HOW TO SET UP REPRESENTATIVE OFFICE IN VIETNAM

ngay_dang 15/01/2020 loaitin Foreign Company

The representative office of a foreign company is a unit dependent on a foreign company, established in Vietnam in accordance with the regulations in force to promote commercial activities.

 

I. Operation of the representative offices

 

Foreign traders are allowed to establish representative offices in Vietnam to carry out the following activities:

               - Promote the investment opportunities of the traders they represent for.

               - Operate as contact office of a foreign company in Vietnam

               - Promote cooperation projects of the foreign company in Vietnam

               - Research market to push up chances to purchase commodities, supply and consume commercial services of the foreign company in Vietnam

               - Supervise the implementation of the contract signed between the foreign company and Vietnamese partners or related to Vietnam market

               - Conduct other works allowed by applicable law.

               It should be noted that under Vietnamese law, representative offices are not allowed to provide services for the purpose of making profits on behalf of the representative office in Vietnam.

 

                                                                                Setting up a Representative Office in Vietnam is a good choice

 

II.  Conditions to be issued of Vietnam-based representative office establishment license

 

- Foreign traders (foreign companies) may set up their representative offices in Vietnam according to Vietnam’s commitments in treaties to which Vietnam is a contracting party.

- Foreign traders have been operating for at least one year since the date of establishment or registration.

- The operation contents of representative offices must comply with Vietnam’s commitments in treaties to which Vietnam is a contracting party.

- A foreign trader must not be established more than one representative office or branch with the same name within a province or centrally-run city.

- The head of the representative office must authorize in writing other persons to exercise the rights and obligations of the head of the representative office at law when leaving Vietnam. This authorization must be approved by the foreign trader. The head of the representative office shall still be responsible for exercising the authorized rights and obligations.

- The head of the representative office of a foreign trader must not concurrently hold the following positions:

 

a. The head of a branch of the same foreign traders;

b. The head of the branch of another foreign trader;

c. The representative at law of such foreign trader or another foreign trader;

d. The legal representative of the economic organization established under the provisions of Vietnamese law.

Thus, if the enterprise – Foreign investors meet the above conditions, it is possible to set up a Representative Office to invest in Vietnam.

 

III.  Application file to establish a representative office of a foreign company in Vietnam

 

- An application form for License for Establishment of the representative office of a foreign company in Vietnam;

- Copy of business registration certificate or equivalent documents of foreign traders certified by the competent authority of the foreign company;

- A letter of appointment of the head of the representative office;

- 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;

- 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 office lease and lessor's land use right certificate (if you rent a business, you must provide an additional registration certificate), business with real estate business function;

In addition, the location of the representative office of a foreign company shall be in accordance with the provisions of Vietnamese law on the conditions of safety, order, safety at work and other prescribed conditions by the law.


IV.  Documents requiring legalization and notarized translations

 

- Business registration certificate;

- Resources must be translated into Vietnamese and notarized;

- Passport of the head of the representative office;

- Company charter;

- Audited financial statements or documents certifying the implementation of fiscal or financial obligations during the last financial year

 

Note: All requests for the establishment of representative offices are signed and sealed by the parent company. If the parent company in a foreign country does not have a seal, the entire file must be legalized by the consulate.

 

V.  Processing time frame to establish representative offices of foreign companies

 

- Apply for a license to register representative office activities: 15-20 business days.

 - Registration for engraving seals for representative offices: 3 business days

- Open a bank account for representative offices: 1 day.

- Request a certificate of registration of the tax (subsidy fee code), 2 to 5 business days.


VI. Cases ineligible for Licenses for representative offices of foreign companies in Vietnam

 

The licensing agency must establish a representative office of a foreign company in Vietnam without granting a license to establish a representative office of a foreign company in Vietnam in the following cases:

- Foreign traders do not fulfill the conditions specified above.

- Foreign traders trade only goods and services listed on the Prohibited Goods and Services List in accordance with Vietnamese law.

 -The foreign operator applies for a license to establish the representative office of a foreign company in Vietnam for a period of 2 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 order, and historical, cultural, moral and traditional traditions. Vietnam and people's health, the destruction of resources, the destruction of the environment.

- Submit invalid documents and not add sufficient documents at the request of the licensing authority to obtain a license.

