Vietnam's Rise as a Sourcing and Manufacturing Hub
As global supply chains diversify away from China, Vietnam has become a major destination for American entrepreneurs setting up sourcing agencies, quality-control offices, and manufacturing liaison operations, alongside corporate transferees managing supplier relationships for US companies. This population faces a materially different tax picture than salaried employees: US business tax rules on foreign entities, not just personal FEIE mechanics.
Choosing a Structure: Sole Proprietor vs. Vietnamese Entity
Many American entrepreneurs start as informal sole proprietors invoicing US clients directly, simple but limited: it doesn't support a stable work permit/TRC path, keeps you exposed to the full 15.3% self-employment tax with no Totalization offset, and offers no liability protection. Setting up a Vietnamese-registered entity (commonly a Limited Liability Company) solves the visa problem and creates real liability separation, but introduces US international tax complexity: GILTI (Global Intangible Low-Taxed Income) and Subpart F rules can apply to a US person's ownership of a foreign corporation.
GILTI: The Cost of Incorporating Locally
If you own a Controlled Foreign Corporation (a Vietnamese company more than 50% owned by US persons), GILTI generally requires you to include your share of the company's active business income on your US return currently, even if you never distribute it as a dividend, at rates that can exceed what a simple sole-proprietor structure would owe. This is a genuinely complex area that requires specialist modeling before incorporating, not after.
FBAR and FATCA on Business Accounts
Business bank accounts you have signature authority over count toward your personal FBAR obligation even if the funds aren't personally yours, a commonly missed reporting requirement for entrepreneurs managing both personal and business Vietnamese accounts.
Employees Sent by US Companies
Corporate transferees managing supplier relationships on behalf of a US employer generally face a simpler picture: standard FEIE/FTC planning on their salary, since they're W-2 employees rather than business owners. The GILTI and entity-structuring questions above are specific to those who own or co-own the Vietnamese operation, not those merely employed to run it.
Worked Example: A Sourcing Agency Founder
An American entrepreneur sets up a Vietnamese LLC to run a sourcing and quality-control agency serving US import clients, moving from an informal sole-proprietor arrangement that had left her stuck on rolling tourist visas. The new entity supports a proper work permit and TRC, resolving her immigration risk, but her accountant models GILTI exposure on the company's retained earnings before she finalizes the structure, since as majority owner of a Controlled Foreign Corporation, she may owe current US tax on the company's income regardless of whether she takes a distribution.