Foreign representative office in Vietnam
MANAGE THE CASH-FLOWS AND REQUIRED COMPLIANCES

Foreign representative office in Vietnam
MANAGE THE CASH-FLOWS AND REQUIRED COMPLIANCES

(Last Updated On: December 3, 2021)

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

The cash-flows chart from VIVA business consulting may help you for an overview on cash-flows 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
Manage cash-flows and required compliances for representative offices in Vietnam

Manage cash-flows and required compliances for representative offices in Vietnam

 

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

 

After every 3 to 5 years of office operating, the Tax Department will require your office to provide cashbooks – petty cash, bank statements, and all related vouchers – lawful invoices – employees profiles, proper salary payrolls for tax inspection:

  1. How much are the fund from headquarters over the years of operation?
  2. How much are the paid expenditures?
  3. How much are the paid salary and insurances?
  4. If the paid expenditures are in line with allowed activities of the office?  If the paid expenditures proved by the lawful invoices? If not, there will be tax arrears and fines.
  5. If the paid salary has lawful labor records? If not, there will be tax arrears and fines.

 

Actually, many representative offices did not believe the rules and have dealt with the tax inspection with very disastrous lessons.

To avoid seriously tax arrears and fines which may also impact to your compliance history in Vietnam, you should:

  1. Review the required business records and compliance reports in advance,
  2. Verify the exists and risks,
  3. Complete the records and reports to manage the final payable amount in the optimal – reasonable – lawful manner.

The common risks and violations that a foreign representative office shall keep in mind:

  • Not open a local bank account.
  • Receive payment – fund from other parties.
  • Using personal accounts for representative office activities.
  • Pay for trading – manufacturing transactions – profitable activities.
  • Pay for lending activities.
  • Pay for commissions.
  • Pay without the lawful invoices
  • Pay without accounting book / cashbook / reports.

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Representative office in Vietnam: Cashbook and lawful invoices for tax inspection

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