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FOREIGN REPRESENTATIVE OFFICE IN VIETNAM
MANAGE THE ANNUAL REQUIRED COMPLIANCE PROCEDURES

FOREIGN REPRESENTATIVE OFFICE IN VIETNAM
MANAGE THE ANNUAL REQUIRED COMPLIANCE PROCEDURES

VIVA BUSINESS CONSULTING là công ty tư vấn doanh nghiệp được tín nhiệm bởi hằng ngàn khách hàng danh tiếng từ năm 2006. VIVA cung cấp nền tảng quản lý toàn diện và nguồn lực thực thi theo cách kết hợp đồng thời của: Luật pháp và thủ tục hành chính trong kinh doanh – Quản lý thuế và kế toán – Quản trị quan hệ lao động – Quản trị tài chính doanh nghiệp – Quản trị và kiểm soát nội bộ. Năng lực của chúng tôi giúp khách hàng lường trước các rủi ro, tối ưu chi phí, kiến tạo lợi thế kinh doanh.

VIVA is a business consulting company, specializes in business compliance procedures according to local business laws and regulations since 2006. VIVA has been continuously trusted by thousands of well-known clients since 2006. We are creating added value for clients by offering one-stop business platform with exclusive and tailored-made services related to market entry and mandatory business compliances. We keep our client’s good standing in lawful and optimal manners whenever they are working and doing business in Vietnam.

Foreign representative office in Vietnam - Compliance procedures 2023

Vietnam-based representative office of a foreign investor means a dependent unit, a lawful office in Vietnam, allowed to recruit staff to manage and promote sale contracts with local business partners, research and develop products, seeking opportunities for the purchase or sale of goods and provision of services. A foreign representative office is a simple form of investment in Vietnam to enhance business from overseas, with multiple advantages while fewer risks regarding the required business compliance procedures such as investment capital, tax, accounting, and auditing. And it is easy to be extended or terminated or dissolved. The expatriate employees who work for representative office can obtain work permit and two years multiple visa (temporary residence card) for themselves and their family in Vietnam.

HOW VIVA BUSINESS CONSULTING ENSURES A REPRESENTATIVE OFFICE HAVE FULLY COMPLIED WITH LOCAL REGULATIONS – KEEPS BUSINESS IN GOOD STANDING IN A CONSISTENT MANNER?

WHY FOREIGN REPRESENTATIVE OFFICE IN VIETNAM

  • 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 opening a residence office, recruiting employees, managing and promoting 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.
  • The representative offices are generally easier to establish than a branch or subsidiary, as they are not used for actual “business” (e.g., sales) and therefore there is less incentive for them to be regulated. 
  • The representative office is quite simple and cost-effective: No investment capital, no Value Added Tax, no Corporate Income Tax, no Accounting, no financial statements, no independent audit required … and easy to extend, terminate or dissolve when necessary.

ALLOWED ACTIVITIES OF FOREIGN REPRESENTATIVE OFFICES

Vietnam-based representative offices of foreign enterprises can conduct these activities:

  • Act as a bureau of communication.
  • Market research.
  • Facilitate investment projects of foreign enterprises.
  • Expedite and monitor the implementation of projects in Vietnam, which are sponsored by foreign enterprises.
  • Representative offices of foreign enterprises in Vietnam shall not carry out business activities in Vietnam.

MORE ADVANTAGES OF FOREIGN REPRESENTATIVE OFFICES?

Establishing a foreign representative office is the optimal option for local customer care, and market research, without having to invest capital or pay corporate income taxes. 

