Buy an Existing Company vs Set Up a Subsidiary in Vietnam (2026): Which Is Better for Inbound Investors?

Every foreign investor entering Vietnam faces the same threshold question: buy an existing company or set up a new subsidiary? The answer shapes your regulatory timeline, tax exposure, legacy-liability profile, and exit options for years to come. For CFOs, PE sponsors, and corporate development teams preparing an investment-committee memo in 2026, the calculus has shifted, Vietnam’s reformed Investment Law (Luật số 143/2025/QH15, effective 1 March 2026), new administrative-simplification measures under Resolution 66.18/2026 (effective 1 July 2026), and updated tax rules in Decree 141/2026 all change the cost–benefit balance between buying and building. This guide sets out a dimension-by-dimension comparison and a prescriptive decision framework so you can choose the right route before engaging counsel.

Option A: Buy an Existing Company in Vietnam

Acquiring an existing Vietnamese enterprise means purchasing either the shares (equity) of a target company or its underlying business assets, then stepping into its legal identity, licences, contracts, workforce, and obligations included. This is the route investors choose when speed-to-market, an existing customer base, or hard-to-replicate permits outweigh the risk of inheriting the target’s history.

Typical Structures and Mechanics

The two principal structures are a share purchase and an asset purchase. In a share deal, the buyer acquires equity in the target company; the legal entity survives and its contracts, licences, and land-use rights remain in place. In an asset deal, the buyer cherry-picks specific assets (equipment, IP, inventory, contracts) and leaves unwanted liabilities behind, though asset transfers can trigger VAT and require individual consent from counterparties. A third variant, purchasing a pre-registered “shelf” company, is functionally a share purchase of a dormant entity and carries its own compliance risks if the shelf company was not properly maintained.

Common Targets

Inbound buyers typically pursue one of three target types:

• Operating SMEs with revenue, staff, and local contracts, attractive for immediate market presence.
• Shelf or dormant companies already holding an Enterprise Registration Certificate (ERC) and, sometimes, a conditional business licence, attractive for speed but requiring careful compliance checks.
• Stakes in state-owned or equitised enterprises, relevant in sectors where privatisation rounds offer access to land-use rights or infrastructure concessions.

Key Advantages

• Speed. An existing, compliant company can be operational under new ownership within weeks of closing.
• Licences and permits. Sectoral licences (e.g., retail distribution, telecoms, education) transfer with the entity in a share deal, avoiding fresh application timelines.
• Revenue continuity. Existing customer contracts and supplier relationships remain in place.
• Land-use rights. If the target holds allocated or leased land, a share acquisition preserves those rights without a separate transfer process.

Key Risks

Buying a Vietnamese company means buying its past. The principal risks are:

• Legacy tax liabilities. Undisclosed or underreported tax obligations can surface post-closing, particularly where the target has been through multiple audit cycles.
• Labour and social-insurance claims. The buyer inherits all employment contracts and any outstanding social-insurance arrears.
• Environmental and regulatory exposure. Manufacturing targets may carry remediation obligations the seller has not provisioned for.
• Land-use rights complexity. Title may be unclear, encumbered, or subject to expiry, requiring additional provincial-level approvals.
• Undisclosed litigation and supplier disputes. Comprehensive due diligence is essential to quantify contingent claims.

Option B: Set Up a New Subsidiary in Vietnam

The alternative is to incorporate a fresh entity, typically a limited liability company (LLC) or a joint-stock company (JSC), with the foreign investor as sole or majority owner. This is the “greenfield” route: the entity has no history, no legacy contracts, and no inherited obligations.

Steps to Incorporate and Key Documents

Setting up a new subsidiary in Vietnam follows a two-track registration process governed by the Enterprise Law and the Investment Law (Luật số 143/2025/QH15):

• Enterprise Registration Certificate (ERC). Filed with the provincial Department of Planning and Investment (DPI); grants the entity legal personality.
• Investment Registration Certificate (IRC). Required for foreign-invested projects that meet the classification thresholds under the Investment Law. Nghị định số 96/2026/NĐ-CP provides detailed procedural guidance on project-approval requirements.
• Sectoral licences. Business lines on the conditional list (e.g., education, healthcare, logistics, fintech) require separate sub-licences from the relevant ministry.
• Tax and bank-account registration. Post-ERC, the entity registers for tax, opens a capital account, and contributes charter capital within the statutory timeframe.

When Setting Up Is Preferable

• Full control from day one. The investor designs the corporate governance structure, IP-holding arrangements, and employment terms without negotiating around a target’s legacy.
• Clean balance sheet. Zero legacy liabilities, no hidden tax, no inherited labour claims, no environmental remediation.
• IP protection. Sensitive technology or brand assets can be ring-fenced in the new entity’s charter, reducing leakage risk versus buying into a target whose IP arrangements are unclear.
• Tax incentives. New investment projects may qualify for CIT holidays, preferential rates, or land-rental exemptions under the Investment Law, depending on location and sector.

