Declare representative office expenses in Vietnam

A representative office is a dependent unit of an enterprise, which has the task of representing by authorization for the interests of the enterprise and protecting those interests. Representative offices do not perform business functions of enterprises. So does the representative office have to declare expenses?

Features of representative office

• A dependent unit of the company, which has no legal status;
• Execute communication activities for the enterprise;
• Execute research, information gathering and evaluation activities to assist enterprises in accessing new markets, customers and partners;
• Not allowed to do business directly, or sign economic contracts;
• Established in the same or different location with the head office.

Does the representative office have to declare costs and input invoices?

Pursuant to Clause 1, Article 11 of Circular 156/2013/TT-BTC stipulates as follows:

• In case the taxpayer has a business unit in the locality of the province or centrally run city and the place where the taxpayer is headquartered, the taxpayer shall make a general value-added tax return for the affiliated unit.
• In case the taxpayer has an affiliated unit in a locality different with the province where the taxpayer’s head office is located, the affiliated unit shall submit a value-added tax return to the tax authority directly managing the affiliated unit; if the affiliated units do not directly sell goods and generate no revenue, they shall make concentrated tax declarations at the taxpayer’s head office.

Therefore, whether a representative office is established in the same province or a different province with the head office, it shall declare invoices and expenses at the head office.

Some questions related to representative office

Do representative offices have to pay license fees?

• Representative offices of enterprises engaged in production and trading of goods and services must pay license fees.
• Representative offices of enterprises that do not have activities of producing or trading in goods or services are not required to pay license fees.

The level of license fee of the representative office?

• The annual license fee payment rate of the representative office is: 1,000,000 VND/year;
• If the representative office is established from January 1 to June 30, the license fee equivalent to 1,000,000 VND must be paid for the whole year;
• If the representative office is established from July 1 to December 31, a half-year license fee equivalent to VND 500,000 shall be paid;
• In case the representative office is established in the same year as the company, the first year fee is exempted.

Personal income tax of employees working at representative offices:

• In case the Representative Office does not sign a labor contract, does not pay wages to employees, the Company signs a labor contract and pays all salaries and wages of employees working at the Representative Office, the representative office is not required to declare and pay PIT. Company is responsible for withholding, declaring and paying PIT as prescribed in Clause 1 and 2, Article 16 of Circular No. 156/2013/TT-BTC dated November 6, 2013 by the Ministry of Finance.
• In case the Office directly pays salaries to employees, the Office must perform tax registration, deduction, PIT declaration and payment to the tax agency directly managing the Office.

Corporate income tax of representative office?

In case a representative office is an affiliated unit but does dependent accounting, the representative office is not required to submit a corporate income tax return. The company is responsible for making centralized declarations at the head office and all distributions arising at affiliated units.

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