The main law covering the creation of foundations in Vietnam is the Non-Profit Act. Also known as non-profit or not-for-profit entities, these are organizations that primarily engage in fund-raising for charitable, religious, cultural, social, educational, or other similar reasons.
Below, our company formation agents in Vietnam explain the main characteristics of foundations. They can also assist those who want to set up such organizations.
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Types of non-profit organizations in Vietnam
According to the law, there are several types of foundations available for registration in Vietnam. These are:
- the non-governmental organization or NGO;
- the charitable organization;
- foundations;
- religious organizations.
Charitable organizations are further divided into:
- social funds;
- charity funds.
The main objective of social funds, which are set up and run on a non-profit basis, is to support and promote culture, education, healthcare, sports, and research, as well as agricultural and rural development.
Charity funds are established and run on a non-profit basis with the primary goal of assisting in the relief efforts for those affected by serious catastrophes, such as fires, illnesses, or natural disasters, as well as other people in need of social aid.
It is also possible to set up a foundation in Vietnam as a foreigner, however, the conditions in this case are different.
You can rely on our company registration advisors in Vietnam for support with the incorporation of a local or foreign-owned NGO.
How to register a foreign NGO in Vietnam
To establish presence in Vietnam, a foreign NGO must apply for the foreign NGO status. For this purpose, the foundation must notify the Committee for Foreign NGO Affairs (COMINGO) and the Ministry of Foreign Affairs before entering Vietnam. These government organizations will determine whether the organization respects the country’s social development goals and adheres to the legal criteria.
The types of documents that the government issues to authorize an NGO in Vietnam arethe representative office certificate of registration and the certificate of operations and registration.
When applying for either the representative or the operation registration certificate, Vietnamese NGOs must meet the following criteria:
- possess legal person status as defined by domestic law;
- have operational charters and rules that are in keeping with Vietnam’s requirements and interests;
- have specific social purposes for the next 3 years;
- appoint a local representative.
Do not hesitate to contact our local agents if you need more information in how to set up a foundation. We can also help you open a company in Vietnam, if you are interested in profit-oriented activities.
Special operational conditions for foreign foundations in Vietnam
When setting up foreign foundations in Vietnam, there are certain conditions that apply to them only. Here are the most important to consider:
- they must have their offices in Hanoi, Danang, or Ho Chi Minh City, even if they carry out their activities in other parts of the country;
- they must adhere to the local regulations of the city where their offices are based;
- when working under an operating certificate, the validity of this permit is of maximum 3 years;
- when working as a representative office, the validity of the license is maximum 5 years;
- they cannot accept donations from Vietnamese citizens and companies.
Given these important aspects, we recommend working with our company registration agents in Vietnam to ensure all compliance matters are respected.
Compliance requirements for non-profit organizations in Vietnam
Decree No. 58/2022 is the main law providing for the creation of local and foreign foundations in Vietnam. It also covers the compliance requirements that such entities must respect. Specifically, they are required to file an activity report on their operations every 6 months with the People’s Committee. The report must meet the following conditions:
- the principle of transparency;
- the principle of respecting local regulations related to the types of activities they undertake.
Some of the compliance requirements cover the finances of NGOs. From this point of view, they must put in place a financial management system through which:
- they prevent the misuse of funds;
- they prevent financial wrongdoings.
For this purpose, all foundations must have Vietnamese bank accounts through which financial transactions are completed.
In terms of financial benefits, foundations that carry out charitable operations can benefit from:
- preferential import duties;
- the possibility to make payments in both VND and foreign currencies.
Furthermore, simplified procedures related to the issuance of work permits for foreign employees are in place. Also, self-termination of the foundation is possible when it ceases its activities.
Our company formation specialists in Vietnam are at your service if you want to set up a foundation for charitable purposes.
Taxation of NGOs in Vietnam
Income obtained from various types of charitable and social purposes is eligible for tax benefits under the Enterprise Income Tax Law (2008) and the Individual Income Tax Law (2007). Additionally, Vietnamese NPOs are given tax breaks and advantages outlined in laws and rules governing value-added tax (VAT).
Our accountant in Vietnam is at your disposal if you have an NGO and need assistance in obtaining all the tax benefits arising from such activities.
How long does it take to register a foundation in Vietnam?
If you want to open a foundation in Vietnam, here is a timeline you can expect:
- the approval procedure in the case of foreign NGOs takes about 30 working days;
- then, the licensing process takes another 40 days;
- in case of delays due to lack of documents or other compliance matters, the reassessment procedure takes 25 days.
NGO activities in Vietnam
Vietnam is a country that relies on the activities of local and foreign foundations, and according to the recent news:
- 436 foreign NGOs from 29 states around the world have had activities in Vietnam in the first half of 2022;
- during this time, they have supported projects worth USD 108.5 million;
If you want to open a foundation in Vietnam and need guidance, do not hesitate toaddress our company incorporation experts.