Limitations of the Greenfield Route

Setting up a subsidiary is not without friction:

• Sectoral restrictions. Vietnam maintains a negative list of sectors closed or conditionally open to foreign investment. If the target business line is on the conditional list, the new entity must obtain the relevant sub-licence before commencing operations, a process that can add months.
• Land access. A newly incorporated entity cannot simply purchase land. It must apply for land-use rights allocation or enter into a lease, and availability is constrained by provincial land-use planning and industrial-zone capacity.
• Slower commercial ramp. Without existing contracts, staff, or customer relationships, the entity starts from zero revenue. For buyers entering a competitive market, this delay can be strategically costly.
• No operating track record. A greenfield entity has no audited financials, making it harder to secure local bank financing or win public tenders that require demonstrated experience.

Buy vs Set Up Subsidiary in Vietnam: Side-by-Side Comparison

The table below compares the two routes across the dimensions that matter most to an investment-committee decision. Use it as a quick-reference screen before diving into the detailed analysis that follows.

At a glance, Option A (buy) wins on speed and operational continuity, provided the target is compliant and due diligence is clean. Option B (set up) wins on risk control and predictability, but at the cost of slower market entry and the need to build commercial relationships from scratch. The sections below unpack each dimension in detail.

Dimension-by-Dimension Analysis: Buy vs Set Up Subsidiary Vietnam

Tax Implications

Tax is often the dimension that tips the decision. The treatment differs sharply between buying an existing company and setting up a new subsidiary, and the 2026 changes under Decree 141/2026 add further variables to the buyer’s model.

Note: rates are subject to applicable double-tax treaties and local practice. Verify all figures with qualified tax counsel before modelling. Decree 141/2026 amends certain filing and treatment rules that may affect acquisition tax exposure.

Approvals and Merger Control

Vietnam’s merger-control regime, governed by the Law on Competition (Luật số 23/2018/QH14) and its implementing Decree 35/2020 (Nghị định số 35/2020/NĐ-CP), requires mandatory pre-notification for economic concentrations that meet specified turnover, asset, or market-share thresholds. This obligation falls squarely on acquisitions (Option A) and rarely arises when setting up a new subsidiary (Option B).

• Option A, Buy. A share or asset acquisition may trigger a mandatory merger-control filing if the combined turnover, total assets, or transaction value of the parties exceeds the statutory thresholds. Resolution 66.18/2026 (effective 1 July 2026) introduces administrative simplifications that industry observers expect will narrow the number of smaller deals caught by the filing obligation, but the core thresholds under the Law on Competition remain the starting point for any screen. Foreign-to-foreign transactions with a Vietnam-asset nexus are also caught.
• Option B, Set up. Incorporating a new entity does not constitute an economic concentration. Merger-control filing is not triggered. The investor files for an ERC and, where required, an IRC under the Investment Law, a more predictable and typically faster approval path.

Timing and Execution Risk

The timeline for each route depends on sector, target complexity, and whether provincial or central-level approvals are needed.

The key execution risk for Option A is discovery of a material issue during due diligence that either delays or reprices the deal. For Option B, the risk is that a required sectoral licence or land allocation takes longer than projected, pushing back the revenue start date.

Liability and Due Diligence

This dimension is where the buy-vs-build choice carries the starkest contrast. When you buy an existing company in Vietnam through a share purchase, you acquire the entire legal entity, including liabilities the seller may not have disclosed. When you set up a new subsidiary, your liability slate is clean.

A thorough due-diligence process for an acquisition target should cover:

• Tax compliance. Historical CIT filings, VAT reconciliation, transfer-pricing documentation, and social-insurance contribution records.
• Labour and employment. Employment contracts, outstanding wage or bonus obligations, social-insurance and unemployment-insurance arrears.
• Environmental. Discharge permits, waste-treatment compliance, and any pending or potential remediation orders.
• Land-use rights. Title status, encumbrances, lease expiry dates, and any pending disputes with the provincial People’s Committee.
• Litigation and disputes. Pending lawsuits, arbitration claims, and regulatory investigations.

Recommended protections for the buyer include seller representations and warranties, indemnity provisions, escrow or holdback mechanisms for contingent claims, and, for material risks, purchase-price adjustment clauses tied to post-closing audits.

Land-Use Rights and Property

Land in Vietnam is owned by the State; enterprises hold land-use rights (LURs) allocated, leased, or recognised under the Land Law. This distinction is critical for the buy-vs-build decision.

• Option A, Buy. A share purchase preserves the target’s existing LURs without a formal land transfer, since the legal entity holding those rights does not change. However, the buyer must verify that the LURs are properly registered, unencumbered, and not approaching expiry. An asset purchase, by contrast, requires a separate LUR transfer, which needs provincial approval and can take several additional weeks.
• Option B, Set up. A new subsidiary must secure land access independently, either through allocation in an industrial zone, a direct lease from the State, or a sub-lease from a developer. Availability is constrained by provincial land-use master plans, and popular industrial zones in the south and north may have limited plots.