  • No investment capital is 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 the new Labor law in Vietnam, there is no limit on the number of foreign employees for a representative office. In case the office can prove its demand fair with commercial operations, the office is entitled to determine the demand for foreign workers for every job position for which Vietnamese workers are underqualified and request acceptance from the local competent state agencies for work permits.
Representative offices in Vietnam

OUR SERVICE ABOUT THE REQUIRED COMPLIANCE PROCEDURES FOR REPRESENTATIVE OFFICE IN VIETNAM

THE GENERAL REQUIRED COMPLIANCE PROCEDURES:

  1. Local bank accounts
  2. Business record management: Standard folders | Daily records | Scan into soft files | Records completion…
  3. Manage the labor relations: Employee profile | Labor contract | Payrolls | Compulsory insurances | PIT.
  4. Tax management and Accounting: Bank statements | Cashbook | Petty cash | Complete the reports and risk management.
  5. Foreign employees: Employee profile | WP | TRC | PIT | Compulsory insurances | Rights, obligations, and compliance requirements on the chief
  6. Licensing and other procedures: Annual operation reports | Extension of office license | Amending and adjusting the license.  

SOME TYPICAL PROCEDURES FOR DAILY TRANSACTIONS:

Management of employment relations:

  • Employee profile.
  • Labor regulations, labor contracts, and labor agreements with employees.
  • Implement and manage labor contracts.
  • Payrolls service.
  • Internal Labor rules and codes of conduct.
  • Compulsory insurance, labor regimes, labor disputes.
  • Monthly and quarterly reports of Social and medical declarations.
  • Representative, on behalf to manage and settle with the competent state agencies for any query or requirement.
  • Other required relations between employees with a company in signing and implementation of labor contracts.
  • Other required relations between a company with Insurances and Labor agencies in reporting and payments.
  • Other required relations between a company with Tax Department in reporting, payments and annual settlement.

Accounting and Tax management:

  • Monthly and quarterly reports on Tax declaration.
  • Preparing Personal Income Tax declarations, tax settlement, and obtaining a certificate of tax completion of the chief or expat when they leave Vietnam.
  • Preparing cashbooks, petty cash, vouchers and records for tax inspection. Transactions review, and complete legal documents for every transaction. Optimize tax payable amount and risk management.
  • Business record management: Standard folders | Daily records | Scan into soft files | Records completion…
  • Representative, on behalf of clients to manage and settle with the competent authorities for any query or requirement.

Required compliance reports:

  • Annual operation reports and periodic reports for the Department of Industry and Trade.
  • Monthly, quarterly and annual reports and procedures at the Department of Labour and Social Welfare Services.
  • Monthly, quarterly and annual reports and procedures relating to personal income tax for staff at the Department of Taxation.
  • Manage all business records and make them ready for any inspections from authorities.
  • On behalf of clients settle any query or requirement from local competent state agencies.

Required compliance for foreign employees:

  • Visa.
  • Work permit | Labor contracts | Employee profile according to local labor laws.
  • Temporary residence card.
  • Personal income tax.
  • Compulsory insurances.
  • Driving license.
  • Exclusive advice for the Chief of representative office and Legal representatives in Vietnam.

THE REQUIRED PROCEDURES FOR THE CHIEF OF REPRESENTATIVE OFFICE

Professional employee profile and establish local employment relations:

  • Know your employer and your title position.
  • Local job descriptions that shall be inlined and consistent with the position
  • Establish lawful employment relations in forms of appointment letters, labor contracts, internal assignments…
  • Required papers to meet local conditions on foreign employment in Vietnam.
  • Manage your work permits, and residence.

Manage your personal income tax and compulsory insurance:

  • Taxable incomes and tax exemption, methods of tax declaration and payment.
  • Review and identify your sources of income, and tax deductions to avoid potential violations that may impact your good standing.
  • Calculation of your tax payable amount and compulsory insurance in lawful and optimal manners.
  • Review your tax reports and annual final settlement, apply for insurance benefits and avoid double tax payments according to the tax agreements.
  • Representative on behalf to manage and settle any query or requirements from the local competent state agencies.

Manage the local business rules and regulations:

  • Procedures for setting up representative offices / foreign-invested companies.
  • Procedures for amendment, supplementation, and termination of office license.
  • Labor rules and regulations, forms and procedures.
  • Personal income tax declaration and settlement.
  • Requirements and queries from competent state agencies.
  • Business records and internal reports.
  • Managing establishment licenses, annual operation reports, renewal and adjustment.
  • Optimizing – Managing employment relations – salaries – compulsory insurance.
  • Optimizing – Managing personal income tax and inspection procedures from the tax department.
  • Accounting Management.
  • Visas, work permits and temporary residence cards for expats.
  • Extension or termination of representative office license.
  • Exclusive advice for the Chief of representative office and Legal representatives in Vietnam.
  • Updating new laws and regulations on foreign representative offices and expats. Closuring and upgrading the representative office into a subsidiary.

