Following Part 1 on the recommendations to Investor related to the investment in Vietnam, in this article, we would like to draw your further attention on the choice of head office address. CDLAF believes that the below analysis would help the Investor in having general ideas on the must do actions and key things that you should check in the process of finding office and project location.

1. How the working place creates economic value

In this article, CDLAF mentions about the advantage on tax incentives, but not other factors of convenient location or customer attraction, etc. Having tax incentives will help enterprise reducing operational costs thanked to the lower corporate income tax contribution.

The Government of Vietnam have applied many preferential tax policies, in which, the enterprises operating in some special industries or locations, such as in high-tech parks, industrial parks, economic zones, difficult economic areas, etc would enjoy a preferential tax rate (10%) lower than the standard tax rate (22%) or the scheme on tax exemption and reduction for a certain period.

Thus, the Investor needs to determine if the expected business lines, the desired project implementation place is located at the geographical areas that are being entitled to any incentive, and estimate the annual tax obligations.

2. What location cannot be used as a head office address?

Condominiums and apartments:

We can see many enterprises have placed the offices in apartments or mixed-use buildings, however, not all of them are allowed for having the lawful head offices.

The Investor must check on the related legal document issued by the competent authority to the lessor if the purpose of use of the intended rental place has been recorded as “residential” or “multi-function apartment” – a form of apartment that has both functions of living and working as an office. It is unlawful if the Investor rents the residential apartment for office purpose, and the business registration agency will reject the Investor’s establishment application dossier accordingly.

Restricted business areas:

Apart from the apartments, there are some prohibitions or restrictions of business lines or industries would be applied at the specific sites. Accordingly, some local authorities may have their own plans on the areas and streets that have not been allowed for doing some certain business activities or they may limit the number of enterprises operating in the same business line in such geographical area, which is common in the big cities like Ho Chi Minh, Hanoi, Da Nang, etc.

Environmental influences:

Some industries may have the significant impacts to the surrounding environment. As a principle, subjected to the laws and the granted power in environmental protection, the competent authority may identify and decide which areas are not opened for investment or the projects located therein could be limited on the capacity of operation. Many factors of estimated water consumption, electricity consumption, the waste expected to be discharged into the environment, hazardous or non-hazardous waste could be assessed carefully by the authorities of Vietnam before accepting any establishment and operation of the business therein.

All the above factors will have its own impact to the choice of the location of the enterprises, thus CDLAF suggests the Investor to determine the business line, the industry and production capacity, leasing areas at early stage, the expansion plan in the future, etc. It is highly recommended that any legally binding document between the Investor and the lessor should be entered after the Investor has determined the suitable rental location based on the consideration of all related factors, in order to eliminate the dispute between the parties.

Time of writing: 15/02/2023

The article contains general information that is of reference only; if you want to receive official legal opinion on this topic or any other legal matters, please contact our lawyer at info@ email info@cdlaf.vn.