Do Vietnamese Companies Need an IRC in Industrial Zones?

Introduction

When expanding production or leasing factories within Industrial Zones (IZs) or Export Processing Zones (EPZs) in Vietnam, many domestic enterprises wonder: Do domestic Vietnamese companies need to apply for an Investment Registration Certificate (IRC)?

Understanding this legal distinction helps domestic investors streamline administrative procedures, reduce compliance costs, and launch operations faster.

1. General Rule Under the Law on Investment

According to Article 37 of the Law on Investment, the legal requirements for obtaining an IRC are distinguished based on the nature of the investor:

• Foreign Investors & FDI Enterprises (with >50% foreign capital ownership): Mandatory to apply for an IRC before implementing an investment project in Vietnam, including projects located inside Industrial Zones.

• Domestic Vietnamese Enterprises (100% domestic capital or foreign ownership ≤50%): NOT required to perform procedures for obtaining an Investment Registration Certificate.

Key Takeaway: If your company is a 100% domestic Vietnamese entity (or has ≤50% foreign ownership), you do not need an IRC when setting up a manufacturing project or leasing a factory in an Industrial Zone.

2. Mandatory Procedures for Domestic Companies in IZs

Although exempt from the IRC requirement, domestic companies operating inside Industrial Zones must still satisfy other regulatory conditions, including:

1. Submitting an Investment Project Proposal (if required): For projects seeking land lease directly from the state or projects subject to Investment Policy Approval under provincial/management authority.

2. Factory Lease & Sublease Agreements: Signing a valid land/factory lease contract with the Industrial Zone Infrastructure Developer.

3. Enterprise Registration Certificate (ERC): Registering a new legal entity or adding manufacturing lines/branches to the existing ERC with the Department of Planning and Investment (DPI).

4. Sub-licenses and Permits: Obtaining relevant operational permits prior to production, such as:

   • Environmental Licenses / Environmental Impact Assessment (EIA)

   • Fire Safety Approval and Inspection (PCCC)

   • Construction Permits (if constructing or altering factory facilities)

3. Can Domestic Companies Optionally Request an IRC?

Yes. Under Clause 4, Article 37 of the Law on Investment, if a domestic enterprise desires to have an Investment Registration Certificate for its project in an Industrial Zone, it may voluntarily submit an application to the Industrial Zone Management Board to be granted an IRC.

Why would a domestic company voluntarily apply for an IRC?

• To Secure Investment Incentives: Officially recording corporate income tax (CIT) exemptions/reductions, land rent incentives, or import duty exemptions in an IRC document for bank financing or tax audits.

• To Support Banking & Financial Transactions: Providing clear legal proof of project scale, capital commitment, and project lifespan to secure long-term bank loans.

• To Prepare for Future FDI Capital Injection: Having an existing IRC makes it easier to onboard foreign investors later via share transfers or capital increases.

Conclusion

Domestic Vietnamese companies do not need an IRC to invest or operate in Industrial Zones. However, voluntarily securing an IRC can offer strategic advantages regarding tax incentives, credit access, and future restructuring.

Source: BizAdvice Analysis / Law on Investment