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.
WHY FOREIGN REPRESENTATIVE OFFICE IN VIETNAM?
ALLOWED ACTIVITIES OF REPRESENTATIVE OFFICES
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 open a resident office, recruit employees, manage and promote 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. Some reasons that representative office is a preferred option when doing business in Vietnam:
- No investment capital 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 in the number of foreign employees for representative office. In case the office can prove its demand fair with commercial operations, the office entitle to determine the demand for foreign workers for every job position for which Vietnamese workers are underqualified and request for acceptance from the local competent state agencies for work permits.
Despite of the advantages, representative offices are not allowed for actual “business” such as sales and profitable activities and have to strictly complied with the local regulations and procedures. In fact, many representative offices have been paying for expensive lessons due to un intentional violations.
CONDITIONS FOR BEING GRANT LICENSES TO SET UP REPRESENTATIVE OFFICES IN VIETNAM
- The foreign investor is incorporated and registers for doing business in accordance with provisions of laws of countries or territories being parties to treaties to which Vietnam is a signatory or is recognized by the aforesaid countries or territories.
- The foreign investor has come into operation for at least 01 year from the date of establishment or registration.
- The Certificate of Business Registration or the equivalent document is valid for at least 01 more year from the date of submission of the application.
- The scope of operation of the representative office is consistent with that in Vietnam’s Commitments to treaties to which Vietnam is a signatory. Where the scope of operation of the representative office is inconsistent with Vietnam’s Commitments or the foreign investor is not located in the country or territory being party to treaties to which Vietnam is a signatory, the representative office can be established only if relevant Ministers, Heads of ministerial agencies have given approval for establishment of the representative office.
LICENSING SERVICE – GRANTING THE OFFICE LICENSE
- Give guidance of license procedures, explaining policies, rights and obligations, providing with forms of documents until obtaining the office license.
- Give guidance and prepare for the documents and dossiers.
Group 01 of three: Papers from headquarters
- Copies of the Certificate of Business Registration or equivalent documents of the foreign investor.
- A letter of appointment of the head of the representative office.
- Copies of audited financial statements or certificates of completion of tax liabilities or financial obligations of the last fiscal year or equivalent documents as proof of existence and operation of the foreign trader issued or certified by competent authorities where such foreign investor is established.
All above papers should be certified or by overseas diplomatic missions or Consulates of Vietnam under laws of Vietnam. Translated documents in Vietnamese and certified true for any papers from overseas.
Group 02 of three: Papers from local agencies
- Copies of the passport or ID card (for Vietnamese) or copies of the passport (for foreigners) of the head of the representative office.
- Documents on the expected location of the representative office including:
- Copies of memorandum of understanding (MOU) or leasing agreements or documents as proof of the right to use a location as the representative office.
- Copies of documents on the expected location of the representative office in accordance with related laws.
Group 03 of three: Application and dossiers to the competent state authority
- An application form for License for Establishment of the representative office using the form promulgated by the Ministry of Industry and Trade and signed by a competent representative of the foreign investor.
- Proper papers and documents of group 1 and group 2 above.
Procedures of granting the license
- The foreign investor shall submit the application to the licensing agency where the representative office is expected to be located.
- Within 03 working days from the date of receipt of the application, the licensing agency shall examine such application and request the applicant to complete the application (if the application is incomplete). The request for supplementation to the application shall be made only once during the processing of such application.
- The licensing agency shall send the applicant a written notification of whether the license or establishment of the representative office is granted or not within 07 working days from the date of receipt of the valid application.
- In case of rejection, the licensing agency shall send the applicant a written notice in which reasons for rejections shall be specified.
Initial compliance procedures after granting the office license
- Publish on three consecutive issues of a printed or online newspaper licensed in Vietnam.
- The representative office must officially commence its operation and notify in writing the provincial/municipal Trade Service of the commencement of its operation at the registered head office.
- Open current bank account at a commercial bank.
- Employee profile and labor contracts.
- Tax code – Personal income tax for local staff and expats. Registering Personal Tax Code for em
- Declaration of using employees.
- Business records.
SERVICE RENDERED BY VIVA – LICENSING SERVICE
- Consult for required papers and procedures, collect and prepare dossiers for setting up a new representative office and opening bank accounts in Vietnam.
- Carry out the procedure for applying the rep office license: Submit dossiers at the HCM Department of Industry and Trade. Manage and follow up for any query or requirement from the related local competent state agencies.
- Submit the dossiers for register on tax identification number for rep office at Tax Department
- Obtain tax identification number certification from Tax Department.
- Submit the dossiers for engraving the seal at Public Security.
- Obtain seal and Certificate of seal specimen from Public Security.
- Submit dossiers of initial taxation registration for staff of Rep Office at Tax Department and receive the tax code for each staff.
- Submit the dossiers for opening accounts at expected bank.
- Guidance for activating and using bank account.
- Collect all documents related to the above procedures and save as standard legal dossiers, for storage and management.
- Handover legal dossiers with related soft files.
SERVICE FEES AND PAYMENT TERMS – LICENSING SERVICE
- Based on your proper required conditions and papers, it is proposed that USD1,500.00 for our service fees for all services described above is excluded VAT 10% and fee of legalization and translation while fees of transportation, courier, tel & fax charge, miscellaneous, vouchers by the agencies are included.
- The service fee shall be paid in full upon your acceptance of this quotation.
- The service fee shall be refunded if VIVA fails to implement the committed tasks.
- VAT invoices shall be issued after the tax and related fees are paid. The invoice value is excluded of fees from competent state agencies.
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.
- Representative office in Vietnam: What you need to know
- Representative office in Vietnam: Conditions and required papers for setting up
- Required compliances for a foreign representative office in Vietnam – what you need to know
- Representative office in Vietnam: Typical rights and obligations
- Representative office in Vietnam: Manage 08 compliance procedures
- Why foreign representative offices must open bank accounts in Vietnam?
- Representative office in Vietnam: Annual budget and running cost
- Representative office in Vietnam: Annual operation report
- Representative office in Vietnam: Risk management on operation
- Representative office in Vietnam: Chief of representative office or head of branch – role and responsibility
- Representative office in Vietnam: Cashbook and lawful invoices for tax inspection
- Representative office in Vietnam: Cases of re-grant of licenses
- Representative office in Vietnam: Taxable incomes from wages and remunerations
- Representative office in Vietnam: Internal Audit Plan