Un Espresso, Per Favore

Dear Marijn,

I used to worked and lived in Hoi An with my family before moving back to Italy where we currently reside. Now that our children have moved out to attend universities, my wife and I often daydream about returning to Hoi An. We would love to open a small Italian coffee shop where people can listen to good music, drink Italian coffee and sample specialties from Italy. We would like to know the cost involved in realizing our dream.

I completely understand that you would like to have an idea about the cost of doing business in Vietnam before actually making your move to this beautiful part of the world. Needless to say, opening a coffee shop will involve various costs: securing a good location, importing products and the machines, purchasing furniture, hiring of staff, etc. However, as a lawyer, I can only give you insight on the administrative side of things. A good starting point for any foreigner interested in investing in Vietnam is the “service commitments” that Vietnam agreed to when it became a member of the World Trade Organization in 2007. Vietnam committed to opening up its services market, sector by sector, to foreign investment. For the hotel and restaurant sector, Vietnam agreed to pave the way for foreign investors after a transition period of eight years, during which the provision of services by foreigners needed to be linked with parallel investment in hotel construction, renovation, restoration or acquisition.

Now, more than eight years down the line, there should be no more restrictions for foreigners like you who want to open a coffee shop. Having cleared that hurdle, the two most important laws for you to look at are the Law on Investment and the Law on Enterprises. In an effort to improve the business climate in Vietnam and to encourage foreign investment, the government has recently renewed these two new laws.

As of July 1, 2015, investors need to obtain two licenses: first, they need to present and register their investment project with the Vietnamese authorities in order to obtain a investment registration certificate (IRC). The second step is to establish an enterprise for the implementation of a project, which will grant you an enterprise registration certificate (ERC). Obtaining the IRC is free and the ERC will only set you back VND200,000. Please keep in mind that you may need to spend some additional money on the translation, legalization and/or notarization of the required documents.

Vietnamese law does not impose minimum capital requirements but it is important to know that the authorities may look at the amount of money that you are planning to invest in order to gauge the seriousness of your intentions and the feasibility of your project.

After obtaining your IRC and ERC, you will need to spend some money on post-licensing procedures: 1) publishing your enterprise registration on the National Business Registration Portal, VND300,000; 2) obtaining your company seal and registering it with the Business Registration Office, around VND400,000; 3) registering the VAT calculation method of your choice and paying the business license tax, VND1 million; and 4) opening a foreign investment capital account and a current bank account, usually free of charge. You can purchase VAT invoices from the tax authorities for around VND200,000 per book.

For your specific business, you will need to apply for a food safety and hygiene certificate, which will cost around VND150,000. If you would like to serve your customers some Italian amaretto with their coffee, an additional license for that is not required unless you intend to open a separate store selling bottles from wholesalers to your customers.

As you see, when adding all these administrative costs up, starting your own business in Vietnam doesn’t have to be very expensive. I hope that this information will bring you one step closer to opening the coffee shop of your dreams. Best of luck to you and your wife and you may see me dropping by in Hoi An for some tiramisu!

Every month, Marijn Sprokkereef answers legal questions from Oi readers. If you have any legal question you want answered, send them to legal@oivietnam.com.

BIO: After having obtained legal experience in his home country the Netherlands and in Cambodia, Marijn Sprokkereef is currently an associate of Audier & Partners. Audier & Partners is an international law firm with presence in Vietnam (Ho Chi Minh City and Hanoi), Myanmar and Mongolia, providing advice to foreign investors on a broad range of legal issues.

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