Set up a representative office in Vietnam
A representative office is the most convenient and practical means of initially setting up in the country. This is even more critical given that setting up other forms of commercial presence may be either complicated and time-consuming but the representative office does not engage in any direct profit-making activities.
Therefore, DUONG LUAT would like to share with you some basic legal information about setting up a representative office in the Q&A format as below.
What are the requirements for the foreign trader granted the Establishment of Representative office License in Vietnam?
- The foreign trader is incorporated and registers for doing business in accordance with provisions of laws of countries or territories being parties to treaties to which Vietnam is a signatory or is recognized by the aforesaid countries or territories;
- The foreign trader has come into operation for at least 01 year from the date of establishment or registration;
- The Certificate of Business Registration or the equivalent document is valid for at least 01 more years from the date of submission of the application;
- The scope of operation of the representative office is consistent with that in Vietnam’s Commitments to treaties to which Vietnam is a signatory;
- Where the scope of operation of the representative office is inconsistent with Vietnam’s Commitments or the foreign trader is not located in the country or territory being party to treaties to which Vietnam is a signatory, the representative office can be set up only if relevant Ministers, Heads of ministerial agencies (hereinafter referred to as “relevant Ministers”) have given approval for the establishment of the representative office.
What are the documents needed to prepare a dossier to set up a representative office?
- An application form for License for Establishment of the representative office using the form promulgated by the Ministry of Industry and Trade and signed by a competent representative of the foreign trader;
- Copies of the Certificate of Business Registration or equivalent documents of the foreign trader (translated into Vietnamese and certified or legalized by overseas diplomatic missions or Consulates of Vietnam in accordance with laws of Vietnam);
- A letter of appointment of the head of the representative office (translated into Vietnamese and certified in accordance with laws of Vietnam);
- Copies of audited financial statements or certificates of the fulfillment of tax liabilities or financial obligations of the last fiscal year or equivalent documents as proof of existence and operation of the foreign trader issued or certified by competent authorities where such foreign trader is established (translated into Vietnamese and certified true in accordance with laws of Vietnam);
- Copies of the passport or ID card (for Vietnamese) or copies of the passport (for foreigners) of the head of the representative office;
- Documents on the expected location of the representative office include:
- Copies of the memorandum of understanding (MOU) or leasing agreements or documents as proof of the right to use a location as the representative office;
- Copies of documents on the expected location of the representative office which satisfies requirements for security, occupational hygiene and safety, and others stipulated on the laws of Vietnam.
Important Note. All documents for setting up a representative office are signed and sealed by the parent company. In case the parent company in foreign countries has no seal, the whole dossier must be legalized by a general consulate.
How many steps must you proceed to set up a representative office in Vietnam?
Step 1: Issuance of License for establishment of representative office:
Time for completion is from 7 to 10 working days;
Step 2: Mark the seal and register the seal sample of the representative office of the foreign company
Time to complete: 05 working days;
Step 3: Sign up for the Tax Code Notification of Representative Office of Foreign Company
Time to complete: 05 -07 working days.
What are cases that a foreign trader is not granted the Establishment of a representative office in Vietnam?
- Foreign traders do not fully meet the requirements specified above;
- Foreign traders trade in goods and services on the list of goods and services banned from business in compliance with Vietnamese law;
- Foreign traders request to apply for the establishment of representative office license in Vietnam within 02 years from the date of 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 safety, historical traditions, culture, morality, Vietnamese customs, the health of the people, resources destruction, environmental destruction;
- Submitting invalid documents and failing to supplement sufficient documents at the request of licensing agencies.
Is there anything to notice for the Head of Representative office?
The head of a representative office shall not concurrently hold the following titles:
- The head of a branch of the same foreign traders;
- The head of a branch of another foreign trader;
- The legal representative of the same foreign trader or others;
- The legal representative of a business organization incorporated in accordance with Laws of Vietnam.
Shall the information of a representative office be published on the web portal?
Within 15 working days from the date of grant, re-grant, adjustment, extension, and revocation of the License for Establishment of a representative office, the licensing agency shall publish the following information on its web portal:
- The name and address of the representative office;
- The name or address of the head office of the foreign trader;
- Information on the head of the representative office;
- The reference number, date of issue, and effective period of the Licenses for Establishment of representative office and licensing agency;
- The scope of operation of the representative office.
- Before January 30th of each year, the representative office shall send a report of the Ministry of Industry and Trade about 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.
What are the procedures needed to proceed after setting up a representative office?
- Annually, foreign companies must certify salaries and incomes (following the set form) to the Head of Representative Office and employees of the Representative Office;
- Pay personal income tax, insurance for the Head of the Representative Office and employees of the Representative Office (if any). Note, when paying taxes, save the entire tax declaration form and tax receipts of state agencies and annual income tax finalization for the Head of the representative office and employees of the Representative Office;
- Every year, before January 30 of the following year, the Representative Office must send a written report on its activities in the year to the Department of Industry and Trade (according to the form);
- Prepare a cash fund book to record all revenues and expenditures during the operation of the representative office;
- Apply for a work permit for foreign workers working at the Representative Office (if any);
- Sign labor contracts with the Head of Representative Office and employees of the Representative Office;
- Other obligations in accordance with current law.
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