03 Sep ANNUAL BUDGET AND RUNNING COST OF REPRESENTATIVE OFFICE IN VIETNAM
In fact, setting up a representative office in Vietnam can enhance and support a lot for the parent company’s business, such as managing effortlessly, saving cost and avoiding risky things from local compliance procedures. In this article, VIVA would like to share some information about the average running costs of representative office in Vietnam.
Vietnam-based representative office of a foreign investor means a dependent unit, which is established under the provisions of Vietnamese law to conduct market survey and a number of commercial promotion activities permitted by Vietnamese law.
With a cost of representative office, foreign investors can set up a lawful office in Vietnam, recruit staff to manage and promote sale contracts with local business partner, research and develop products, seeking opportunities for the purchase or sale of goods and provision of services… The expatriate employees who work for representative office can obtain work permit and two years multiple visa (temporary resident card) for themselves and their family in Vietnam.
Here is the list of key administration requirements of running costs of representative office in Vietnam for annually budgeting:
| Compliance Procedures | Cost (USD) | Remark |
|---|---|---|
| Establishment | 1200 | One-stop fee, one time payment |
| Virtual office | 800 | Annual fee |
| Tax - Accounting - Compulsory insurance and other secretary services | 900 | Annual fee, applied for less than 02 staffs |
| Compulsory insurances | 75 | per / month / 01 local staff |
| Compulsory insurances | 50 | per / month / 01 expat |
In accordance with the Law on Social Insurance, which went into force in early 2018, the employers and employees have to contribute compulsory social insurance and trade union fee as follows:
| The payers | Social insurance | Health insurance | Unemployment insurance | Trade Union fee | Total |
|---|---|---|---|---|---|
| Employee | 8% | 1.5% | 1% | 10.5% | |
| Employer | 17.5% | 3% | 1% | 2% | 23.5% |
Total: 34% on the salary and wages:
- For the employer: 23,5%
- For the employee: 10,5%
Read more: Manage Tax Declaration and Settlement for A Representative Office in Vietnam
The cap of the salary used as the basis for social insurance contribution is: 29.800.000VND. It means, in case the salary exceeds the cap, the maximum contribution amount will be: 34% x 29.800.000VND only.
Foreign workers in Vietnam with a work permit, or a practicing certificate or license also going have to contribute health insurance and social insurance. The basis for social insurance contribution will be broadened to include salaries, allowances and other supplementary amounts.
Besides the compulsory insurance, you shall declare and pay PIT 20% on local incomes for non-resident expats and pay progressive tax rates from 5% to 35% depending on income levels for resident expats and local employees. The representative only has to pay PIT.
ABOUT VIVA BUSINESS CONSULTING
Who we are
- 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.
- The insights and consistent backgrounds in Business Laws – Accounting and Corporate Finance – Tax Management – Labor Relations and Payroll – Secretarial services help us build trust and confidence in the entrepreneur's community.
- We have been successfully providing service for thousands of leading companies from Hong Kong, Japan, US, EU, Singapore, India, China, Korea…. in forms of FDI companies, Foreign representative offices, Foreigner working in Vietnam, Vietnamese SMEs, Chief Operation Officers.
What we do
- Services for Expats in Vietnam: Visa, Work Permit, Temporary residence card, Compulsory Insurances, Personal Income tax, Labor contracts, Employment Records and Relations, Other Secretarial Services.
- Services for Representative offices in Vietnam: Establishment, extension of representative office licenses. Required compliance procedures during operation. Rights and obligations of the chief of representative office. Closure of representative office risks management.
- Services for a company in Vietnam: Setting up a new company and licensing service. Business records management. Daily business transactions management. Tax management. Accounting and financial statements. Employments, payroll and compulsory insurances. Representative on behalf at competent state agencies for any business administration procedures.
Motivated by our core values of ceaseless improvement, our great insights in local business culture and regulations, as well as the exclusive services, promise to offer you one-stop and tailored-made solutions that optimize every of your business in Vietnam in the lawful manner.
We are looking to be your valued business partner and resources in Vietnam as we have been choosing since 2006.
Read more:
Compliance procedures of representative office in Vietnam
Annual operation reports for foreign representative offices
The proactive management of wage labor compliance procedure 2020
Important notes on foreign representative office operation in Vietnam
Cashbook and petty cash for tax inspection of representative office in Vietnam
Manage tax declaration and settlement for a foreign representative office in Vietnam