QUESTION

I am Italian. I want to open a restaurant with foreign investment in Ho Chi Minh City, Vietnam. What do I need to prepare for this? What documents are required? How much tax do I need to pay, and where and how do I pay it? What are any tax deductions (if applicable)? Please guide me.

REPLY

1. What you need to open a foreign-invested restaurant in Vietnam

Because you are a foreigner (Italian), you cannot register a business as a sole proprietorship (only for Vietnamese citizens). Instead, you need to establish a separate business. foreign invested enterprise (For example: Limited Liability Company or Joint Stock Company). Here are the basic steps:

Step 1: Apply for an Investment Registration Certificate (IRC)

PurposeThis is the license that allows you to invest in Vietnam.
Granting agencies: Local Department of Planning and Investment (Phu Quoc belongs to Kien Giang province, Da Nang is a centrally-governed city, Nha Trang belongs to Khanh Hoa province).
Processing TimeApproximately 15-30 business days.
Documents need to be prepared:
- Application for Investment Registration Certificate (using the prescribed form).
- Investment project proposal (including: description of restaurant size, location, investment capital, business plan).
- A certified copy of your passport (notarized).
- Financial statements or documents proving financial capacity (e.g., bank statements, personal assets).
- Lease agreement (if applicable) or documents proving the right to use the business premises.

Step 2: Establish the business (Apply for a Business Registration Certificate - ERC)

After obtaining IRCs, you need to register your company.

Granting agencies: Local Department of Planning and Investment.
Processing TimeApproximately 3-5 business days.
Documents need to be prepared:

- Business registration application form (template provided).
- Company charter (drafted by you, outlining the company's operations).
- A certified copy of your passport.
- Investment Registration Certificates (IRCs) have been issued.
- Information regarding capital contribution (the minimum proposed capital is approximately 300 million VND – equivalent to ~12,000 USD, depending on the scale).

Step 3: Obtain the necessary sub-licenses.

Once you have a company, you will need the following licenses to operate the restaurant:

1. Food safety and hygiene certificate:

- Granting agencies: Local Food Safety and Hygiene Department.
- Profile:

- - Application for a certificate.
  - Business registration certificate (copy).
  - Food processing flowchart.
  - Employee health certificate.
- EVENT DATE:: 10-15 days.

2. Fire safety permit (if the restaurant has a large area):

- Granting agenciesLocal Fire and Rescue Police.
- Profile:
  - Application for a license.
  - Fire protection system design drawings.
  - Fire safety inspection report.
- EVENT DATE:: 7-15 days.

3. Retail liquor license (if the restaurant serves alcohol):

- Granting agencies: Economic Department of the District/County People's Committee.
- Profile:
  - Application form.
  - Certificate of business registration.
  - Contract with the wine supplier.
- EVENT DATE:: 7-10 days.

Step 4: Register for a tax code

After receiving your Business Registration Certificate, your company will be automatically assigned a tax identification number. You need to register for an electronic tax account at Local Tax Department to declare and pay taxes.

Step 5: Apply for a visa and work permit (if you want to work in Vietnam)

If you want to directly manage the restaurant:

- Business visaPlease apply at the Vietnamese Embassy in Italy or the Vietnam Immigration Department.
- Work permitYour company will provide the guarantee and submit the application to the Department of Labor, War Invalids and Social Affairs.
- ProfilePassport, photograph, criminal record certificate, health certificate, diplomas/certificates (if any).

2. Types of taxes you need to pay

To open and operate a restaurant with foreign investment in Vietnam, you must pay the following taxes:

1. Business license tax:

- This is a fixed annual tax, based on the company's registered capital:

- - For capital under 10 billion VND: 2 million VND/year.
  - For capital exceeding 10 billion VND: 3 million VND/year.

- Deadline for submission: Before January 30th of each year.

2. Value Added Tax (VAT):

- Tax rate: 10% on revenue (for food and beverage services).
- Calculation method: VAT = Revenue x 10%.
- Submissions can be made monthly or quarterly, depending on the size of the business.

3. Corporate Income Tax (CIT):

- Tax rate: 20% on profit (revenue – expenses).
- Submissions are made quarterly, and final settlements are made at the end of the year.

4. Personal Income Tax (PIT):

- This applies to each Vietnamese employee you hire:

- - Tax rates are progressive, ranging from 5% to 35%, depending on salary level.
  - The company is responsible for deducting and remitting the tax on behalf of the employee.

5. Other taxes (if any):

- Environmental tax (if using plastic packaging).
- Import tax (if you import materials from Italy).

3. Potential tax breaks

Vietnam has several tax incentives for foreign businesses that you can take advantage of:

VAT reduction:
- From July 1, 2023 to December 31, 2025 (according to Decree 44/2023/ND-CP), the VAT rate will be reduced from 10% to 8% for certain services, including food and beverage businesses. This helps reduce the tax costs you have to pay.
Corporate income tax incentives:
- If your restaurant is located at special economic zone (like Phu Quoc), you can get:
  - Corporate income tax exemption for the first four years.
  - 50% reduction in corporate income tax for the next 9 years.
  - Preferential tax rate of 10% for 15 years.
- Conditions: Investment in encouraged sectors (tourism and food services are usually preferred).
Business license tax exemption:
- Newly established businesses are exempt from business license tax in their first year.
Agreement to avoid double taxation:
- Vietnam and Italy have signed a Double Taxation Avoidance Agreement (if you transfer profits to Italy). You need to check the details with the Italian tax authorities to apply.

See more: Tax policies and investment incentives in Vietnam for foreign direct investors.

4. Detailed instructions for DIY

Here's a process you can follow yourself:

Prepare in advance

Identify suitable locations for renting premises in Phu Quoc, Da Nang, and Nha Trang (signing long-term lease agreements).
Develop a business plan (restaurant size, investment capital, menu).
Capital preparation: A minimum of 300 million VND (~12,000 USD) per location is required, excluding operating costs.

Follow the steps

Submit an application for IRCs.:
- Download the application form from the Department of Planning and Investment's website (for example, dpi.kiengiang.gov.vn for Phu Quoc).
- Submit directly or via the online public service portal (dangkyquamang.dkkd.gov.vn).
Business registration:
- After obtaining the IRCs, submit the application to the same Department of Planning and Investment.
Requesting sub-licenses:
- Contact the Food Safety and Hygiene Department, the Fire Prevention and Control Police, and the local Economic Department to submit your application.
Tax registration:
- Register for an account at thuedientu.gdt.gov.vn to file your tax return.
Recruitment and operations:
- Hire staff, purchase equipment, and start your business.

Important note

LanguageDocuments must be in Vietnamese. You can hire a translation service if needed.
EVENT DATE:The total time for all procedures is 1-2 months.
Treatment costThe legal procedure costs approximately 20-50 million VND (~800-2,000 USD), depending on the locality.

If you need more detailed information or sample application forms for opening a foreign-invested restaurant in Vietnam, please contact us. Contact Expertis now!

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How to open a restaurant with foreign investment in Vietnam?