Setting up a representative office of a foreign company in Vietnam

Vietnam is becoming an attractive destination for foreign investors. Establishing a representative office of a foreign company in Vietnam not only helps businesses expand their market but also creates favorable conditions to seize business opportunities. In this article, LawFirm.Vn will provide an overview of the process of establishing a representative office here.

1. Legal basis

– Commercial Law of Vietnam 2005;

– Decree 07/2016/ND-CP detailing the Commercial Law regarding Representative Offices and Branches of foreign traders in Vietnam;

– Circular No. 11/2016/TT-BCT guiding Decree 07/2016/ND-CP detailing the Commercial Law regarding Representative Offices and Branches of foreign traders in Vietnam.

2. Conditions for establishing a representative office of a foreign company in Vietnam

Foreign traders shall only be granted a Certificate of Representative Office Operation in Vietnam when they meet all 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 is recognized by the laws of that country;

– The foreign company has been operating in its home country for at least 01 year from the date of establishment or registration;

– In case the foreign Business Registration Certificate specifies a term of operation, that term must be at least 01 year from the date of application submission in Vietnam;

– The operational scope of the Representative Office: market research, trade promotion in Vietnam.

– In cases where the operational scope of the Representative Office is not consistent with Vietnam’s commitments or the foreign trader is not from a country or territory that is a party to an international treaty to which Vietnam is a member, the establishment of the Representative Office must be approved by the Minister or Head of the specialized ministerial-level agency (hereinafter collectively referred to as the Minister of the specialized Ministry).

3. Dossier for establishing a representative office of a foreign company in Vietnam

– Application for establishing a representative office of a foreign company in Vietnam;

– Consular legalized copy and notarized translation of the Business Registration Certificate or equivalent document of the foreign trader, certified by the competent authority where the foreign company was established;

– Appointment letter for the head of the foreign company’s Representative Office;

– Notarized translation of the audited financial report or document confirming the tax or financial obligations fulfillment in the most recent fiscal year, or an equivalent document issued or certified by a competent agency or organization in the foreign trader’s country of establishment, proving the existence and operation of the foreign trader in the most recent fiscal year;

– Notarized translation of the passport or identity card (if a Vietnamese citizen) or a copy of the passport (if a foreigner) of the head of the Representative Office;

– Documents regarding the proposed location of the Representative Office, including:

+ Notarized true copy of the office lease contract;

+ Notarized copy of the land use right certificate of the lessor (if leasing from an enterprise, also provide the Business Registration Certificate with real estate business function);

+ Additionally, the location of the foreign company’s Representative Office must comply with Vietnamese law on security, order, labor safety and hygiene, and other conditions as prescribed by law.

Note: The entire application for establishing a representative office must be signed and sealed by the parent company.

4. Steps to establish a representative office of a foreign company in Vietnam

Step 1: Obtain the License for establishing a foreign company’s representative office

Completion time: 07 – 10 working days;

Step 2: Carve the round seal and register the seal sample of the foreign company’s Representative Office

Completion time: 05 working days;

Step 3: Register for the tax code notification of the foreign company’s Representative Office

Completion time: 05 -07 working days.

5. Cases where establishment of a foreign company’s representative office in Vietnam is not licensed

The agency granting the License for establishment of a foreign company’s Representative Office in Vietnam shall not grant the license in the following cases:

• The foreign trader fails to meet the specified conditions.
• The foreign trader only trades in goods or services that are on the list of goods or services prohibited from business by Vietnamese law.
• The foreign trader applies for a license to establish a Representative Office in Vietnam within 02 years from the date its Representative Office establishment license was revoked.
• There is evidence that the establishment of the foreign company’s Representative Office would harm national defense, security, social order, safety, historical traditions, culture, ethics, fine customs of Vietnam, and public health, or destroy resources and the environment.
• Submission of an invalid application or failure to supplement the application as required by the competent licensing authority.

6. Reporting regime for the operation of a foreign company’s representative office in Vietnam

– Before January 30th every year, the Representative Office is responsible for sending a report in the form prescribed by the Ministry of Industry and Trade regarding its activities in the previous year by mail to the Department of Industry and Trade.

– The Representative Office is obligated to report, provide documents, or explain matters related to its operations at the request of the competent state management agency.

7. Post-establishment procedures for a foreign company’s Representative Office in Vietnam

– Open a specialized expenditure account in foreign currency and a specialized expenditure account in Vietnamese Dong derived from foreign currency at a bank licensed to operate in Vietnam, and only use this account for the Representative Office’s operations;

– Annually, before January 30th of the following year, the Representative Office must submit a written report on its activities during the year to the Department of Industry and Trade (according to the prescribed form);

– Establish a cash book to record all revenues and expenditures during the Representative Office’s operations;

– Apply for a work permit for foreign employees working at the Representative Office (if any);

– Sign labor contracts with the chief representative and employees of the Representative Office;

– Annually, the foreign company must confirm salaries and incomes (according to the form) for the chief representative and employees of the Representative Office;

– Pay personal income tax and insurance for the chief representative and employees of the Representative Office (if any). Note: when paying taxes, retain all tax declarations and tax receipts from state agencies, and conduct annual tax finalization for the chief representative and employees of the Representative Office;

– Other obligations as stipulated by current law;

8. Some questions related to establishing a Representative Office of a foreign company in Vietnam