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.
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.
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 | in current price | One-stop fee, one time payment |
| Virtual office | in current price | Annual fee |
| Tax – Accounting – Compulsory insurance and other secretary services | in current price | Annual fee, applied for less than 02 staffs |
| Compulsory insurances | in current price | per / month / 01 local staff |
| Compulsory insurances | in current price | 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.
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
- Manage tax declaration and settlement for a foreign representative office in Vietnam
- Equirements for taking foreign loans applied to FDI companies – foreign loans subject to registration with the state bank
