Many foreign investors enter Vietnam with strong business plans but later face fines, inspections, or project delays due to overlooked legal obligations. From post-licensing reporting and capital contribution rules to tax, labor, and data compliance, these hidden requirements often catch investors off guard. This article highlights the legal obligations most commonly missed by foreign investors in Vietnam—and explains how to stay compliant from day one.
Vietnam is widely regarded as an investor-friendly market, especially in manufacturing, technology, services, and digital industries. However, Vietnam’s legal system places strong emphasis on ongoing compliance, not just initial licensing.
Many foreign investors assume that once the Investment Registration Certificate (IRC) and Enterprise Registration Certificate (ERC) are issued, the main legal work is done. In reality, post-establishment obligations are where most compliance failures occur.
These oversights are rarely intentional. They usually result from differences between Vietnamese regulations and international business practices.
Failure to comply with mandatory obligations may lead to:
Administrative fines and penalties
Suspension or revocation of licenses
Inability to transfer profits abroad
Increased scrutiny during inspections or audits
Delays in project expansion or restructuring
Long-term reputational damage
Understanding and tracking these obligations is essential for sustainable investment.
Capital compliance is one of the most regulated areas for foreign investors.
Foreign investors must contribute capital:
Within the timeline stated in the IRC and ERC
Through a Direct Investment Capital Account (DICA)
In the exact amount and currency registered
Many investors delay capital contribution due to cash-flow planning or internal approvals, not realizing that late contribution is a violation that may trigger penalties or forced amendments to investment licenses.
Foreign investors are required to report and obtain approval for changes such as:
Capital increases or reductions
Ownership or shareholder changes
Changes in project objectives or scope
Changes in project location or duration
Unreported changes may invalidate existing approvals and cause serious compliance issues.
After incorporation, foreign-invested companies must maintain strict corporate governance compliance.
Commonly overlooked updates include:
Change of legal representative
Change of company address
Change of charter capital
Change of business lines
Vietnamese authorities require these changes to be registered within statutory deadlines. Operating with outdated licenses is considered non-compliance.
Foreign investors sometimes conduct activities:
Beyond registered business lines
Before obtaining required sub-licenses
In conditional sectors without meeting conditions
Even if the activity is lawful in principle, operating outside the registered scope can result in fines or forced suspension.
Tax compliance in Vietnam goes beyond filing returns.
Foreign-invested enterprises engaged in related-party transactions must prepare:
Transfer pricing documentation
Annual declarations
Benchmarking analyses
Many investors underestimate the importance of these obligations until they face tax audits and reassessments.
Cross-border payments for services, royalties, or technical assistance often trigger withholding tax. Failure to withhold and declare correctly may result in:
Back taxes
Penalties and late-payment interest
Disputes with tax authorities
Proper tax structuring from the beginning is essential.
Labor compliance is a frequent risk area for foreign investors.
Common violations include:
Allowing foreign staff to work before permits are issued
Missing renewal deadlines
Misclassifying job positions
These violations may result in fines, deportation orders, and operational disruption.
Foreign investors sometimes apply foreign HR policies without adaptation, leading to:
Invalid labor contracts
Improper termination procedures
Social insurance non-compliance
Labor disputes can be costly and damage employer reputation.
Vietnam has significantly strengthened data-related regulations.
Foreign-invested companies handling personal data must:
Obtain valid user consent
Implement internal data protection policies
Appoint responsible personnel
Report data breaches when required
Many companies only become aware of these obligations after inspections or complaints.
Certain data may be required to be stored locally in Vietnam. Ignoring localization or reporting requirements can result in service suspension or forced system changes.
IP protection is frequently overlooked during early-stage operations.
Vietnam follows a first-to-file principle. Foreign investors who delay IP registration risk losing rights to local competitors or partners.
Without proper IP assignment clauses, ownership of software, designs, or inventions may legally belong to employees or contractors—not the company.
Vietnamese law imposes recurring reporting obligations on foreign investors.
Foreign-invested companies must submit periodic reports on:
Investment implementation progress
Capital contribution status
Business performance
Failure to submit reports may affect future licensing and expansion approvals.
Certain sectors—such as advertising, fintech, logistics, education, and e-commerce—require additional reporting or operational conditions. Investors often overlook these until inspections occur.
Many legal obligations imposed on foreign investors in Vietnam are not immediately visible during the licensing stage. However, overlooking these duties can lead to penalties, delays, and serious business disruptions.
With proper legal guidance and compliance planning, foreign investors can operate confidently and focus on growth.
Are you a foreign investor unsure whether you are fully compliant in Vietnam?
Contact DEDICA Law for a comprehensive legal compliance review and tailored advisory support.
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