1. What is a Software Development Company?

A software development company specializes in designing, building, testing, and maintaining software systems and applications. These may include desktop programs, mobile apps, cloud platforms, AI systems, and enterprise software solutions. In Vietnam, this type of business falls under the group of information technology services and is governed by specific business codes aligned with the Vietnam Standard Industrial Classification (VSIC) and WTO service classifications.

Relevant business lines include:

• VSIC Code 6201: Computer programming activities
• VSIC Code 6202: Computer consultancy and management
• VSIC Code 6209: Other information technology and computer service activities

WTO CPC Codes:

• CPC 841: Consultancy services related to the installation of computer hardware
• CPC 842: Software implementation services
• CPC 843: Data processing services
• CPC 844: Database services
• CPC 849: Other computer services

2. Purpose of Establishing a Software Development Company in Vietnam

Foreign investors are increasingly drawn to Vietnam’s software industry for several strategic reasons:

• Access to Talent: Vietnam produces thousands of IT graduates every year. Developers are well-trained, particularly in programming languages such as Java, Python, PHP, and .NET.
• Lower Costs: Labor and office rental costs in Vietnam are significantly lower than in the U.S., EU, or even neighboring countries like Singapore or Malaysia.
• Favorable Policies: The Vietnamese government encourages foreign investment in technology, offering tax incentives, simplified procedures, and clear legal frameworks.
• Growing Digital Market: Domestic demand for IT services is booming, and Vietnam serves as a gateway to ASEAN markets.
• IP Protection: Vietnam has joined international treaties on intellectual property, providing better protection for tech-based businesses.

3. Can Foreign Investors Own 100% of a Software Development Company in Vietnam?

Yes. According to Vietnam’s WTO commitments and the current Investment Law, foreign investors are allowed to establish 100% foreign-owned enterprises (FOEs) in the field of software development. There is no requirement to partner with a local Vietnamese shareholder. This is a major advantage that simplifies investment procedures and gives foreign investors full control over business decisions.

4. Requirements to Establish a Software Development Company

To set up a software development company in Vietnam, foreign investors must meet the following conditions:

• Business Location: A valid business address is required. This must be a commercial office or building – not a residential property.
• Charter Capital: There is no fixed minimum capital, but the amount must be realistic and sufficient to cover operating costs (typically USD 10,000 – USD 50,000 or more depending on business scale). The capital must be fully contributed within 90 days from the date of enterprise registration.
• Legal Representative: At least one legal representative is required. The legal rep can be a foreigner or a Vietnamese citizen. They should ideally reside in Vietnam for ease of management and compliance.
• Investment and Enterprise Registration: Foreign investors must obtain an Investment Registration Certificate (IRC) and Enterprise Registration Certificate (ERC).
• Company Charter: A company charter must be prepared to define rights, obligations, and management structures.

5. Are There Any Special Conditions?

While software development is an unrestricted sector under Vietnam’s investment laws, companies must still comply with several legal frameworks:

• Cybersecurity Law (2018): Ensure protection of data infrastructure and network security.
• Personal Data Protection Decree (2023): Comply with strict regulations on the collection, processing, and storage of personal data.
• Intellectual Property Law: Register and protect proprietary software and digital assets

In addition, companies offering cloud computing, telecommunications, or fintech services may require specific licenses from the Ministry of Information and Communications or the State Bank of Vietnam.

6. Step-by-Step Process to Establish a Software Development Company

Establishing a software development company in Vietnam involves a series of legal, administrative, and operational steps. Below is a detailed walkthrough of the procedure:

Step 1: Preparation of Investment Dossier

• Valid passport or ID of the foreign investors
• Lease agreement for the business location (must be a commercial space)
• Bank statement or financial documents proving investment capital
• Draft of the company’s charter (regulations)
• Detailed description of business lines and operational scope

It’s advisable to work with a local consulting firm to ensure these documents comply with Vietnamese regulations and are properly translated into Vietnamese if required.

Step 2: Apply for Investment Registration Certificate (IRC)

Submit the investment dossier to the Department of Planning and Investment (DPI) in the province or city where the company will operate. The DPI will assess the project’s legality and issue an IRC if approved.

Timeframe: Approximately 15 – 20 working days

Step 3: Apply for Enterprise Registration Certificate (ERC)

Once the IRC is granted, the next step is to register the enterprise and receive the ERC. This document officially registers your company as a legal entity in Vietnam.

• Details included: Company name, office address, legal representative, charter capital, business lines, shareholders, and company type
• Timeframe: 5–7 working days after submission

Step 4: Post-License Registrations and Compliance

After receiving both IRC and ERC, your company must fulfill several post-licensing requirements:

• Company Seal: Have the official company seal made and registered
• Public Disclosure: Publish company registration information on the National Business Registration Portal
• Tax Registration: Register with the tax department and obtain a digital signature
• Bank Account: Open an operational and capital account in a Vietnamese bank
• Capital Contribution: Contribute the registered capital within 90 days of ERC issuance
• Invoice Setup: Register and issue electronic invoices
• Labor Registration: Register employees and sign labor contracts with social insurance declaration

Step 5: Business Launch

With all legal procedures complete, your company can begin operating:

• Hire local or foreign employees
• Sign business contracts
• Start software development activities
• Comply with ongoing tax and reporting obligations

Step 6: Register Tax and E-invoice Accounts

With all legal procedures complete, your company can begin operating:

Register for tax identification at the local tax department.

Under Decree 123/2020/NĐ-CP and Circular 78/2021/TT-BTC, all businesses are required to register and implement an electronic invoicing (e-invoice) system.

As of June 1, 2025, Decree 70/2025/NĐ-CP introduces updates:

• Non-resident digital service providers may voluntarily register e-invoices.
• E-invoices with errors must be adjusted or replaced—cancellation is no longer permitted.
• The invoice issuance time must reflect actual delivery/transfer, not payment.

7. Frequently Asked Questions (FAQs)

Q1: How long does the setup process take?
A1: Around 4–6 weeks depending on the completeness of documents.

Q2: Do I need to live in Vietnam to run the company?
A2: No, but having a local legal representative or general director is recommended.

Q3: Can I hire foreigners to work in my company?
A3: Yes, but work permits are required for foreign staff (except for some exemptions).

Q4: What taxes will my company pay?
A4: Corporate Income Tax (CIT): 20%, Value Added Tax (VAT): 10%, Personal Income Tax for employees: progressive from 5%–35%.

Q5: Can I repatriate profits abroad?
A5: Yes, after fulfilling tax obligations and annual audits, profits can be legally transferred overseas.

Q5: Are there any tax incentives for software companies?
A5: Yes. Under Decree 218/2013/NĐ-CP and related guidance, qualified software companies may enjoy corporate income tax (CIT) incentives such as:

• 4 years of CIT exemption starting from the first year of taxable income
• 9 subsequent years of 50% CIT reduction
• Preferential 10% CIT rate for 15 years for eligible high-tech projects

Conclusion

Vietnam presents a strong opportunity for foreign investors in the software development sector. With 100% foreign ownership allowed, clear legal frameworks, and growing demand for digital services, it is the right time to consider setting up a tech business in the country.

If you are ready to launch your software company in Vietnam, contact Green NRJ – your trusted partner for company formation and legal compliance.