Establishing a foreign-invested enterprise operating in the information technology field

At present, alongside the trend of digital transformation and the strong development of the digital economy, the information technology sector in general has become one of the most attractive industries for foreign investors in Vietnam. With advantages such as a young workforce, competitive costs, and an increasingly improved investment environment, Vietnam is regarded as a promising destination for software projects. Therefore, investors still need to have a clear understanding of the legal regulations related to market access conditions, the scope of operations, and investment procedures. Let’s explore these issues together in this article.

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1. Definition related to foreign-invested enterprises operating in the information technology sector

1.1. Definitions related to information technology activities

Pursuant to Clause 1, Article 4 of the Law on Information Technology 2006:

“Information technology means a collection of scientific methods, technologies, and modern technical tools for the production, transmission, collection, processing, storage, and exchange of digital information.”

Furthermore, pursuant to Clause 12, Article 4 of the Law on Information Technology 2006:

“Software means computer programs described by systems of symbols, codes, or languages used to control digital devices to perform specific functions.”

Accordingly, software constitutes the core product of information technology activities, and the development and production of software fall within the scope of information technology activities as prescribed by law.

1.2. Foreign direct investment enterprises

Pursuant to Clauses 19 and 22, Article 3 of the Law on Investment 2020:

A foreign-invested economic organization is an economic organization with foreign investors as its members or shareholders.

A foreign investor is an individual holding foreign nationality or an organization established under foreign laws that conducts investment and business activities in Vietnam.

Accordingly, an economic organization having members or shareholders who are foreign individuals or organizations established under foreign laws and conducting investment and business activities in Vietnam shall be considered a foreign-invested economic organization or a foreign-invested enterprise.

2. Market access conditions for Foreign investors conducting business in the information technology sector in Vietnam

– In general, information technology service activities are not included in the List of industries and trades with conditional market access for foreign investors under Appendix I issued together with Decree No. 31/2021/NĐ-CP. Therefore, foreign investors are required to consider and comply with any applicable restrictions (if any) under the international commitments to which Vietnam is a member.

Under Vietnam’s WTO Schedule of Specific Commitments on Services, the following services are opened to foreign investors:

– CPC code: 841 – Consultancy services related to the installation of computer hardware: No limitation on foreign ownership ratio;

– CPC code: 842 – Software implementation services: No limitation on foreign ownership ratio;

– CPC code: 843 – Data processing services: No limitation on foreign ownership ratio;

– CPC code: 844 – Database services: No limitation on foreign ownership ratio;

– CPC code: 845 – Maintenance and repair services of office machinery and equipment, including computers: No limitation on foreign ownership ratio;

– CPC code: 849 – Other computer-related services: No limitation on foreign ownership ratio.

Accordingly, foreign investors may invest in Vietnam in the information technology services sector and establish enterprises with 100% foreign ownership.

However, it should be noted that market access conditions may vary depending on the investor’s nationality, based on the international treaties to which both Vietnam and the investor’s home country are parties. In cases where the investor’s home country is not a member of any international treaty containing relevant commitments by Vietnam, the principles on market access restrictions for foreign investors under Clauses 3 and 4, Article 17 of Decree No. 31/2021/NĐ-CP shall apply.

3. Procedures for establishing a Foreign-invested enterprise operating in the information technology sector

To establish a foreign-invested enterprise conducting information technology services in Vietnam, investors are required to carry out the following steps:

Step 1: Apply for an Investment Registration Certificate for the investment project in Vietnam at the Department of Finance of the province/city where the enterprise’s head office is located. Investors should pay attention to financial capacity requirements to ensure the implementation of the investment project in Vietnam.

Step 2: Register the establishment of a foreign-invested company conducting information technology services with the provincial-level business registration authority where the enterprise’s head office is located.

Note: Under the amended Law on Investment 2025, which is expected to take effect in 2026, foreign investors will be permitted to establish an enterprise prior to carrying out procedures for obtaining an Investment Registration Certificate for the investment project in Vietnam; however, market access conditions must still be satisfied during the enterprise establishment process

4. Matters to be noted after establishing a Foreign-invested enterprise in the information technology sector

First, the enterprise must engrave its seal, install a company signboard, and complete initial tax registration procedures, including registration for the use of electronic invoices in accordance with applicable laws after establishment.

Second, the enterprise must open and use a Direct Investment Capital Account (DICA). Pursuant to Clause 1, Article 5 of Circular No. 06/2019/TT-NHNN, foreign direct investment enterprises established in the form of investment to establish an economic organization and granted an Investment Registration Certificate are required to open and use a direct investment capital account. All capital contribution transactions and other receipts and expenditures must be conducted through the DICA in accordance with foreign exchange management regulations under Articles 6 and 7 of Circular No. 06/2019/TT-NHNN.

Third, the enterprise must conduct business activities strictly in accordance with the contents stated in its Enterprise Registration Certificate and Investment Registration Certificate. In addition, the enterprise is required to perform periodic investment activity reporting obligations and comply with other relevant provisions of Vietnamese law.

This article was prepared by Vy Nguyen with consultation from Lawyer Y Huynh.

This article is provided for general informational purposes only and does not constitute legal advice for any specific case. The legal regulations cited herein are effective as of the time of publication but may have been amended, supplemented, replaced, or expired at the time of readers’ reference. Therefore, readers are advised to seek advice from qualified lawyers before applying the information contained herein.

For any inquiries or needs for related legal services, please contact CBI Law Company Limited for further assistance.