputes arise, FDI enterprises are often at a disadvantage: contracts may be deemed invalid, internal regulations not recognized, or disciplinary procedures ruled unlawful. These disputes cause not only financial losses but also serious reputational damage.
Risks are inevitable when investing abroad, but they can be prevented and controlled with a proper legal strategy. This is what distinguishes sustainable FDI enterprises from those that merely survive in the short term.
Instead of focusing solely on incorporation procedures, FDI enterprises should build a comprehensive legal foundation from the beginning—covering investment structure, business lines, legal conditions, as well as tax and labor strategies.
Thoroughly reviewing project documents, capital contribution agreements, company charters, and relevant licenses can help enterprises avoid many future risks. At this stage, the support of experienced FDI legal counsel is crucial.
Many FDI enterprises only seek legal advice after disputes arise. In practice, an outsourced legal department model helps enterprises save costs and manage risks far more effectively.
DEDICA Law currently supports many FDI enterprises through ongoing legal advisory services—from contract review and tax–investment consulting to assistance with government authorities—allowing businesses to focus confidently on their core operations.
Are you a newly established FDI enterprise in Vietnam and concerned about potential legal risks? Are you unsure whether your current investment structure is truly compliant and secure?
DEDICA understands that every legal misstep can cost businesses time, money, and reputation. With a team of reputable and experienced lawyers, DEDICA Law is ready to accompany FDI enterprises from the very first steps through long-term development.
Facing similar issues?
Contact DEDICA Law for tailored legal strategies.
📞 Hotline: (+84) 39 969 0012 (WhatsApp, WeChat, Zalo available)
🕒 Working hours: Monday – Friday (8:30 – 18:00)
Contact us today to receive your first free consultation from our professional legal team.
Select a platform to view details