 

VII. Rights and obligations of the representative office

 

Rights of Representative Offices:

 

  1. To operate for the purposes, within the scope and duration stipulated in their establishment licenses.
  2. To rent offices, rent and purchase equipment and facilities necessary for their operations.
  3. 3. To recruit Vietnamese and expatriate employees to work for them according to the provisions of Vietnamese law.
  4. To open accounts in foreign currencies or foreign currency-based Vietnam dong at banks licensed to operate in Vietnam, and to be allowed to use those accounts solely for their operations.
  5. To have seals bearing their names according to the provisions of Vietnamese law.
  6. To have other rights as defined by law.

 

Obligations of the Representative Office:

 

  1. Not to directly conduct profit-generating activities in Vietnam.
  2. To conduct commercial promotion activities within the scope permitted by this Law.
  3. Not to enter into contracts, not to amend or supplement contracts already entered into by foreign traders, except where chief representatives obtain valid letters of authorization from foreign traders.
  4. To pay taxes, fees, and charges, and fulfill other financial obligations provided for by Vietnamese law.
  5. To report on their operations according to Vietnamese law.
  6. To have other obligations as defined by Vietnamese law.

Before the foreign investor decides to invest in Vietnam in the form of a representative office, attention should be paid in Section VI of the Rights and Obligations of the Representative Office. Avoiding acts of violating the law will be subject to administrative sanctions as prescribed.

 

 VIII. Effective periods of Licenses for Establishment of representative offices.

 

The license allowing a foreign operator to establish a representative office in Vietnam has a duration of 5 years but does not exceed the remaining duration of the certificate of registration of the company or the equivalent document of the foreign operator present in the establishment. Foreign law regulates the time of registration of businesses of foreign traders. Permits can be renewed several times.

 

IX. The following procedures to establish a representative office of a foreign company in Vietnam

 

- Open specialized foreign exchange accounts and specialized accounts in Vietnam with foreign currency in banks authorized to operate in Vietnam and use this account only for the operation of the representative offices;

- Annually, before January 30 of the following year, the representative office must send a written report of its activities to the Ministry of Industry and Trade (according to the form);

- Make a cash book to record all income and expenses during the operation of the representative office;

- Apply for a work permit for foreign workers working at the representative office (if applicable);

- The representative office must prepare an annual activity report (according to the form) and send it to the Ministry of Industry and Trade.

- Sign an employment contract with the chief representative and the employees of the representative office;

- Each year, the foreign company must certify the salary and the income (according to the form) to the principal representative and the employees of the representative office;

- Pay the personal income tax to the principal representative and to the employees of the representative office (if applicable). Note that when you pay taxes, back up all state agencies' tax returns and tax receipts and complete the annual income tax adjustment for the chief representative and employees of the Crown. representative office;

- Other obligations in accordance with the current law.

 

*Note:

- Representative offices of traders shall not be allowed to conduct sale promotion themselves or to hire other traders to conduct sale promotion in Vietnam for the traders that they are representing.

- Representative offices of traders must not directly conduct commercial advertising activities. When being authorized by traders, representative offices may sign contracts

with traders providing commercial advertising services to advertise for the traders they are representing.

- Representative offices of traders shall not be allowed to directly display and introduce goods and/or services of traders they are representing, except for displays and introductions at their offices. When being authorized by traders, representative offices shall have the right to enter into contracts with traders providing goods/service display and introduction services for the display and introduction of goods and/or services of traders they are representing.

- Representative offices of traders shall not be allowed to directly organize or participate in trade fairs and exhibitions. When being authorized by traders, representative offices shall have the right to sign contracts with traders providing trade fair and exhibition services to do so for the traders they are representing.

- R.O. employ Vietnamese local employee and a foreigner.

- According to Vietnam Law RO, RO is owned by a foreign company. If the investor would like to set up a Foreign Invested Company in Vietnam, the investor can either set up a wholly foreign-invested company or Joint Venture Company. In several fields such as tourism, telecommunication, logistic, etc., if the investor wishes to set up a company in Vietnam, he must co-operate with a local Partner.

- The investor does not need to pay up capital for RO. With a respect to a company in Vietnam, generally, Vietnam Law does not impose the minimum Capital to be paid up, except for several fields such as banking, real estate, training, tourism, etc.

- Investor remits the balance of the money back to a foreign country.

- Before setting up the representative office Vietnam (RO), can register the trademark under the name of a foreign company with Vietnam National Office of Intellectual Property (NOIP).

- RO in Vietnam will not pay the corporate tax.

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