Establish a representative office of a foreign company in Ho Chi Minh City

Ho Chi Minh City is a major investment attraction in Vietnam. In order to promote trade relations and participate in market promotion in the South of Vietnam, many foreign traders have chosen to establish representative offices of foreign companies in Ho Chi Minh City. Establishing a representative office in Ho Chi Minh City has advantages such as no tax obligations except personal income tax of employees generating taxable income. In order to help foreign traders and foreign companies to facilitate legal procedures in the process of establishing a representative office of a foreign company in Ho Chi Minh City, Viet An Law Firm demonstrates the following conditions.

Legal basis

• The Law on Commercial 2005;
• Decree 07/2016/ND-CP detailed regulations on establishment of representative offices or branches of foreign traders in Vietnam under laws on commerce;
• Decree 99/2016/nd-cp on management and use of seals.
• Circular No. 11/2016/TT-BCT on forms prescribed in Decree 07/2016/nd-cp on guildelines for the law on commerce in terms of representative offices and branches of foreign traders in Vietnam.

Conditions for establishing a foreign representative office in Ho Chi Minh

• To be able to set up a representative office of a foreign company in Ho Chi Minh, a foreign company must be legally recognized by the law of the country where such trader is established or registered for business; has been established for at least 01 year and the operation term of the operation certificate, for companies with the operation term stated, must be valid for at least 01 year;
• The operation certificate of the representative office in Vietnam of the foreign trader is valid for 5 years which can extended equal to that of the current license but not exceeding the remaining effective period of the Certificate of Enterprise Registration or the equivalent (for documents having expiry date).

To your further information on Conditions for establishing representative offices of foreign traders in Vietnam, please refer to this attached article.

Dossier to establish a foreign representative office in Ho Chi Minh

• An application form for the establishment of a foreign representative office in Ho Chi Minh (this application will be drafted by Viet An);
• Notarized translation with consular legalization of the Enterprise Registration Certificate or equivalent document of the foreign trader certified by the competent authority where the foreign trader is established;
• A letter of appointment of the head of the representative office;
• Notarized translations of audited financial statements or documents certifying the fulfillment of tax or financial obligations in the latest fiscal year or papers of equivalent value issued by a competent agency or organization in the locality. established foreign traders grant or certify and prove the existence and operation of foreign traders in the latest fiscal year;
• Notarized copy of passport or ID card of the head of the representative office.
• Notarized copies of documents on the proposed location of the representative office’s head office including:
  • Copies of memorandum of understanding (MOU) or leasing agreements or documents as proof of the right to use a location as the representative office (Certificate of land use right, Notarized construction permit, Business registration of the lessor);

• • Copies of documents on the expected location of the representative office, which (i) satisfies requirements for security, occupational hygiene and safety and others stipulated in laws of Vietnam and (ii) not lend or sublet their offices..

Procedures for setting up a foreign representative office in Ho Chi Minh

• Obtaining operation certificates of representative offices;
• Engraving the representative office seal;
• Register tax code for Representative Office.

The time to complete the above procedures for a representative office in Ho Chi Minh is usually 20-25 working days;

Authority to grant operation licenses of foreign representative offices in Ho Chi Minh.

• Departments of Industry and Trade of provinces and centrally run cities where the trader intends to locate Representative offices outside industrial parks, export processing zones, economic zones, and high-tech zones shall grant the License to establish the representative office in case the establishment of a representative office has not been specified in specialized legal documents.
• The Management Board of industrial parks, export processing zones, economic zones, and high-tech zones shall issue the License for the establishment of a representative office in case the establishment of a representative office is not specified in specialized legal documents.

Reporting regime for representative offices of foreign companies in Ho Chi Minh

Before January 30 of each year, the representative office is responsible for sending a report according to the form set by the Ministry of Industry and Trade on its activities in the previous year by post to the licensing agency;

Note the dossier that need to be kept during the operation of the foreign representative office in Ho Chi Minh

Legal dossier

• License to operate representative office for the first time and additional times
• Report on the operation of the representative office submitted to the Department of Industry and Trade during its operation;
• Certificate of seal sample of the representative office;
• Representative office seal;
• Notice of tax identification number of the representative office;
• Notice (Letter) of the parent company on the appointment of the Head of Representative Office;
• List of heads of representative offices during operation;
• List of employees: Vietnamese, foreigners working at VPDD: working time, details of income.
• Notice of opening a bank account.

Records related to accounting, tax finalization

• Dossiers of tax finalization for years according to tax payment receipts into the state budget
• Personal income tax declaration of the head of the representative office and all employees who have worked at the office during its operation;
• Office bank account statement; Cash book of the office;
• Statement of the foreign worker’s salary account;
• Certificate of income and tax paid to the tax authorities in the country of the foreign worker’s nationality.
• Summary of the number of days of residence in Vietnam of foreigners;
• Letter of confirmation of annual income for foreign employees certified by the parent company (enclosed with appointment decision, labor contract); Decision on salary increase; Signing sheet for receipt of salary and other expenses.
• Dossier of family deduction; Tax exemption and reduction dossiers; Policy of the parent company with employees at the Office;
• Contract for office lease, house rental and accompanying invoices;
• Excel table for calculating personal income tax and finalizing tax for each employee;
• List of tax payment documents and personal income tax payment invoices of all employees who have worked at the office during its operation;
• Statement of actual income payment for employees at the Office;
• Table of payment of incomes for current individuals: consulting services, tax declaration services, expenses for no reason….
• Mandatory insurance records.

If you have a need to use more services of Viet An Law such as establishment procedures, tax registration, please contact us!