Advisory for representative office of online marketing enterprise in Vietnam

Client’s requirement:

Could I also enquire about setting up a full company, rather than representative office?

Our company currently operates from Singapore and are interested in expanding operations to Vietnam. We are seeking to establish a subsidiary, (or sister company related through holding structure). We supply online marketing services and are in particular focused on expanding our digital signage offering. We are export oriented and do not anticipate local sales (particularly in the first 12 months). Could I please request an estimate of setup costs and timeframe involved.

Is a temporary residence permit all that is required for directors to participate in local operations, or is a work permit also required?

Consultancy:

Dear Sir/Madam,

First of all, Viet An Law would like to thank your trust for legal consultancy services of Viet An Law Firm. For your questions, we would like to answer as follows:

The difference between company and representative offices is:

• Representative offices are created with the following functions:
• Perform the function of a liaison office;
• Conducting research activities, providing information, supporting businesses to access new markets and partners;
• In addition, representative offices may not conduct other profitable business activities. Representative offices do not have the right to personally sign their own contracts
• Commercial companies ’s function must be directly implemented with the aim of making a profit through business activities.

Based on that, if your purpose is only to develop trade promotion in Vietnam for the parent company  in Singapore, we advise you to establish a representative office; If your purpose is trade and make business profit in Vietnam, you must to set up a company.

In addition to a temporary residence permit, if directors are not investors but employees, they must have to labor permit issued by the competent authority of Vietnam.

Furthermore:

• According to information you provided, you plan to set up a representative. Do you want set up in Hanoi or Ho Chi Minh City? We will send you our price quota about this service.
• Head of representatives must be exempted from labor license but eligible for a temporary residence permit. And they need procedure for exemption of labor license.
• Representative offices may not conduct other profitable business activities so they must not pay any tax accept individual income tax of employees working in representative.
• Representatives do not have to perform any audits.

Above is our advice content. If you have any questions, please contact Viet An Law and provide more information for specific advice.

Yours sincerely,