Setting up a Representative Office in Vietnam

A Representative office is a temporary facility that allows foreign companies to assess Vietnam’s market. A representative office cannot conduct any commercial activity. Therefore, foreign companies will typically use a representative office as a first step to enter Vietnam prior to establishing a company. This article provides information about setting up a representative office in Vietnam and covers the following topics:

Key Facts

- The License for Establishment of a representative office shall be valid for 05 years but not exceeding the remaining effective period of the Certificate of Business Registration or the equivalent (for documents having expiry date). Furthermore, after the 5-year period, the representative office must be renewed.

- A representative office cannot engage in any type of commercial activity. Rather, a representative office is used to conduct market research, promotion of its head office’s businesses in Vietnam.

- A representative office is not obligated to pay the Business License tax, Company Income tax in Vietnam

Permitted Activities

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

• - liaison activities;
• - market research, and
• - Promotion of its head office’s businesses

In particular, a representative office is not allowed to engage in the following activities:

- Engage in trade or business activities

- Sign on business contracts for making the profits;

Registration Requirements

To register a representative office, the foreign parent company must meet the following requirements (According to the Article 7 of Decree No. 07/2016/ND-CP):

1. The foreign trader is incorporated and registers for doing business in accordance with provisions of laws of countries or territories being parties to treaties to which Vietnam is a signatory or is recognized by the aforesaid countries or territories;

2. The foreign trader has come into operation for at least 01 year from the date of establishment or registration;

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

4. The scope of operation of the representative office is consistent with that in Vietnam’s Commitments to treaties to which Vietnam is a signatory;

5. Where the scope of operation of the representative office is inconsistent with Vietnam’s Commitments or the foreign trader is not located in the country or territory being party to treaties to which Vietnam is a signatory, the representative office can be established only if relevant Ministers, Heads of ministerial agencies (hereinafter referred to as “relevant Ministers”) have given approval for establishment of the representative office.

Furthermore, all new applications for a representative office must include the following documents:

1) Copies of the Certificate of Business Registration or equivalent documents of the foreign trader;

2) A letter of appointment of the head of the representative office;

3) Copies of audited financial statements or certificates of 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;

4) Copies of the passport or ID card (for Vietnamese) or copies of the passport (for foreigners) of the head of the representative office;

5) Documents on the expected location of the representative office including:

- Copies of memorandum of understanding (MOU) or leasing agreements or documents as proof of the right to use a location as the representative office;

- Copies of documents on the expected location of the representative office in accordance with provisions of Article 28 hereof and related laws.

Note that the Documents specified in points 1, 2, 3, 4 and 5 (for the head of the representative office being foreigners) shall be translated into Vietnamese and certified true in accordance with laws of Vietnam. Documents specified in point 1 shall be certified or legalized by overseas diplomatic missions or Consulates of Vietnam under laws of Vietnam

Registration Procedure

In general, foreign companies register a representative office in the Department of Industry and Trade of the province where the representative office is expected to be located. Management Boards of industrial parks, export-processing zones, economic zones or hi-tech zones (hereinafter referred to as Management Boards) shall grant, re-grant, adjust, extend or revoke the License for Establishment of the representative office and shall have the power to suspend the operation of such representative offices located in industrial parks, export-processing zones , economic zones or hi-tech zones in case the establishment of such representative offices has not been prescribed by specialized legislative documents.

Compliance Requirements

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

·The name of the representative office must match the parent company; Representative offices shall be named using letters in Vietnamese alphabet, letters F, J, Z and W, numbers and symbols; The name of a representative office shall be the name of its head office enclosed with the phrases “representative office”. The nameplate of every representative office or branch shall be put up at their office. The size of the name of the representative office or branch printed in their transaction documents, records and publications shall be smaller than that of its head office .

·Location of Representative: Representative offices shall be headquartered at locations that satisfies requirements for security, occupational hygiene and safety and others stipulated in laws of Vietnam.Representative offices shall not lend or sublet their offices.

·The head of a representative office shall not concurrently hold the following titles:

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

a) The head of a branch of another foreign trader;

c) The legal representative of the same foreign trader or others;

d) The legal representative of a business organization incorporated in accordance with Laws of Vietnam.

Reporting:  By January 30^th of each year, every representative office shall submit operation status reports using the form stipulated by the Ministry of Industry and Trade to the licensing agency by post. Representative offices shall submit reports, documents and explanations for their operation upon the request of competent state regulatory authorities.

Renewal Procedure

Once approved, a representative office is valid for 5 years and must be renewed to continue operations.

An application for extension of the License for Establishment shall include:

a) An application form for extension of the License for Establishment of the representative office or branch using the form promulgated by the Ministry of Industry and signed by a competent representative of the foreign trader.

b) Copies of the Certificate of Business registration or equivalent documents of the foreign trader;

c) Copies of audited financial statements or certificates of 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;

d) Copies of the existing License for Establishment of the branch or representative office

Please note that Documents specified in point b, clause 1 of this Article shall be translated into Vietnamese and certified or legalized by overseas diplomatic missions or Consulates of Vietnam in accordance with laws of Vietnam. Documents specified in point c, clause 1 of this Article shall be translated into Vietnamese and certified true in accordance with laws of Vietnam.

Conclusion

If you are interested in the Vietnam market and want to study the potential of your business, setting up a representative office  is recommended.

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