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

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.

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.

Requirements to Set up a Software Development Company

1. Business Location – A Valid Commercial Address is Mandatory

To register a software development company in Vietnam, you must provide a legal business address. This address must be located in a commercial building or office space that is approved for business use.

• Foreign investors can rent an office, use a coworking space, or opt for a virtual office service (such as those offered by Green NRJ) to fulfill this requirement.

• The chosen address will be stated on the business registration certificate and may be subject to verification by authorities.

2. Charter Capital – No Minimum, But Must Be Sufficient

There is no fixed minimum charter capital required to open a software company in Vietnam. However, the declared capital must be:

• Realistic and sufficient to support the planned business operations, such as salaries, office rent, equipment, and IT infrastructure.

• For most startups in the software industry, a charter capital of USD 10,000 to USD 50,000 is considered appropriate, depending on the size and scope of the company.

• Foreign investors are required to contribute the full charter capital within 90 days from the date of issuance of the Enterprise Registration Certificate (ERC).

Vietnam for ease of management and compliance.

3. Legal Representative – Residency Requirement and Responsibilities

Under Vietnamese law, every foreign-owned software development company must appoint at least one legal representative. This individual is legally responsible for the company’s entire operation, including signing contracts, handling tax and labor matters, and representing the business before government authorities.

Who Can Be a Legal Representative?

• The legal representative can be either a Vietnamese citizen or a foreign national.

• A company may appoint one or multiple legal representatives, depending on its internal structure and management needs.

Residency Requirement – Minimum 183 Days per Year

For practical purposes and legal compliance, it is strongly recommended that the legal representative:

• Reside in Vietnam for at least 183 days per year, or

• Have a long-term residence permit or temporary residence card in Vietnam.

This is crucial because:

• A legal representative who is absent from Vietnam for more than 183 days/year may be considered as not having tax residency, which can complicate tax filings, bank account operations, and legal representation.

• Many authorities (e.g., tax departments and banks) require that the legal rep be physically present or reachable for signing documents, attending meetings, and receiving official correspondence.

What If the Investor Cannot Reside in Vietnam?

If the foreign investor does not plan to reside in Vietnam, there are two common solutions:

1. Appoint a Vietnamese legal representative (e.g., a trusted local partner or employee).

2. Use a nominee director service (such as that offered by Green NRJ), where a professional local director is appointed as the legal representative to fulfill the legal and administrative duties on behalf of the foreign owner.

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.
• Decree 13/2023/ND-CP on 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 Software Development company registration

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 obligations before officially operating:

• 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
• Electronic Invoice Registration: Register and implement an electronic invoicing (e-invoice) system in compliance with Decree 123/2020/NĐ-CP and Circular 78/2021/TT-BTC.
• Invoice Setup: Register and issue electronic invoices
• Labor Registration: Register employees and sign labor contracts with social insurance declaration.

🔎 Regulatory Note:
As of June 2025, proposed amendments under Decree 70/2025/NĐ-CP may soon revise the e-invoicing framework. Potential changes include:

• Voluntary registration for e-invoices by non-resident digital service providers.
• Requirements for adjusting or replacing e-invoices with errors, rather than cancellation.
• Clarification that the invoice issuance time must reflect actual delivery/transfer of goods or services, not solely the payment time.

Investors should monitor official announcements from the Vietnamese government for the exact promulgation and effective dates of any new decrees or circulars regarding e-invoices.

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

7. Frequently Asked Questions (FAQs)

Q1: How long does the setup process take to set up a software development company in Vietnam?
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 software development company?
A3: Yes, but work permits are required for foreign staff (except for some exemptions).

Q4: What taxes will the software development company be liable for?
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.

Q6: Are there any tax incentives for software development company?
A6: Yes. Under the Investment Law 2020 and its guiding decrees and circulars, 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
• Note: Eligibility for these incentives is subject to specific conditions outlined in the law.

Q7: What is the process for software development company registration in Vietnam?
A7: The registration process involves submitting an investment dossier to the Department of Planning and Investment (DPI) to obtain an Investment Registration Certificate (IRC), followed by applying for the Enterprise Registration Certificate (ERC). After receiving both certificates, the company must complete post-registration procedures such as tax registration, obtaining a company seal, and opening a corporate bank account.

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.