02 Nov ALLOWED ACTIVITIES OF REPRESENTATIVE OFFICES IN VIETNAM(Last Updated On: November 2, 2021)
The foreign representative office in Vietnam is a dependent unit supporting business operations of the parent company, which is allowed to do basic business activities such as open a resident office, recruit employees, manage and promote local business contracts, market research., etc. Representative Offices tend to be utilized by foreign investors in fields such as sourcing of products, quality control, and general liaison activities between the Head Office and the Representative Offices overseas. Some reasons that representative office is a preferred option when doing business in Vietnam:
- No investment capital required.
- No Value Added Tax, no Corporate Income Tax, no Accounting, no Financial statements, no independent audit required.
- Easy to extend, terminate or dissolve when necessary.
- Allowed to recruit local and foreign employees.
- Based on new Labor law in Vietnam, there are no limit in number of foreign employees for representative office. In case the office can prove its demand fair with commercial operations, the office entitle to determine the demand for foreign workers for every job position for which Vietnamese workers are underqualified and request for acceptance from the local competent state agencies for work permits.
Despite of the advantages, representative offices are not allowed for actual “business” such as sales and profitabe activities and has to strictly complied with the local regulations and procedures. In fact, many representative offices have been paying for expensive lessons due to un intentional violations.