01 Nov WHY FOREIGN REPRESENTATIVE OFFICE IN VIETNAM?(Last Updated On: November 2, 2021)
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 new Labor law in Vietnam, there are no limit in 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 profitabe activities and has 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 GRANTED 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.
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- 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 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.
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