It is esstential to choose and compare the appropriate affiliated unit of the business: establish a branch or establish a representative office or establish a business location when investing without establish a company in Vietnam.
Based on the Law on Enterprises 2020 and implementation guidelines, in order to help Clients have further information of the characteristics and requirements to, Viet An Law builds a general comparison table based on the following specific criteria:
| Criteria | Branch | Representative office | Business location |
| Concept | A branch is a affiliated unit of an enterprise, tasked with performing all or part of the functions of the enterprise, including the function of an authorized representative.
The branch’s line of business must be consistent with the business line of the enterprise |
A representative office is a affiliated unit of an enterprise, having the task of representing by authorization for the interests of the enterprise and protecting those interests. | A place of business is a place where a business conducts specific business activities.
The business location of the enterprise may be outside the registered address of the head office (Article 33.2 of Decree 78/2015/ND-CP as amended by Decree 108/2018/ND-CP) |
| Operation range | To perform all or part of the functions of the enterprise, including business functions and authorized representation functions. | Perform the duties of an authorized representative of the enterprise.
Representative office has no business function |
Be able to operate by registering a number of trades company registration. |
| Seal, license to operate | Has its own seal, seperated operation certificate | Has its own seal, seperated operation certificate | No own seal; seperated operation certificate |
| Name | The name of the branch must bear the business name, accompanied by the phrase “Branch” in the case of a branch. | The name of the representative office must bear the business name, accompanied by the phrase “representative office” in the case of a representative office. | The business name is not required when naming. |
| Contracting
|
Allowed to sign economic contracts. | Not to be named on the economic contract. | Not to be named on the economic contract. |
| Invoice | Allowed to use and issue invoices. | Do not register or use invoices. | Do not register or use invoices. |
| Tax code | Has its own 13-digit tax code. The branch that declares tax according to its tax identification number is the branch number recorded in the Certificate of Operation Registration. | Has its own 13-digit tax code. Representative offices declare tax according to the tax code which is the office code recorded in the Certificate of Operation Registration. | There is no separate tax code.
For a business location in the same province or city where the Company’s head office is located, the tax shall be declared and paid for the business location. For a business location differ from the province or city where the company’s head office is located, the location must register for a dependent tax identification number at the Tax Department where the business location is located and declare according to the dependent tax identification number. |
| Tax accounting | Branches can choose Independent or Dependent Accounting form. | Independent declaration with the enterprises at the tax authority where the representative office is located. | Accounting depends on the company, the form of collective tax declaration according to the company. |
| Required taxes | Excise
VAT tax Corporate income tax Personal income tax |
Personal income tax. | License tax.
|
| Tax obligations | – The branch pays license tax at the Tax Agency where the branch is located.
– In case the branch accounting depend on its operations in a province or city differed from the area the enterprise’s head office is located, it shall declare enterprise income tax at the place where its head office is located. – Branches still have to fulfill tax obligations for VAT, corporate income tax according to the provisions of Circular 80/2021/TT-BTC and Circular 219/2013/TT-BTC (as amended and supplemented from time to time) |
Representative offices do not perform business functions, so they do not pay license tax | – Location of license tax payment at the place of registration. Currently, the business location is established in a different province or city where the head office is located, so if registering in another province, there will be additional procedures for registering a tax code for the location to submit the declaration and license tax. |
| Procedures for establishment and adjustment of business registration | The establishment dossier is more complicated than the business location.
Change of address to another county must conduct tax certification procedures before changing the address on the Certificate. |
The establishment dossier is more complicated than the business location.
Change of address to another county must conduct tax certification procedures before changing the address on the Certificate. |
Simple establishment profile;
Changing address without conduting tax confirmation procedures. |
Based on the above-mentioned comparision, enterprises choose the form of establishing branches, representative offices or business locations depending on their purposes.
If you have any problems, please contact Viet An Law Firm for detailed advice by a team of professional lawyers.
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