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 2025) and WTO service classifications.
Relevant business lines include:
- VSIC Code 62010: Computer programming activities
- VSIC Code 62020: Computer consultancy and management
- VSIC Code 62090: 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
Why Foreign Investors Choose Vietnam’s Software Industry
Foreign investors are increasingly turning to Vietnam’s software development industry thanks to its strong combination of talent, cost efficiency, and supportive policies. Each year, Vietnam produces more than 60,000 IT graduates, highly skilled in popular programming languages such as Java, Python, PHP, and .NET — providing a deep and competitive pool of IT talent for global software projects.
Another major advantage is Vietnam’s low software development cost. Both labor and office rental expenses are substantially lower than in neighboring countries like Singapore or Malaysia, and up to 70% cheaper than in the United States. This cost advantage enables foreign investors to scale operations efficiently while maintaining high-quality output.
The Vietnamese government also plays a key role in attracting investors through tax incentives for IT companies under the Law on Corporate Income Tax and its guiding decrees, as well as increasingly streamlined licensing procedures under the Law on Investment 2020 (as amended in 2025). Qualified software companies can enjoy up to four years of corporate income tax exemption, followed by nine years at a 50% reduction, and a preferential 10% tax rate for up to 15 years – a major policy benefit for tech investors.
Vietnam’s digital economy is another powerful driver. Projected to reach USD 45 billion by 2025, it positions the country as a regional gateway to ASEAN’s fast-growing tech markets. Meanwhile, intellectual property regulations have also improved significantly: as a member of WIPO, the Berne Convention, and TRIPS, Vietnam provides robust software IP protection to safeguard foreign investors’ innovations and digital assets.
Overall, this combination of young talent, cost competitiveness, government incentives, a booming digital market, and reliable IP protection makes Vietnam one of Asia’s most attractive destinations for foreign software investment.
Can Foreign Investors Own a Software Development Company in Vietnam?
Yes — foreign investors can fully own a software development company in Vietnam. Under Vietnam’s WTO Commitments and the Law on Investment 2020, the software development sector is open to 100% foreign ownership, meaning you don’t need a local partner or joint venture. This policy allows international investors to set up a software company in Vietnam with complete control over management, daily operations, and profit distribution. It’s one of the key reasons why Vietnam has become a top destination for tech startups and IT service providers expanding in Asia.
Requirements to Set up a Software Development Company
To successfully set up a software development company in Vietnam, foreign investors must meet several key legal and operational requirements.
First, your company needs a registered business address located in a commercial building or office space approved for business use. This address may be subject to inspection by the local authority. Investors can rent a private office, coworking space, or use Green NRJ’s virtual office service to simplify the registration process.
Next, there is no minimum charter capital required for software companies in Vietnam. However, the declared amount must be realistic and sufficient to cover essential expenses such as staff salaries, office rent, and IT equipment. For most startups, a capital of USD 10,000–50,000 is considered appropriate. Under the Law on Enterprises 2020 (as amended by Law No. 76/2025/QH15), the contributed capital must be fully paid within 90 days from the date the Enterprise Registration Certificate (ERC) is issued.
Each company must also appoint at least one legal representative who acts as the official signatory, manages compliance, and represents the company before Vietnamese authorities. This person can be either Vietnamese or foreign, but is advised to reside in Vietnam for at least 183 days per year or hold a temporary residence card. If the investor cannot be physically present in Vietnam, Green NRJ offers a Nominee Director Service to ensure compliance and smooth day-to-day operations.
While software development is an unrestricted business line under Vietnamese law, investors must still comply with essential regulations. The Cybersecurity Law (2018) governs data protection and information security. Decree 13/2023/ND-CP on Personal Data Protection sets strict requirements for collecting, processing, and storing personal data. The Intellectual Property Law (amended 2022) protects software source code and digital assets. Additionally, companies offering cloud, telecommunications, or fintech-related services may need sector-specific licenses from the Ministry of Information and Communications (MIC) or the State Bank of Vietnam (SBV).
Step-by-Step Process for 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
To register a software development company in Vietnam, the first step is to prepare a complete investment dossier. The required documents vary slightly depending on whether the investor is an individual or a foreign organization.
For Individual Foreign Investors:
Certified copy of the investor’s valid passport (notarized and legalized if issued overseas).
Bank statement or equivalent financial document proving sufficient investment capital.
Office lease agreement.
Draft of the company’s charter (Articles of Association).
Business plan or explanation of investment project, describing objectives, scale, capital structure, and expected efficiency.
For Foreign Organizational Investors (Companies, Corporations, or Funds):
List of founding shareholders and foreign shareholders (for joint-stock companies), or List of members (for limited liability companies with two or more members).
Certified copy of the organization’s Certificate of Incorporation, Business Registration Certificate, or Establishment Decision (legalized and translated into Vietnamese).
An authorization document appointing a capital representative or authorized person in Vietnam.
Certified copy of the authorized representative’s identity card or passport.
Bank statement or audited financial statement of the investor to prove financial capacity.
Office lease agreement, draft charter, and business plan similar to individual investors.
All documents in foreign languages must be translated into Vietnamese, notarized, and consularly legalized in accordance with Vietnamese law. If the investor authorizes a consulting firm (such as Green NRJ) to handle the registration process, a Power of Attorney (POA) must also be included in the dossier.
Step 2: Apply for Investment Registration Certificate (IRC)
Submit the investment dossier to the Department of Finance (DOF) in the province or city where the company will operate.
(Note: According to the new organizational restructuring under Official Letter No. 05/CV-BCĐTKNQ18, the function of issuing the Investment Registration Certificate has been transferred from the Department of Planning and Investment (DPI) to the Department of Finance (DOF) after the merger.)
