Setting Up a Representative Office in Vietnam

The License for Establishment of a representative office shall be valid for 05 years. However, this duration shall not exceed the remaining effective period of the Certificate of Business Registration or an equivalent document for those having an expiry date. Upon the conclusion of this 5 year period, the representative office license must be renewed to continue operations.

It is important to note that a representative office is strictly prohibited from engaging in any type of commercial or profit generating activity. Instead, its primary functions are to conduct market research and promote the head office’s business interests within the Vietnamese market. Additionally, a representative office is not obligated to pay Business License tax or Corporate Income tax in Vietnam.

Permitted Activities

With the central purpose of conducting market research, a representative office is permitted to perform the following specific activities:

1. Conducting liaison activities with local partners.

2. Carrying out market research and feasibility studies.

3. Promoting the business operations of its parent head office.

In contrast, a representative office is strictly forbidden from the following:

1. Engaging in direct trade or manufacturing activities.

2. Signing business contracts for the purpose of generating profit.

Registration Requirements

To successfully register a representative office, the foreign parent company must satisfy the requirements stipulated in Article 7 of Decree No. 07/2016/ND-CP:

1. The foreign trader must be incorporated and registered in accordance with the laws of countries or territories that are parties to treaties to which Vietnam is a signatory.

2. The foreign trader must have been in operation for at least 01 year from the date of its establishment or registration.

3. The Certificate of Business Registration or equivalent document must remain valid for at least 01 more year from the date of the application submission.

4. The intended scope of operation of the representative office must be consistent with Vietnam’s commitments in international treaties.

5. In cases where the scope is inconsistent or the foreign trader is not from a signatory country, the establishment requires specific approval from relevant Ministers or Heads of ministerial agencies.

Required Documentation

All new applications for a representative office license must include the following essential documents:

1. Certified copies of the Certificate of Business Registration of the foreign trader.

2. An official letter of appointment for the head of the representative office.

3. Copies of audited financial statements or certificates of tax fulfillment from the last fiscal year as proof of the parent company's existence.

4. Copies of the passport or ID card for the head of the representative office.

5. Documents regarding the expected location, including a memorandum of understanding (MOU) or leasing agreements.

Please be advised that documents specified in items 1, 2, 3, 4, and 5 must be translated into Vietnamese and certified in accordance with Vietnamese law. Furthermore, the Certificate of Business Registration must be legalized by overseas diplomatic missions or Consulates of Vietnam.

Registration Procedure

In general, foreign companies register their representative office at the Department of Industry and Trade in the province where the office is located, such as Danang or Ho Chi Minh City. However, the Management Boards of industrial parks, export processing zones, or hi-tech zones hold the authority to grant or adjust licenses for representative offices located within their respective specialized zones.

Compliance Requirements

In order to remain compliant with local regulations, a representative office must adhere to the following:

• Naming Conventions: The name of the representative office must match the parent company and include the phrase "representative office" in Vietnamese. The office nameplate must be clearly displayed at the headquarters.

• Location Standards: Representative offices must be headquartered at locations that satisfy requirements for security and occupational hygiene. Subletting or lending the office space to other parties is prohibited.

• Personnel Restrictions: The head of a representative office shall not concurrently hold the position of head of a branch for any foreign trader or act as the legal representative for any business organization incorporated under Vietnamese law.

• Reporting Obligations: By January 30th of each year, every representative office must submit an operation status report to the licensing agency using the form stipulated by the Ministry of Industry and Trade.

Renewal Procedure

Once approved, a representative office license is valid for 5 years and must be renewed to continue operations. The application for extension includes an official application form signed by a competent representative, updated business registration documents of the parent company, and audited financial statements for the most recent fiscal year. All foreign documents in the renewal dossier must also undergo translation and consular legalization where required.

Conclusion

If you are interested in exploring the potential of the Vietnam market with minimal risk, setting up a representative office is highly recommended. DB Legal provides professional support for foreign investors in Danang, Ho Chi Minh City, and neighboring provinces to ensure a smooth and compliant establishment process.

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