Establishing Representative Offices in Vietnam
Representative office help companies effectively gauge the business environment in Vietnam; allowing them to conduct their own market research and study the industries that interest them. They are a liaison office for the parent company that pursues business opportunities for the overseas headquarters in providing economic, trading, scientific and technical services.
An RO cannot engage in business directly with local companies since it is forbidden to conduct any revenue-generating activities. It is not allowed to either promote the parent company’s goods or services or directly enter into contracts with local companies unless a written power of attorney is obtained. However, once the contract is signed between the parent company and Vietnamese companies and organizations, an RO can help ease the execution of contracts on economic cooperation, trade, scientific and technical commitments. This stipulation goes on further to forbid an RO to issue and use its own invoices. This is an advantage because it reduces the accounting and tax compliance burden for an RO; making it the most inexpensive entity for foreign businesses in Vietnam.
To read the full version of this article, please purchase the summer issue of Vietnam Briefing, which can be found in the Asia Briefing Bookstore. Companies requiring assistance may contact Dezan Shira & Associates at vietnam@dezshira.com for advice.
