22 Apr WHY FOREIGN REPRESENTATIVE OFFICES MUST OPEN BANK ACCOUNTS IN VIETNAM?(Last Updated On: July 21, 2021)
Nowadays, many representative offices in Vietnam don’t open a bank account, or don’t use the account properly. That leads to many administrative violations and other problems.
- According to Commercial Law 2005, Paragraph 4, Article 17 about Representative offices rights, opening 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.
- According to Circular No. 32/2013/TT-NHNN dated December 26th 2013 of the State Bank of Vietnam on guiding the implementation of regulations on restricting the use of foreign exchange within the territory of Vietnam, Article 4 about Cases allowed to use foreign exchange in the territory of Vietnam, using foreign currency for the payroll between Representative offices and Vietnamese individuals, Taxation, office rental,… is prohibited.
- According to Decree 70/2014/ND-CP, Paragraph 1, Article 6, date July 17th, 2014 about ” Money transfer from foreign countries to Vietnam”, “Foreign currency receipts of residents as organizations earned from such transfer process must be deposited into foreign currency accounts opened at authorized credit institutions or sold to these credit institutions.”
- Representative offices in Vietnam must open bank accounts, in foreign currencies and VND and those accounts are exclusive for allowed activities in Vietnam.
- Any recieved foreign currencies shall be exchanged into VND at authorized agencies. It is not allowed representative offices to use bank accounts of the chief or other staff to receive foreign currency and pay to for local transactions.
- According to the current currency management regulations, any local transaction and expenditure shall be listed and paid in VND only. The representative office has to open an account, which is specialized in transferring money for activities in Vietnam. The action of directly transferring money through chief of representative office or other individual’s accounts are considered illegal.
- Moreover, when using the accounts to receive money from the parent company, the representative office has to comply with Vietnam accounting and taxation regulations. Especially, the related fees have to be suitable to the office’s allowed activites, have the appropriate invoices and should be reported properly.
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