MANAGE THE CASH-FLOW AND REQUIRED COMPLIANCES

There are many foreign representative offices in Vietnam that have been paying serious lessons for violations of unallowed transactions or lawful invoices.

The cash-flow chart from VIVA business consulting may help you with an overview of cash-flow of a foreign representative office, the main transactions in order to manage the required compliances properly:

  1. Local bank accounts – regulations on currency and investment.
  2. Allowed activities of a foreign representative office.
  3. Employment relations.
  4. Compulsory insurances.
  5. Personal income tax.

According to the Laws on VAT invoices: The sellers should issue the lawful invoices for any services or goods sold and the buyers have the responsibility to collect and keep the invoices.  Since 2012, together with the Anti-money laundering regulations and the latest updates on tax laws, the tax inspectors especially focus on representative offices for tax inspection.

EXCLUSIVE PROMOTION FOR LOYAL CLIENTS WHO WILL GO WITH US IN THE NEXT 04 YEARS – FREE CONSULTING AND SUPPORT:

TRANSFORM A FOREIGN REPRESENTATIVE OFFICE IN TO A SUBSIDIARY COMPANY IN VIETNAM

Why no longer a foreign representative office?

  • Could not directly conduct profit-generating activities in Vietnam. Not allowed to do any profitable activities (No trading, no provide service, no import–export goods, no inventory, no manufacturing…)
  • Has no legal status, not to enter into contracts, not to amend or supplement contracts already entered into by foreign traders.
  • Limit operating period to every 5 years.
  • Cannot transfer the ownership.
  • Cannot expand more office, branch.
  • Only get paid from headquarter for limited activities of the office.
  • Must pay VAT, PIT, fees and charges, and fulfill other financial obligations provided for by Vietnamese law.

Why a subsidiary company?

Vietnam top business opportunities:

  • Vietnam has been developing strongly after joining the World Trade Organization (WTO) more than 10 years ago thanks to expansion of relations and reform policies.
  • The admission to the WTO opened a wide door for the Southeast Asian country to enter the global playground.

Your rights and chances:

  • You can do full business activities such as trading, manufacturing, service… directly
  • No limited operating period
  • Open an unlimited number of bank accounts, receive and payment domestic and abroad, transfer profits to home country
  • Have full legal status and enjoy all rights of a business unit in civil administrative and business regulations such as ownership of properties, expansion investment, opening new branch, new factory, new office, investment in other businesses, transfer/sale portions of capital…
  • Enjoy the tax incentives -VAT refund, CIT exemptions, duty exemption on goods imported for manufacture of domestic exports…
  • There is only a business Laws system, equal for both local and foreign investors to do business in Viet Nam, deals with the establishment, organization, restructuring, dissolution, and relevant activities of enterprises, including limited liability companies, joint-stock companies, partnerships, sole proprietorships, and groups of enterprises.

How to transform the foreign representative office into a subsidiary company?

Firstly, terminate – dissolute – Closure of the foreign representative office

There are 03 key steps to closure of a Foreign Representative office in Vietnam:

  1. Preparing for the official dissolution decision and applications and submitting to the competent state agencies for closuring any further obligation.  This step aims to suspend, or terminate any new obligation, especially for the tax reports and other compliance procedures. From the date of proper notice to the local competent state agencies, the office is in closured standby status.
  2. To collect, complete the compliance business records and arrange for any certificates of obligation completion. Especially for the liquidation of employment, the certificate of tax, social insurance.  This is a legal requirement to guarantee that the office has no more pending obligations before being allowed to close under legal procedures.  
  3. Upon the certificates of obligations completion, the office will close the bank accounts, return the business licenses, return the legal stamp as the final step of company closuring. This is the final paperwork as completed. 

