Setting up a Representative Office in Vietnam

Posted on by

Dec mag illustrationThe representative office (RO) is an effective tool for foreign traders to monitor Vietnamese market trends and engage in cooperation with local companies. However, an RO offers much more limited functions compared to a fully fledged company. It is typically a dependent unit of its parent company, forbidden to generate its own profits and enter directly into contracts unless a legally authorized power of attorney is granted. ROs are strictly forbidden to issue invoices, easing the accounting and tax compliance burden for foreign traders.

An RO is permitted to recruit local and foreign employees directly or through an agency, lease office space – restricted to only one office in a province or city, equip itself with facilities necessary for its operation, obtain its own company seal and open its local bank accounts for operational purposes.

Professional Service_CB icons_2015RELATED: Dezan Shira & Associates’ Corporate Establishment Services
Licensing Procedures

RO establishment shall be granted only if the parent company meets requirements of possessing an authorized business registration certificate in its country of incorporation and being in operation for at least one year since the effective date of incorporation. An application dossier for an RO license must be submitted to the Provincial Department of Industry and Trade. An RO license, valid for five years of maximum with an option for renewal, shall be issued within 15 working days of receipt of valid application documents, excluding any time spent amending or supplementing the application.

An application dossier for obtaining the RO license must include:

  • An RO application letter and chief representative appointment letter, signed by the legal representative and affixed with the company chop or seal;
  • A notarized copy of the Certificate of Incorporation, business registration certificate of the parent company (if any), or another government certified document showing the business lines of the parent company (if the registration documents do not mention business lines);
  • A notarized copy of the Company Charter (i.e. Memorandum and Articles of Association);
  • A notarized copy and Vietnamese translation of audited financial reports or other legal alternative documents showing the parent company’s latest financial year issued by an independent auditing company;
  • An original copy or valid notarized copy of the official lease contract in Vietnamese, from a landlord certified to lease the office

Related Link IconRELATED: Paying Personal Income Tax in Vietnam

All copies of these documents must be notarized by the Vietnam embassy in the foreign investor’s country. Documents in a foreign language must be translated to Vietnamese, notarized and certified by the Vietnamese competent agencies. If an application is invalid, the parent company shall receive a written notification within three business days of the date such an application is received.

Post-Licensing Procedures

Operating Announcement

Within 45 days of the issue date of the RO license, it is compulsory that the new RO announces its establishment publicly by publishing on either a newspaper or electronic media authorized for publication in Vietnam. Also, the RO shall announce its official commencement date to the licensing authority.

Opening Bank Accounts

An RO is allowed to open bank accounts in Vietnamese Dong and foreign currency bank accounts at licensed banks in Vietnam for payment purposes. These accounts shall be used for the RO’s operation activities only. Due to the RO’s legal limited scope of activities, the accounts must not be used for profit-generating activities. In case the RO wants to transfer money abroad, it needs to give a reasonable purpose. Last but not least, all the activities related to the RO’s accounts including opening, use and closure must comply with the stipulations of the State Bank of Vietnam (SBV).

Tax and Reporting

An RO is not subject to Vietnamese corporate income tax (CIT). However, it still has to pay value-added tax (VAT) when consuming goods or services from other Vietnamese enterprises, and is responsible for declaring its employees’ personal income tax (PIT).

Professional Service_CB icons_2015RELATED: Dezan Shira & Associates’ Tax and Compliance Services

An RO must submit a written annual report on its operations of the preceding calendar year before the final working day of January.

 

About Us

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email vietnam@dezshira.com or visit www.dezshira.com.

Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.

Related Reading Icon-VB

Import and Export: A Guide to Trade in Vietnam
In this issue of Vietnam Briefing Magazine, we provide you with a clear understanding of the current business trends related to trade in Vietnam, as well as explaining how to set up your trading business in the country. We also attempt to give perspective on what will be Vietnam’s place in the Association of Southeast Asian Nations (ASEAN) in 2015, and look at some of the country’s key import and export regulations.

Using Vietnam’s Free Trade & Double Tax Agreements
In this issue of Vietnam Briefing we explore how Vietnam’s Free Trade Agreements – and especially those via its membership in ASEAN – will affect foreign investment into Vietnam. We also go a step further and examine the specific, bilateral Double Tax Agreements that Vietnam has enacted, and how these can be further used to minimize profits and withholding taxes that would otherwise be levied upon foreign investors.

Developing Your Sourcing Strategy for Vietnam In this issue of Vietnam Briefing Magazine, we outline the various sourcing models available for foreign investors – representative offices, service companies and trading companies – and discuss how to decide which structure best suits the sourcing needs of your business.

 

Leave a Reply

Your email address will not be published. Required fields are marked *

Dezan Shira & Associates

Meet the firm behind our content. Dezan Shira & Associates have been servicing foreign investors in China, India and the ASEAN region since 1992. Click here to visit their professional services website and discover how they can help your business succeed in Asia.

News via PR Newswire

Never Miss an Update

Subscribe to gain even better insights into doing business in Vietnam. Subscribing also lets you to take full advantage of all our website features including customizable searches, favorite, wish list and gift functions and access to otherwise restricted content.

Scroll to top