According to Vietnamese law, representative offices (representative offices) of foreign companies are not allowed to conduct profit-making activities but are limited to market research and non-profit activities. other profits. In case foreign investors do not have enough information to make investment decisions in Vietnam, the establishment of a representative office will be the most appropriate choice.
In the article below, VIVA would like to share 4 steps to set up a foreign representative office in Vietnam.
Conditions for establishing a representative office of a foreign company in Vietnam
Foreign traders may only be granted operation certificates of representative offices in Vietnam when fully meeting the following conditions:
- The foreign company has been established and registered for business in accordance with the laws of a country that is a party to an international treaty to which Vietnam is a member or recognized by the laws of these countries;
- The foreign company has operated in the host country for at least 01 year from the date of establishment or registration;
- In case the foreign business registration certificate stipulates the operation term, the duration of such license must be at least 01 year from the date of filing in Vietnam;
- Activities of Representative Offices: market research, trade promotion in Vietnam.
- In case the operation contents of the representative office do not conform to the commitments of Vietnam or the foreign trader is not a member of a country or territory participating in an international treaty to which Vietnam is a contracting party, the establishment of a representative office shall be carried out. representative offices must be approved by ministers or heads of ministerial-level agencies in charge of specialized management (hereinafter referred to as the Minister of specialized management).
4 Steps to set up a foreign representative office in Vietnam
STEP 01: FIND OUT ABOUT LOCAL REGULATIONS ON REPRESENTATIVE OFFICE ESTABLISHMENT
- A representative office in Vietnam of a foreign trader is an affiliated unit of a foreign trader established in accordance with Vietnamese law, in order to conduct market investigation and a number of trade promotion activities. permitted by Vietnamese law.
- Representative offices must comply with regulations on labor, social insurance by registering employers and monthly insurance. The amount of compulsory social insurance payment can be up to 34.5% of the salary budget.
- Foreigners working for more than 3 months are granted a work permit .
- Representative offices must comply with regulations on personal income tax according to tax registration numbers for each employee and are required to declare personal income tax monthly, prepare and submit annual tax finalization reports . The income tax rate for temporary workers is 20% on income earned in Vietnam, for residents from 5 to 35% of total income.
- Representative offices must comply with other regulations such as Anti-Money Laundering, Commercial Law and other tax laws for any activities in Vietnam. In particular, the representative should collect and manage all relevant business records, in response to queries or questions from the authorities. After every 3 to 5 years of operation, the tax department will carry out inspection procedures to verify the truth, fairness and legality of each transaction…
- The representative office must prepare and submit an annual report to the Licensing Department.
- The maximum term of operation of a representative office is 5 years and can be extended .
STEP 02: PREPARATION FOR THE DOCUMENTS REQUIRED FOR ESTABLISHMENT OF REPRESENTATIVE OFFICE
Group 1: Papers directly from abroad
- A copy of the business registration certificate or equivalent document of the foreign trader.
- Letter of appointment of the head of the representative office of the foreign trader.
- A copy of the audited financial statement or a document certifying the performance of tax or financial obligations in the latest fiscal year or a paper of equivalent value issued by a competent agency or organization where the trader is located. foreign trader to issue or certify, prove the existence and operation of the foreign trader in the latest fiscal year.
The documents mentioned above must be certified or legalized by a diplomatic mission or consular office of Vietnam abroad in accordance with Vietnamese law.
Group 2: Other documents that must be collected domestically
- Copy of passport or identity card of the head and representative office.
- Documents related to the location of the representative office establishment:
- A copy of the memorandum of understanding ( MOU ) or the agreement to rent the location or the documents proving that the trader has the right to exploit and use the location to locate the representative office.
- A copy of the document on the proposed location of the representative office’s headquarters in accordance with relevant laws.
- The papers in group 1 have been translated into Vietnamese and authenticated.
Group 3: Submitting dossiers to competent state agencies
- An application form for a license to establish a representative office, made according to the form of the Ministry of Industry and Trade, signed by a competent representative of the foreign trader.
- Valid documents mentioned in Group 1, Group 2.
STEP 03: APPLY FOR LICENSE TO ESTABLISH REPRESENTATIVE OFFICE
- Complete all paperwork and records before applying.
- Track the process, query or request from the staff.
- Have a license within 20 days or sooner.
- Engraved with official seal.
- Register electronic signature for tax and labor declaration.
STEP 04: COMPLETE INITIAL COMPLIANCE PROCEDURES BEFORE OPERATION OF OFFICE
- Announcement of representative office activities.
- Published in three consecutive publications of a licensed print or online newspaper in Vietnam.
- The representative office must officially start operating and notify in writing the Department of Trade of the start of operation at the registered office.
- Employment records and employment contracts.
- Tax Code – Personal income tax for local employees and foreigners.
- Register a tax code for a representative office.
- Register personal tax code for employees.
- Office bank account statement .
- Labor declaration.
- Employee Employee Statement.
Cases in which the establishment of a representative office of a foreign company is not granted in Vietnam
The agency that issues the establishment license of a representative office of a foreign company in Vietnam shall not grant a license to establish a representative office of a foreign company in Vietnam in the following cases:
- Foreign traders do not fully satisfy the conditions specified above.
- Foreign traders only trade in goods and services on the List of goods and services banned from business in accordance with Vietnamese law.
- Foreign traders apply for a license to establish a representative office of a foreign company in Vietnam within 2 years from the date of its revocation of the license to establish a representative office.
- There is evidence that the establishment of a representative office of a foreign company is detrimental to national defense, security, social order and safety, historical traditions, culture, morality, fine customs and traditions of Vietnam. South and the health of the people, destroy natural resources, destroy the environment.
- Submit invalid and incomplete dossiers at the request of licensing agencies.
Reporting regime for representative offices of foreign companies in Vietnam:
- Before January 30 of each year, the representative office is responsible for sending a report according to the form set by the Ministry of Industry and Trade on its activities in the previous year by post to the Department of Industry and Trade.
- Representative offices are obliged to report, provide documents or explain matters related to their operations at the request of competent state management agencies.
The following procedures to establish a representative office of a foreign company in Vietnam
- To open a specialized spending account in foreign currency and a specialized spending account in Vietnam dong with foreign currency origin at a bank that is licensed to operate in Vietnam and may only use this account for the operation of the Representative Office;
- Annually, before January 30 of the following year, the Representative Office must send a written report on its activities during the year to the Department of Industry and Trade (under the form);
- Make a cash book to record all revenues and expenditures during the operation of the Representative Office;
- Apply for a work permit for foreign workers to work at the Representative Office (if any);
- Sign a labor contract with the chief representative and employees of the representative office;
- Annually, the foreign company must certify the salary and income (according to the form) for the chief representative and employees of the representative office;
- Pay personal income tax, insurance for the chief representative and employees of the representative office (if any). Note, when paying tax, save all tax payment declarations and tax receipts of state agencies and finalize annual income tax for the head of the representative office and employees of the representative office;
- Other obligations as prescribed by current law;
If you’re considering setting up a representative office in Vietnam, this guide should help give you the information that you need to make an informed decision. We hope that it has been helpful and look forward to working with you on your next project!