Secondly, setting up a company, 

There are 05 key steps to set up FDI company in Vietnam:

  1. Find a lawful location for your head office.
  2. Preparation of required legal papers.
  3. Apply for the investment license and enterprise registration.
  4. Initial compliance procedures after obtaining the licenses.
  5. Periodically line up compliance tasks with local regulations.

MANAGING – PLANNING ON COMPULSORY SOCIAL INSURANCE FOR FOREIGN EMPLOYEES WHO ARE WORKING IN VIETNAM

According to Decree No. 143/2018/ND-CP October 15, 2018, compulsory social insurance (SI) for foreigners who are working in Vietnam includes the following benefits: sickness, maternity, occupational accident, disease, retirement, and death insurance benefits. The main contribution and rates shall enter into force from January 1, 2022, as follow: 

The foreigners who are required to participate in the compulsory insurance

  1. Employees who are foreign nationals working in Vietnam shall be required to participate in the compulsory SI program if they obtain work permits, practicing certificates, practicing licenses issued in Vietnam, indefinite-term employment contracts or employment contracts valid for at least one year with employers in Vietnam.
  2. The foreign employees referred to above shall be excluded from participation in the compulsory social insurance as provided herein if:
  • They are intra-company transferees as stipulated in the Labor Code regarding foreign employees working in Vietnam. 
  • They reach retirement age under the Labor Code.

What are the compulsory insurance rates?

Total compulsory social insurances contribution rates are 30%, consisting of:

  1. The employee side shall, on a monthly basis, make a total SI contribution accounting for 9,5% of monthly pay (8% into the retirement and death benefit fund and 1,5%  into the sickness and parental insurance benefit fund)
  2. The employer side shall, on a monthly basis, make a SI contribution accounting for 20,5% in proportion to the employee’s payroll in the SI payment month (14% into the retirement and death insurance benefit fund, 3% into the sickness and parental insurance benefit fund, 0.5% of into the occupational accident and disease benefit fund, 3% into the health medical fund). 

OUR SERVICE FEE

  1. We do trust our service will meet your demands and we aim to not only fully manage, optimize compliance procedures according to local laws and regulations, but also continuously offer outstanding solutions to help create added value and inspire your business in Vietnam long term.
  2. Our service fee can be customized upon your business demands, for ensuring the service, keeping your good standing in Vietnam at the local competent state agencies, we must maintain a team of 05 expertises in Business Laws | Labor relations | Tax management | Accounting | Administration who are always in ready mode. 
  3. This service fee is excluded VAT 10% and while fees of transportation, courier, tell & fax charge, miscellaneous, vouchers by the agencies are included; This service fee is included counseling but will not be included direct procedures of application for work permit, temporary residence card, changing any content of the office license…

ABOUT VIVA BUSINESS CONSULTING

VIVA is the local expertise for local business compliance procedures, has been trusted by thousands of foreign investors, multinational companies from Europe, Japan, Singapore, India, Korea, USA… for the required business compliance procedures by local laws and regulations since 2006.

Thanks for consistent of practice expertise in Business laws - Employment relations – Tax and accounting – Corporate finance – Corporate services,  VIVA has been successfully providing service for thousands of leading companies in such industries: Garment, energy, pharma, advertising, agricultural…

VIVA keeps its signature by offering one-stop business platform with regard to market entry and the mandatory business compliances. We ensure for our client’s good standing, in lawful and optimal manners whenever they are working and doing business in Vietnam.

 

VIVA not only manage business required procedures by laws but firstly places client’s compliance and good standing, in the optimal methods when offering any solution, and integrated with our intensive resources that allow us to prevent most of the risks in advance, create more benefits, advantages and business inspiration for entrepreneurs.

The insights and consistent backgrounds in Business Laws – Accounting and Corporate Finance – Tax Management – Labor Relations and Payroll – Serectarial and consistent with our exclusive standard operation processes, consisting of consultation – implementation – pratice operation help us fully protect client interests as one-stop solution.

YOU WILL RECEIVE

“If you ask any successful businessperson, they will always have had a great mentor at some point along the road.”

 

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