Establish a representative office of a FDI joint stock company in Vietnam

A representative office is a affiliated unit of an enterprise, which has the duty of representing by authorization for the interests of the enterprise and protecting those interests. Representative offices do not perform business functions of enterprises. Viet An Law hereby introduces Clients on establishing a representative office of a joint stock company in Vietnam.

Functions of representative offices in Vietnam

• Representative offices do not have business function, therefore, representative offices are not allowed to perform business activities, generate revenue.
• The main function of representative offices is a communicate office; execute research activities, provide information, support enterprise access to new markets and partners; perform market exploration, or promote their brands to provinces outside the province where they are headquartered.
• Representative offices are only allowed to carry out promotion and transaction work on behalf of the enterprises.

Conditions of establishment a representative office of joint stock company (JSC) in Vietnam

• Representative offices are only established after a JSC is established. Therefore, it is not possible to carry out the procedures for establishing a company with a representative office at the same time.
• The name of the representative office must include the phrase “Representative office” plus the company name.
• Representative offices are only allowed to perform transaction representative functions. Therefore, the head of a representative office is only signed contracts to serve the operation of the office.
• The head of a representative office is not allowed to sign contracts to generate business activities of enterprise.
• The address of the headquarters of the representative office must not be a group house or an apartment building (similar to the headquarters requirements).
• Although representative offices do not arise from procedures with tax agencies. However, when an enterprise needs to change the address of a representative office in another district, it has to confirm tax obligations with the old Tax Department. Therefore, enterprises should pay attention to the selection of an appropriate address when establishing a representative office to avoid arising from a change of address in another district.

Dossier to establish a representative office of a JSC in Vietnam

• Notice of establishment of representative office;
• Minutes of meeting on establishment of representative office (for joint stock companies and limited liability companies with 2 or more members);
• Decision to establish representative office;
• Decision appointing the Chief of the representative office if she/he is not concurrently the legal representative or a shareholder, member or owner of the company;
• 01 notarized copy of valid Citizen ID card/ identification card/ Passport of the chief of the representative office;
• Letter of introduction or power of attorney for the applicant;
• 01 notarized copy of valid Citizen ID card/ identification card /Passport of the applicant.

When the business needs to establish a representative office and through the services of Viet An Law Firm, Clients only need to prepare documents for Viet An Law Firm to draft and sign the documents, all The rest of the work will be done by Viet An Law.

In case an enterprise establishes a representative office in a foreign country

• Carry out the establishment procedures according to the regulations in the host country.
• Enterprises setting up representative offices in foreign countries are not required to conduct procedures for issuance of Offshore Investment Certificates.
• The company only has to conduct the registration procedure for foreign exchange transactions in order to transfer money abroad for the office to operate.
• After obtaining a license in a foreign country, submit it to the business registration office where the company is headquartered to update information on the National Business Registration Portal.

Procedures for establishment a representation office of JSC company in Vietnam

Step 1: Prepare documents to establish a representative office

• 01 notarized identity card of the Chief of the representative office;
• Information about the name, head office, phone number of the representative office;
• 01 copy of the Enterprise Registration Certificate of the JSC.

Step 2: Prepare documents and sign the application for the establishment of a representative office

• After receiving information about the name, office location, phone number of the representative office and notarized identity card of the chief of representative office, the application will be prepared.
• The dossier is completed within 1 day from receiving by Viet An Law to be sent to the Client for signature and stamp.

Step 3: Submit the application for the establishment of a representative office and announce the establishment

• Dossier to establish a representative office shall be submitted at: Enterprise Registration Office of the province or city where the representative office is located.
• Pay the publication fee to publish representative office information on the National Enterprise Portal.

Step 4: Issuing the operation registration certificate of the representative office

• Within 03 working days from the date of receipt of the valid application, the Enterprise Registration Office shall issue the Certificate of operation registration of the representative office for the enterprise.
• In case the enterprise establishes a representative office in a foreign country: After the enterprise has a license to operate in a foreign country, the enterprise shall submit a dossier to the Business Registration Office. The Business Registration Office adds information about an enterprise’s representative office in the National Business Registration Database.

Step 5: Engrave the seal for the representative office

In order to facilitate the signing of records and papers serving the operation of the representative office, the seal of the representative office should be engraved.

Key notes when establishing a representative office of a JSC

About the time limit for carrying out the establishment procedure

Within 10 working days from the date of deciding to establish a representative office, the enterprise shall send a notice of establishment of a representative office to the Business Registration Office.

Regulations on license tax of representative offices

According to Decree 139/2016/ND-CP amending and supplementing by Decree 22/2020/ND-CP stipulating license fees, representative offices engaged in production and business activities must declare license tax at the rate of 1,000,000 VND/year.

However, according to Official Letter No. 658/TCT-CS of the General Department of Taxation, it is stated that a representative office that is not engaged in the production and trading of goods and services is not required to pay license fees as prescribed.

Regarding the personal income tax of office

According to the provisions of Article 24, Circular No. 111/2013/TT-BTC, the representative office is responsible for tax registration for employees working at the office generating taxable income from wages and salaries of employee.

Regarding social insurance for employees

A representative office can pay social insurance premiums for employees working at the representative office or transfer it to the parent company to pay insurance.

Customers need to establish a representative office, please contact Viet An Law Firm for advice and full service provision.