Termination of foreign traders' representative offices

Representative offices of foreign traders performing the function of contact offices, understanding the market, promoting business investment opportunities of foreign traders in Vietnam. Representative offices shall have obligations under the Law on Trade of Vietnam. Therefore, in case of termination of operation, the foreign traders shall carry out procedures to close a representative office in Vietnam.

Legal grounds

• Commercial Law 2005;
• Decree No. 07/2016/ND-CP detailing the Commercial Law on representative offices and branches of foreign traders in Vietnam.

Cases of the termination of foreign traders’ representative offices

• At the request of foreign traders;
• When foreign traders terminate their operations under the laws of the countries or territories where such traders establish or register their business;
• Past the operation duration of 05 years under the license to establish a representative office, the foreign traders do not request the extension or are not agreed to extend by the management agencies;
• Revo recovering the license to establish a representative office;
• Foreign traders, representative offices, and branches no longer meet one of the conditions for licensing establishment in Vietnam (as prescribed in Article 7 of Decree 07/2016/ND-CP).

Application for termination of representative offices of foreign traders

• Notification of termination of operation of representative offices according to the form of the Ministry of Industry and Trade signed by competent representatives of foreign traders;
• List of creditors and outstanding debts, including tax debts and social insurance payment debts;
• List of employees and their current corresponding benefits;
• The original license for the establishment of a representative office
• A copy of the document issued by the licensing agency does not renew the license to establish a representative office or a copy of the decision on Revo Revo issue of the license to establish a representative office (in case of non-renewal of the license)

Order and  procedures for the termination of representative offices of foreign traders

Step 1: Decide to terminate operation and pay obligations to employees

Foreign traders make decisions to terminate the operation of representative offices, notify employees and settle the labor regime with office workers.

Step 2: Carry out procedures for terminating the tax code of the representative office

A dossier of termination of tax code includes:

• A written request for the termination of tax code;
• The decision to terminate the operation of the representative office for the above reasons;
• A copy of the operating license of the representative office, a copy of the notice of tax identification number of the representative office.

Tax offices of representative offices simultaneously settle personal collection tax for heads of representative offices of foreigners and employees working at representative offices.

Step 3: Close the representative office bank account

After the tax agency settles and issued a document terminating the tax code of the representative office, the representative office closes the opened bank account.

Step 4: Return the seal to the provincial/city police office.

Dossiers of return of representative office seals include:

• The dispatch to return the seal of the representative office;
• Seal of representative office;
• Certificate of registration of seal samples;
• A copy of the operating license of the representative office;
• The decision to terminate the operation of the representative office for the above reasons;
• A copy of the written termination of tax code of the tax agency;

Time to carry out the procedure for returning the seal

The police office receives the dossier to return the seal and issued a notice of cancellation of the seal of the representative office within 3-5 working days.

Step 5: Apply for termination of operation of the representative office directly at the management agency

Time for scoring dossiers of termination of operation of representative offices

Within 05 working days after receiving a complete and valid dossier, the licensing agency operating the representative office of the foreign businessman shall publish on its website the termination of operation of the representative office.

Note when  closing/terminating, please note when closing/terminating representative offices of foreign traders

• State agencies shall not grant written certifications of the termination of operation of representative offices but shall publish on their websites the termination of operation of representative offices.
• Foreign traders and representative offices must publicly post up the termination of operations at the head offices of representative offices and perform other obligations as prescribed by law when the representative offices terminate their operations.
• In the course of closing representative offices or tax agencies for tax examination and settlement, in case the representative office arises a violation, it will have to pay the full amount of tax and fine if any before the notice of termination of tax code.

Some questions related to procedures for the dispatch of representative offices of foreign traders

When terminating the operation of the representative office, is it required to do tax finality procedures?

Before applying for termination of operation, the representative office of the foreign business must apply for termination of tax code and procedures for tax final settlement, and the tax agency shall make the final settlement of personal income tax to the head of the representative office and employees.

Where to apply for termination of representative offices of foreign traders?

• Departments of Industry and Trade for head offices of representative offices with addresses outside industrial parks, export processing zones, delicate zones, and high-tech parks.
• The management board of industrial parks, export processing zones, economic zones, and high-tech parks (here below referred to as management copies) in case the representative offices are headquartered in industrial zones, export processing zones, economic zones, and high-tech parks.

Is there a fee to terminate the operation of the representative office?

Following current law, procedures for termination of operation of representative offices of foreign traders are free of state fees.

Competence to sign dossiers of termination of representative offices of foreign traders?

Foreign traders shall sign dossiers of termination, perform or authorize to complete procedures for termination of operation of representative offices in Vietnam.

Customers wishing to consult, use the service of solving and dining foreign representative office, please contact Viet An Law Firm for specific advice.