Exit and Enforceability

Both routes ultimately produce a Vietnamese legal entity that can be sold, restructured, or wound down. The practical differences at exit are:

• Option A. A going concern with operating history, contracts, and audited financials is generally more marketable on exit, provided legacy issues have been resolved. Buyers should negotiate arbitration clauses (VIAC or international arbitral institutions) and include comprehensive representations and warranties in the sale-and-purchase agreement.
• Option B. A clean-sheet entity with no legacy baggage is simpler to sell in principle, but the absence of operating history may narrow the pool of interested acquirers. Investors should build in shareholder-agreement protections (tag-along, drag-along, pre-emptive rights) from incorporation.

What Changes in 2026: Three Reforms That Shift the Decision

Three legislative developments effective in 2026 materially alter the buy-vs-set-up calculus for inbound investors. Any buyer modelling a Vietnam entry should re-run their assumptions against these changes.

1. Investment Law 143/2025 (Luật số 143/2025/QH15), effective 1 March 2026. This reform revises the classification of investment projects and modifies certain pre-approval routes for foreign-invested entities. The practical effect for market-entry decisions: some project categories that previously required an IRC now fall under a simplified registration path, potentially shortening the setup timeline for Option B. Conversely, certain acquisitions of enterprises in conditional sectors may trigger additional project-reclassification requirements. Buyers should verify whether their target’s business lines have been reclassified under the new categories.

2. Resolution 66.18/2026 (Nghị quyết số 66.18/2026/NQ-CP), effective 1 July 2026. This government resolution introduces administrative-simplification measures that, early indications suggest, will raise or adjust certain merger-control and administrative thresholds. The likely practical effect is that a subset of smaller Vietnam-asset acquisitions will fall below the mandatory filing thresholds, reducing the number of deals caught by the notification requirement. Buyers pursuing Option A should re-screen their transaction against the updated thresholds to determine whether a filing is still required.

3. Decree 141/2026 (Nghị định số 141/2026/NĐ-CP). This tax-related decree adjusts certain income-band treatments, withholding interactions, and filing mechanics for newly acquired enterprises. For buyers modelling an acquisition price, the decree may affect the post-deal tax position of the target, particularly on transition-period CIT prepayments and the treatment of certain asset transfers. Buyers should ask their tax advisers to recheck tax warranties and price-adjustment mechanisms against the updated rules.

When Should I Buy vs Set Up a Subsidiary in Vietnam? Decision Framework

Use the table below as a rule-of-thumb screen. Match your priority to the recommended route, then validate with transaction-specific legal and tax advice.

Choose to buy when:

• The target holds licences or permits that would take months to obtain from scratch.
• You need an established workforce with sector-specific expertise.
• The target’s land-use rights are confirmed clean and operationally necessary.
• Due diligence reveals a manageable risk profile that can be covered by escrow and indemnities.
• Speed to first revenue is your competitive advantage.

Choose to set up when:

• No suitable acquisition target exists, or available targets carry unacceptable legacy risk.
• Your sector allows wholly foreign-owned entities and does not require hard-to-obtain legacy permits.
• You want to design the corporate and IP structure from the ground up.
• Tax incentives for new investment projects are material to your return model.
• You have a 6–12 month runway before revenue generation is required.

When to Engage a Lawyer for the Buy vs Set Up Decision

This is not a decision to make on a spreadsheet alone. Engage experienced Vietnam M&A counsel at any of the following trigger points:

• Pre-LOI stage. Before signing a letter of intent or term sheet, counsel should advise on structuring (share vs asset deal), ownership-cap analysis for conditional sectors, and bidding strategy.
• Due-diligence scoping. A legal DD workstream, covering tax, labour, land, environmental, and litigation risk, should be designed and supervised by counsel familiar with Vietnamese regulatory practice.
• Merger-control screening. If there is any possibility the transaction meets the filing thresholds under the Law on Competition (Luật số 23/2018/QH14) and Decree 35/2020, counsel must run a formal screen and, if required, prepare the notification dossier.
• Land-use rights verification. Provincial-level LUR due diligence and any transfer or re-registration requires specialist land-law advice.
• Tax warranty and escrow drafting. The sale-and-purchase agreement must allocate legacy-tax risk clearly, this is where experienced M&A counsel earn their fee.

Qualified Vietnam M&A lawyers can be found through the Global Law Experts Vietnam lawyer directory.

Sources

1. Luật số 143/2025/QH15, Investment Law (official text)
2. Nghị định số 96/2026/NĐ-CP, Guidance for Investment Law implementation
3. Luật số 23/2018/QH14, Law on Competition (official text)
4. Nghị định số 35/2020/NĐ-CP, Decree implementing Competition Law (merger control)
5. Nghị quyết số 66.18/2026/NQ-CP, Government resolution on administrative simplification
6. Nghị định số 141/2026/NĐ-CP, Tax-related Decree