Capital concepts Total investment capital: Project investment capital is the total capital sources contributed to an investment project to implement that project. Investment capital includes investors’ contributed capital and mobilized capital. Contributed capital for project implementation: The amount of capital that an enterprise contributes to a specific investment project. The amount of capital contributed to the implementation of this investment project may be smaller, larger or equal to the charter capital of the enterprise. Charter capital: is the total value of assets contributed or committed to contribute by members when establishing a limited liability company or a partnership; is the total par value of shares sold or registered for purchase upon establishment of a joint-stock company Legal capital: The minimum amount of capital required by law to establish an enterprise. Pursuant to Vietnam’s Enterprise Law 2020, Vietnam has no regulations on how much an investor must have when registering a project operation and setting up a business in Vietnam. This is a very open regulation, proving that Vietnam highly encourages foreign investors to invest in Vietnam, a potential market for investors in the world. However, when implementing investment projects, investors often consult at VPLS/law firms to consult on the appropriate level of investment capital. To determine the appropriate level of investment capital, it can be based on the following basic factors: First, the investor’s financial ability and intention on investment capital. Second, the company’s business lines in Vietnam. Some conditional business lines require a minimum capital to set up a business such as: Banking, finance, insurance, real estate business, air transportation business, audit services … However, foreign investors note that the capital level to register to invest in Vietnam must be suitable to the nature and scale of the investment project. Third, project scope and scale: The larger the scope and scale of the project, the higher the investment capital and costs. Although the law does not stipulate the minimum investment level in each locality, but in accordance with the planning of each locality, many localities encourage projects with appropriate investment capital. This matter, investors who want to invest in Vietnam should find out first and consult a lawyer. Fourth, estimated costs when the project goes into operation: Including personnel costs; Cost of equipment, machinery and office supplies; Venue rental costs… These costs depend on the size of the project to determine the appropriateness. Fifth, how much is the project signed with the partners worth? Sixth, Taxes, fees and charges: When an investor’s project is licensed by the Vietnamese state agency to operate, that project means that it will have to pay some taxes and fees. Each project, based on the criteria of capital, business lines, business areas … will apply different taxes and fees with different rates of collection. The company’s charter capital will be a basis for the Government of Vietnam to calculate the license tax applicable to each business. License tax is an annual tax that businesses must pay every year since the business is established, even if it has not had any business activities. License tax is calculated based on the registered charter capital. For companies with charter capital of 10 billion VND or less, the annual license tax payable is 2 million VND. For a company with a charter capital of more than 10 billion VND, you will have to pay license tax of 3 million VND/year. As you know, when an investor wants to invest in a project and establish a business in Vietnam, a lawyer needs to make a project registration document for the investor. We need to develop a project proposal for the investor to submit to the investment registration agency. In it, we need to present the legality, feasibility and effectiveness of foreign investors’ investment projects in Vietnam. In order to ensure the feasibility and effectiveness of the project and prove the feasibility and effectiveness of the project to the investment registration agency, one of the important factors to prove and convince the registration agency is to prove it. Signing an investment license for an investor is the amount of investment capital. Therefore, it is necessary to give an appropriate amount of investment capital. Example: For investment projects related to commerce and services, the appropriate investment capital is about 50,000 USD. This is a reasonable amount of capital to be able to build a feasible and effective project proposal. This is also a reasonable level of investment capital for new investors when initially wanting to explore the Vietnamese market. Because, after establishing a business in Vietnam, investors see that the potential Vietnamese market, the business activities and lines of the enterprise can develop in Vietnam, the investors can completely increase their working capital. rate at any time. Regarding the time limit for making capital contribution after establishing an enterprise in Vietnam: According to Vietnamese law, after establishing an enterprise, within 90 days from the date of issuance of the Certificate of Business Registration, investors must make a full contribution of the committed capital amount recorded in Investment Registration Certificate and Enterprise Registration Certificate. In case, the investor cannot contribute enough capital
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Capital concepts Total investment capital: Project investment capital is the total capital sources contributed to an investment project to implement that project. Investment capital includes investors’ contributed capital and mobilized capital. Contributed capital for project implementation: The amount of capital that an enterprise contributes to a specific investment project. The amount of capital contributed to […]
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