The DOF will review the project’s legality and issue the 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.
New in 2025: Investors should note that the enterprise registration dossier (ERC application) must now include a Declaration of Beneficial Owner(s), as required under the amended Law on Enterprises. This declaration ensures that authorities can identify individuals who ultimately own or control the company, improving transparency and compliance.
- Timeframe: 5–7 working days after submission
Step 4 – Fulfill Post-Licensing Compliance
After obtaining the Enterprise Registration Certificate (ERC), your company must complete several post-licensing procedures before officially starting operations. These steps ensure your business is legally recognized for taxation, banking, invoicing, and labor management purposes.
| Compliance Item | What to Do | Purpose / Notes | Timeline |
|---|---|---|---|
| 1. Create the Company Seal | The company can design its own seal (round or square). No notification (registration) of the seal specimen to the authorities is required. | The seal is used for signing official documents, contracts, and bank procedures. | Within 3–5 days after ERC issuance. |
| 2. Publish Business Registration Information | Publish the company’s details (name, address, charter capital, legal representative, business lines) on the National Business Registration Portal. This step is usually filed automatically with the ERC application. | Required by Article 33 of the Law on Enterprises 2020. Failure to publish within 30 days may result in a fine of VND 10–15 million. | Within 30 days from ERC issuance. |
| 3. Tax Registration & Digital Signature Token | Register for a tax code (usually automatic with ERC issuance) and obtain a digital signature token for e-filing tax reports. | The digital signature is required to file VAT, CIT, and other tax declarations online. | Immediately after ERC. |
| 4. Open Capital and Operational Bank Accounts | Open a Direct Investment Capital Account (DICA) and an operational Current Account (CA) at a licensed Vietnamese bank. The capital account is generally mandatory for foreign-invested enterprises where foreign investors hold a controlling interest (typically 51% or more), and is used to receive charter capital from overseas and repatriate profits in compliance with State Bank of Vietnam regulations.. | The capital account is mandatory for foreign-invested companies to transfer capital from overseas and comply with the State Bank of Vietnam (SBV) regulations. | Within 07–10 days after ERC, depending on the bank’s internal procedures. |
| 5. Contribute Registered Capital | Transfer the declared charter capital from the investor’s overseas bank account to the company’s DICA in Vietnam. | The capital must be fully contributed within 90 days from the ERC date. Late contribution may lead to administrative penalties or forced capital reduction. | Within 90 days from ERC issuance. |
| 6. Register for E-Invoices | Register to use electronic invoices under Decree 123/2020/NĐ-CP and Circular 78/2021/TT-BTC via the General Department of Taxation portal. | Required before issuing any invoices to clients. Companies may use certified e-invoice service providers. | After completing tax registration. |
| 7. Register Employees & Declare Social Insurance | Sign labor contracts with employees, register them with the Social Insurance Department, and declare monthly contributions (social, health, and unemployment insurance). | Mandatory under the Labor Code 2019 and Law on Social Insurance 2024. | Before starting official operations. |
Step 5 – Business Launch
Once all registrations and compliance procedures are completed, your company is fully licensed to operate. You may hire employees, sign service contracts, develop software, and issue e-invoices to clients in Vietnam and overseas.
Tax Obligations & Incentives for Software Development Companies in Vietnam
For foreign investors looking to establish a software development company in Vietnam, understanding tax obligations and available incentives is essential.
Under the Law on Corporate Income Tax No. 67/2025/QH15, corporate income tax (CIT) rates are applied progressively as follows:
- 15% CIT rate applies to enterprises with total annual revenue not exceeding VND 3 billion;
- 17% CIT rate applies to enterprises with total annual revenue exceeding VND 3 billion but not exceeding VND 50 billion;
- 20% CIT rate (standard rate) applies to enterprises with total annual revenue above VND 50 billion.
The value-added tax (VAT) rate is 10% for most goods and services. Software products are VAT-exempt when supplied domestically and subject to 0% VAT when exported, under Vietnam’s current VAT regulations on software products and services.
Employees are subject to personal income tax (PIT) at a progressive rate from 5% to 35%, and profits may be legally repatriated abroad following the annual audit and full tax clearance.
However, if your business qualifies as a software production or high-tech project, you may be eligible for attractive tax incentives. Eligible activities typically include software manufacturing, development of software products/services, and export-oriented IT operations. The incentives often include:
Full CIT exemption for the first 4 years from the year you begin to generate taxable income;
50 % reduction in CIT for the next 9 years (effectively 5 % tax if the preferential rate is 10%);
A preferential CIT rate of 10% for up to 15 years for the portion of income from eligible projects.
To benefit from these incentives, the company must be recognized as a new investment project registered under “software production” or related IT activities, and the products or services must be listed in the official Catalogue of Software Products and Services issued by the Ministry of Information and Communications. In addition, the company must maintain separate accounting records for income derived from eligible software activities, as only those earnings qualify for the preferential rates. Projects located in high-tech parks, software development zones, or information technology centers may also enjoy extended tax incentives and priority access to government support programs.
It is important to note that under the 2025 amendment to Vietnam’s Corporate Income Tax regulations, the government has strengthened documentation and compliance requirements for incentive claims. Authorities will require clear proof that the project’s income originates from eligible software development activities. Therefore, investors should ensure their business lines, project scope, and accounting structure are accurately defined from the beginning.
By properly structuring your business and maintaining transparent compliance, foreign investors can legally minimize tax exposure and maximize profitability when setting up a software development company in Vietnam.
