What to Do After Setting Up a Business in Vietnam: A Case Study

Case Study: Navigating Business Challenges in Vietnam - A Real Entrepreneur’s Journey

Introduction

Starting a business in a new country is both exciting and daunting. Vietnam, one of Southeast Asia’s most dynamic and rapidly growing markets, attracts many entrepreneurs eager to seize new opportunities. However, as many quickly discover, getting your business registered is just the beginning—the real challenge lies in navigating the local business landscape.

In this case study, we share the real-life story of one of our key clients, a marketing entrepreneur from another Southeast Asian country (we will refer to him as "Jay") Their journey highlights the common pitfalls of starting a business in Vietnam and offers invaluable lessons to help you avoid similar mistakes.

The Early Days: Optimism Meets Reality

When our client decided to establish a business in Vietnam, they were full of enthusiasm. Having navigated administrative challenges in their home country, Jay assumed it would be straightforward to set up shop here.

"I thought that once I had my business license, I’d be good to go. I didn’t realize how much more needed to be done," Jay admitted.

This optimism soon turned into frustration as they encountered unexpected obstacles. The first hurdle was relying on advice from friends and vendors who claimed to know the local business environment but lacked practical experience.

Key Mistake #1: Relying on Unverified Advice

Initially, the entrepreneur relied on friends and vendors for guidance on registration procedures. Unfortunately, these sources lacked specific knowledge about Vietnamese regulations, leading to delays and confusion.

Key Mistake #2: Focusing Solely on the Business License

The client focused heavily on obtaining the business license, thinking it was the final step. They overlooked essential processes, like securing the correct ownership documents and registering for tax obligations.

Overcoming Operational Challenges

After securing the business license, Jay assumed operations could begin. However, he quickly realized that the lack of basic operational setups was holding them back.

Problem #1: Ownership Documents Not Properly Recorded

Although Jay had acquired a local business, the ownership transfer wasn’t correctly completed. During an inspection by the Investment Department, Jay couldn’t present the necessary paperwork because it was stored abroad!

"I didn’t think keeping documents overseas would be a problem until the inspectors asked for proof on the spot," Jay admitted over a few drinks.

Problem #2: Missing a Tax Token

The client also discovered they lacked a Tax Token, a critical component for online tax management in Vietnam. Without it, issuing VAT invoices and checking tax status were impossible.

"Nobody told me I needed a Tax Token" is a very common phrase we hear from a lot of our other clients.

Problem #3: Tax Filing Misconceptions

Friends had advised the client that, since the business wasn’t generating income, there was no need to file tax reports. This was incorrect—quarterly filings are mandatory regardless of revenue, leading to fines for missed submissions.

Ignoring tax reports will both time and money. Zero income doesn’t mean zero reporting.

Lessons Learned: What You Can Do Differently

Through this challenging process, Jay gained valuable insights. Here are the key takeaways to help you avoid similar pitfalls:

1. Always Consult Local Experts:

Find consultants with proven experience in the Vietnamese market. Avoid relying solely on non-local vendors or unverified advice.

2. Focus on More Than Just the License:

Ensure all supporting documents, including ownership transfers and tax registrations, are in place. The license is just one part of the puzzle.

3. Secure Your Tax Token Early:

Make it a priority to obtain a Tax Token during the registration process. Without it, managing your tax obligations can become an administrative nightmare.

4. File Taxes Regardless of Revenue:

Even if your business has zero income, you must file quarterly reports. Missing these can result in fines and legal issues.

5. Centralize Legal Documents Locally:

Keep all critical paperwork filed in Vietnam. Storing documents overseas can cause severe complications during inspections.

Step-by-Step Guide to Avoiding Pitfalls

1. Plan Your Documentation: Prepare ownership, tax, and compliance papers before initiating business operations.
2. Hire a Local Advisor: Ensure they have a track record in helping foreign businesses set up in Vietnam.
3. Obtain Your Tax Token Early: Apply during the initial registration phase to avoid delays.
4. Keep Legal Documents On-Site: Store official copies within Vietnam to meet inspection requirements.
5. Schedule Regular Tax Filings: Set reminders for quarterly reports to avoid penalties.

Final Thoughts: Building a Strong Foundation

Starting a business in Vietnam can be rewarding, but it requires careful planning and reliable local support. As our client’s journey shows, early mistakes can create long-lasting challenges. However, with the right guidance and proactive planning, you can set your business on a successful path.

Need Assistance?

If you’re planning to start a business in Vietnam, don’t make the same mistakes. The team at United Consulting can guide you through the setup process, ensuring all requirements are met. Contact us today to get started!