Requirements and Procedures for Setting up a Representative Office in Vietnam

A representative office is a popular form of business presence in Vietnam for foreign companies looking to explore the market or establish a presence in the country. It allows foreign companies to conduct market research, promote their products and services, and provide support to their clients in Vietnam. In this blog post, we will discuss the legal framework, requirements, and procedures for setting up a representative office in Vietnam.

Introduction

Representative office in Vietnam

Before diving into the requirements and procedures, it is important to understand what a representative office is and its purpose. A representative office is a business entity that is set up by a foreign company to represent its interests in Vietnam. It is not allowed to engage in any profit-making activities and is limited to conducting market research, promoting the parent company’s products and services, and providing support to its clients in Vietnam.

Representative offices Vietnam are not considered separate legal entities and do not have the right to enter into contracts or conduct business transactions on behalf of the parent company. They are also not subject to corporate income tax, but they are required to pay taxes on their employees’ salaries.

Legal Framework for Representative Offices Vietnam

The legal framework for representative offices Vietnam is governed by the Law on Enterprises and the Law on Investment. These laws outline the requirements and procedures for setting up a representative office in Vietnam.

The Law on Enterprises defines a representative office as a dependent unit of a foreign company, established to conduct market research, promote products and services, and provide support to its clients in Vietnam. It also states that representative offices are not allowed to engage in any profit-making activities.

The Law on Investment specifies the conditions and procedures for setting up a representative office in Vietnam. It also outlines the limitations and obligations of representative offices in the country.

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Requirements for Setting up a Representative Office Vietnam

Requirements for Setting up a Representative Office Vietnam

In order to set up a representative office Vietnam, foreign companies must meet the following requirements:

• The parent company must have been in operation for at least one year from the date of application.
• The parent company must have a good financial standing and be profitable in the previous year.
• The parent company must have a clear business plan for the representative office in Vietnam.
• The parent company must have a valid business registration certificate or equivalent document issued by the competent authority in the country of origin.
• The parent company must appoint a chief representative who will be responsible for the representative office’s operations in Vietnam.

Additionally, representative offices are required to have a registered address in Vietnam and must obtain a permit from the Department of Industry and Trade before commencing operations.

Procedures for Setting up a Representative Office Vietnam

The procedures for setting up a representative office in Vietnam are as follows:

Step 1: Prepare documents

The first step is to prepare the necessary documents, including:

• Application for setting up a representative office
• Copy of the parent company’s business registration certificate or equivalent document
• Copy of the parent company’s financial statements for the previous year
• Copy of the parent company’s business plan for the representative office in Vietnam
• Copy of the chief representative’s passport or ID card
• Copy of the lease agreement for the representative office’s registered address in Vietnam

Step 2: Submit application

Once all the documents are prepared, the application must be submitted to the Department of Industry and Trade where the representative office will be located. The application must be signed by the chief representative and the legal representative of the parent company.

Step 3: Obtain permit

After the application is submitted, the Department of Industry and Trade will review the documents and issue a permit within 15 working days if all requirements are met. The permit is valid for five years and can be renewed upon expiration.

Step 4: Register with tax authorities

Once the permit is obtained, the representative office must register with the tax authorities and obtain a tax code. This is necessary for paying taxes on the employees’ salaries.

Step 5: Register with other authorities (if applicable)

Depending on the nature of the representative office’s activities, it may be required to register with other authorities, such as the Ministry of Industry and Trade or the Ministry of Information and Communications.

Limitations and Obligations of Representative Offices Vietnam

Limitations and Obligations of Representative Offices in Vietnam

While representative offices offer a convenient way for foreign companies to establish a presence in Vietnam, they are subject to certain limitations and obligations, including:

• Not allowed to engage in any profit-making activities
• Not allowed to issue invoices or enter into contracts on behalf of the parent company
• Not allowed to hire employees directly and must use a third-party service provider
• Must submit an annual report to the Department of Industry and Trade
• Must comply with all relevant laws and regulations in Vietnam

It is important for representative offices to adhere to these limitations and obligations to avoid any legal issues and maintain their operations in Vietnam.

Conclusion

In conclusion, setting up a representative office Vietnam can be a great option for foreign companies looking to establish a presence in the country. It allows them to conduct market research, promote their products and services, and provide support to their clients without the need to set up a separate legal entity. However, it is important to understand and comply with the legal framework, requirements, and procedures for setting up a representative office in Vietnam to ensure a smooth and successful operation.