Establishing a representative office in Vietnam: The The latest-updated dossiers and procedures

Currently, the demand for business development and expansion of the operation scale of foreign businesses in Vietnam is increasing. It is why more and more representative offices of foreign companies in Vietnam have been established. However, conditions, application documents, and procedures to establish representative offices of foreign companies in Vietnam are pretty complicated. To simplify the steps and help foreign companies save costs, LTS LAW assumes the mission to provide the requisite support to the establishment of representative offices of foreign companies in Vietnam. Find out more about the service with LTS LAW right here!

Representative offices of foreign companies in Vietnam

What is a representative office of foreign companies in Vietnam?

In Clause 6, Article 3 of the 2005 Commercial Law, a representative office of a foreign company in Vietnam is defined as follows: “This is a dependent unit of a foreign trader, which is established under the provisions of Vietnamese law to research the market and carry out several trade promotion activities permitted by Vietnamese law.”

Accordingly, a representative office of a foreign company is a dependent unit of a foreign company, carrying the task of an authorized representative to explore the market, conduct trade promotion, represent the foreign company’s interests, and protect those interests in Vietnam.

Opening a representative office of a foreign company in Vietnam
Opening a representative office of a foreign company in Vietnam

The operation contents of a representative office must be consistent with the commitments of international treaties to which Vietnam is a signatory: market research and trade promotion. Representative offices are not allowed to carry out business activities or sign economic contracts with partners (except in the case of receiving authorization from a foreign company on a case-by-case basis). The foreign company shall manage all activities of the representative office and be responsible before Vietnamese law for the operation thereof.

Benefits of a representative office in Vietnam

A representative office in Vietnam is established to survey the market and carry out trade promotion activities within the scope permitted by international treaties to which Vietnam is a signatory and by the laws of Vietnam. Some benefits of a representative office of foreign companies in Vietnam are as follows:

  • Operate in accordance with the purposes, scope, and duration specified in the representative office establishment license.
  • Rent offices; rent and purchase necessary means and supplies related to the operation of representative offices.
  • Recruit Vietnamese and foreigners to work at representative offices but must comply with the provisions of Vietnamese law.
  • Open bank accounts in foreign currency or Vietnam dong with foreign currency origin at banks licensed to operate in Vietnam, but only use these accounts to operate the representative offices.
  • Other rights as prescribed by Vietnamese law.

Advantages of establishing a representative office in Vietnam

Establishing a representative office in Vietnam is considered an optimal and popular choice for many foreign companies that want to research the Vietnamese market before launching their entire commercial presence in Vietnam. So what are the advantages of establishing a representative office of a foreign company in Vietnam?

Having plenty of time to explore the Vietnamese market

Foreign companies entering Vietnam for the first time have the primary purpose of promoting their brands, reviewing, and exploring the Vietnamese market. At that time, establishing a representative office is a suitable solution to help foreign businesses optimize costs and simplify legal procedures.

Simple establishment procedure

Compared with establishing a commercial presence in Vietnam by other forms such as foreign-invested companies, branches, investments under a business cooperation contract (BCC), etc., opening a representative office is obviously the simplest form.

Quick licensing process

The time to process an application for a representative office establishment license as prescribed by law is relatively short, within seven (7) working days from submitting a complete and valid application dossier to the licensing authority (i.e., the relevant provincial Department of Industry and Trade).

Should a foreign company’s representative office be established in Vietnam?
Should a foreign company’s representative office be established in Vietnam?

Maximum cost savings

A representative office of foreign companies in Vietnam shall not be taxed because it has no revenue-generating activities. The representative office is only required to withhold and pay personal income tax (PIT) for and on behalf of its staff.

Creating a stepping stone to establish a foreign-invested company

According to Vietnamese law, a representative office cannot conduct business or other income-generating activities. Instead, it carries out the functions of communication, market survey, creating business investment opportunities, etc., for foreign companies that want to expand their operation to Vietnam.

Thanks to these activities, the image as well as the brand name of the foreign company shall gradually become known in the Vietnamese market. From there, the foreign companies will decide when is the right time to establish a foreign-owned company and conduct official commercial activities in Vietnam.

Conditions for establishment of a representative office in Vietnam

To obtain a representative office establishment license in Vietnam, foreign companies must meet all conditions prescribed by law, specifically:

  • Foreign companies are allowed to establish and register their business in accordance with the laws of countries participating in international treaties to which Vietnam is a signatory or recognized by the laws of these countries.
  • Foreign companies must have been operating in the host country for at least one (1) year, counting from the date of their establishment or registration.
  • Suppose a business registration license or certificate of incorporation of a foreign country stipulates the operation period. In that case, the time left must be at least one (1) year counted to the date of applying for a representative office establishment license in Vietnam.
  • All activities of a representative office must be consistent with Vietnam’s commitments to international treaties.
  • In case the operation contents of a representative office do not conform to Vietnam’s commitments in international treaties, specific approval from the Minister of the relevant Ministry must be obtained before issuing the representative office establishment license.
  • Conditions for the head of the representative office: Not to be concurrently the head of any representative office or branch of any companies nor be concurrently the legal representative of any companies. Vietnamese law does not stipulate the nationality conditions for the head of a representative office, so the person appointed as the head of the representative office can be a foreigner.
  • The location of the representative office must ensure security, order, occupational safety, health conditions, and other conditions as prescribed by Vietnamese law.

