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 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

1. 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.
2. The foreign investor has come into operation for at least 01 year from the date of establishment or registration.
3. 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.
4. 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.

Read more:

• What is a foreign representative office?
• Representative office: How to setting up?
• Representative office: Typical rights and obligations
• Why foreign representative offices must open bank accounts in Vietnam?
• Representative office: Conditions and required papers for setting up
• Representative office: Annual budget and running cost
• Representative office: Annual operation report
• Representative office: Risk management on operation
• Representative office: Chief of representative office or head of branch – role and responsibility
• Representative office: Taxable incomes from wages and remunerations