Application dossier for a representative office establishment license in Vietnam

Foreign companies apply for a representative office establishment license to a provincial Department of Industry and Trade where the representative office is intended to be located. The dossier includes:

  • An application form for a representative office establishment license of a foreign company in Vietnam;
  • A business registration license, certificate of incorporation, or other documents of equivalent value to foreign companies.
  • A letter of appointment appointing the head of the representative office in Vietnam;
  • An audited financial statements of the last two (2) years or a written certification of the fulfillment of tax/financial obligations in the latest fiscal year or papers of equivalent value issued or certified by competent State agencies of the country where the foreign company is headquatered;
Application dossier for establishing a representative office in Vietnam
Application dossier for establishing a representative office in Vietnam
  • A certified copy of the ID card/citizen ID card/ passport of the head of the representative office;
  • Proof of address of the representative office, including:
  • Notarized copy of an office lease contract;
  • A notarized copy of a certificate of land use right, house ownership and assets attached to land of the lessor (in case the leasor is a real estate business company, its enterprise registration certificate with real estate business line is required);

Note: the business registration certificate or certificate of incorporation or its equivalent must be legalized by an embassy or general consulate of Vietnam in the given country. All documents in a foreign language must be translated into Vietnamese and certified by a notary public in Vietnam.

Procedures after establishing a representative office in Vietnam

  • Register a tax code at the relevant provincial tax department.
  • Register a personal income tax (PIT) code for the representative office’s head if they are
  • Make a stamp for the representative office at the relevant police
  • Hang a signboard in front of the representative office’s office.
  • Opening bank accounts under the representative office’s name.
  • Post an establishment announcement on written or electronic newspapers that are allowed to operate in Vietnam upon issuance of the representative office establishment license.
  • The representative office must officially come into operation and notify the relevant Department of Industry and Trade of its opening within 45 days.
  • Prepare and submit annual reports to the Department of Industry and Trade before the last working day of January of each year.
  • Declare and pay personal income tax (PIT) for the head of the representative office and other staff of the representative office (if any).

Cases where a representative office establishment license of foreign companies is not granted in Vietnam

A representative office establishment license shall not be issued in the following cases:

  • Failure to meet one of the conditions for granting a representative office establishment license.
  • Foreign companies apply for a representative office establishment license within two (2) years from the date of revocation of the representative office establishment license.
  • For reasons of national defense and security, social order, safety, social ethics, and community health.

Frequently asked questions?

How long is the representative office establishment license in Vietnam valid?

Answer: According to Article 9 of Decree 07/2016/ND-CP, the representative office establishment license in Vietnam is valid for five (5) years but must not exceed the remaining term of the business registration certificate or certificate of incorporation or equivalent documents of foreign companies (in case such documents specify operation period).

Does the representative office have a business function?

A representative office is a dependent unit of a foreign company with the task of authorized representation for a foreign company’s interests and protecting those interests. Representative offices are not permitted to perform the business functions of the foreign company except for the work authorized on a case-by-case basis.

LTS LAW provides the services of establishing a representative office of foreign companies in Vietnam

To open a representative office in Vietnam, foreign companies are recommended to consult with professional lawyers, use LTS LAW’s service of establishing a representative office in Vietnam. We provide a variety of services related to the process of establishing a representative office:

  • Give pre-establishment advice on issues related to documents and procedures for establishing a representative office of foreign companies in Vietnam.
  • Support in preparing documents and dossiers of establishing a foreign company’s representative office in Vietnam at clients’ request, ensuring compliance with the provisions of law.
  • Apply for a representative office establishment license.
  • Obtain a seal and seal sample certificate of the representative office from the relevant police agency.
  • Obtain a tax code for the representative office of foreign companies.
  • Give full advice on post-licensing procedures upon the availability of a representative office establishment license.

Carry out the procedures related to personal income tax, social insurance, and labor issues at the relevant Department of Industry and Trade, social insurance agency, tax department, etc.

Services of establishing a representative office in Vietnam at LTS LAW
Services of establishing a representative office in Vietnam at LTS LAW

Above is the most detailed information about the procedure and establishing a representative office of foreign companies in Vietnam. Clients should seek legal support from professional consulting firms to prepare a complete and valid dossier without having to change or supplement it many times, affecting investment progress and business implementation. LTS LAW is a perfect choice for foreign businesses that intend to establish a representative office of foreign companies in Vietnam.

Contact LTS LAW immediately for the most detailed advice:

LTS LAW

Address: Room 602, Floor 6, 520 CMT8, Ward 11, District 3, HCMC, Vietnam

Email: contact@lts.com.vn

Hotline: (+84) 902 798 066

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