Establish a representative office of a foreign limited liability company in Vietnam
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. In the following article, Viet An Law will present how to set up a representative office of a foreign limited liability company (LLC) in Vietnam.
Table of contents
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.
Conditions for establishing a representative office of a foreign LLC in Vietnam
A foreign LLC may only be granted an operation certificate of a representative office in Vietnam when it satisfying all following conditions:
Such LLC has been established and registered for business in accordance with the laws of the country which is a party to an international treaty to which Vietnam is a contracting party or recognized by the laws of these countries;
Such LLC has been operating in the host country for at least 01 year from the date of establishment or registration;
In case the foreign business registration certificate stipulates the operation term, the duration of such license must be at least 01 year from the date of filing in Vietnam;
In case the operation contents of the representative office are not consistent with the commitments of Vietnam or the foreign limited company is not a country or territory participating in an international treaty to which Vietnam is a contracting party, the establishment eepresentative offices must be approved by ministers or heads of ministerial-level agencies in charge of specialized management.
Requirements for representative offices of foreign LLC in Vietnam
The name of the representative office must include the phrase “representative office” and the LLC’s name.
Representative offices are only allowed to perform transaction functions. Therefore, the head of a representative office can only sign contracts to serve the operation of the office.
The head of a representative office is not allowed to sign contracts to generate business activities.
The address of the head office of the representative office of the company must not be a group house or an apartment building (similar to the head office of the company).
Representative offices are not required to conduct procedures with tax authorities. However, when an enterprise needs to change the address of a representative office in another district, the district still has to confirm tax obligations with the old Tax Department. Therefore, businesses should pay attention to choosing an appropriate address when establishing a representative office to avoid arising from a change of address to another district.
Dossier to establish a representative office of a foreign limited company in Vietnam
An application form for License for Establishment of the representative office
According to Form MD-1 of Appendix issued with Circular 11/2016/TT-BCT;
Signed by a competent representative of the foreign LLC
Copies of Enterprise Registration Certificate or Certificate of establishment of the foreign LLC
Certified or consularly legalized by a diplomatic mission or consular office of Vietnam abroad in accordance with Vietnamese law
A letter of appointment of the head of the representative office
Copies of audited financial statements or certificates of fulfillment of tax liabilities or financial obligations of the last fiscal year or equivalent documents as proof of existence and operation of the foreign LLC issued or certified by competent authorities where such foreign LLC is established
Copies of the passport or citizen ID card or identification card (for Vietnamese) or copies of the passport (for foreigners) of the head of the representative office
Copies of documents on the expected 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 exploit and use the 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.
Certified translation of office lease agreement.
A true copy of the representative office’s headquarters dossier.
Authorization letter for Viet An Law to carry out the procedures for engraving the representative office seal (in case the company cannot accompany to carry out the procedures at Ministry of Public Security)
Translation, certified if signed and stamped abroad.
The case signed in Vietnam must be notarized.
Authority to grant license for establishment of representative office of foreign LLC
Departments of Industry and Trade (DoIT) of provinces and centrally run cities where the foreign limited company is expected to locate Representative offices outside industrial parks, export processing zones, economic zones, high-tech zones.
Management boards of industrial parks, export processing zones, economic zones and high-tech zones (Management Board).
Procedures for setting up a representative office of a foreign LLC in Vietnam
Step 1: Prepare documents to establish a representative office
Prepare 01 set of application documents for the establishment license of a representative office of a foreign LLC in Vietnam according to the form above.
The entire application for a license to establish a representative office shall be signed and stamped by the foreign LLC.
Submit the application in person or by post or online (if applicable) to the Licensing Agency (DoIT or Management Board) where the Representative Office is expected to be located.
Step 2: Submit application for establishment of a representative office and announce the establishment
Within 03 working days from the date of receipt of the dossier, the Licensing Agency shall examine and request supplementation if the dossier is incomplete or invalid. The request for additional records is made at most once during the processing of the application.
Within 07 working days from the date of receipt of complete and valid dossiers, the Licensing Agency shall grant or not grant a license to establish a representative office for the foreign LLC. In case of refusal, there must be a written explanation clearly stating the reason.
In case the operation content of the representative office is not consistent with the commitment of Vietnam or the foreign LLC is not in a country or territory participating in an international treaty to which Vietnam is a contracting party, or the establishment of a representative office has not been specified in specialized legal regulations, the Licensing Agency shall continue to:
Send a written request to the Ministry of specialized management within 03 working days from the date of receipt of a complete and valid application.
Within 05 working days from the date of receipt of the written request for opinions from the Licensing Agency, the Ministries of specialized management shall issue a written document stating their agreement or disagreement with the licensing of establishment of a representative office.
Within 05 working days from the date of receipt of the opinion of the Ministry of specialized management, the Licensing Agency shall grant or not grant a license to establish a representative office for the foreign LLC. In case of refusal, a written reason must be clearly stated.
Step 3: Engrave a circular seal and register the seal sample of the Representative Office
The seal engraving procedure is carried out at the Administrative Management Department for social order and safety of the Police Department of the province/city where the representative office’s head office is located.
Engraving records include:
A certified copy of the License of Establishment representative office;
A certified copy of the ID card/ Passport of the head of the representative office;
Power of Attorney for Law Viet An to conduct the procedure on behalf of the company, which be certified or consularly legalized by a diplomatic mission or consular office of Vietnam abroad in accordance with Vietnamese law.
Completion time: 05 working days.
Key notes when establishing a representative office of a foreign LLC in Vietnam
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 personal income tax of representative 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
The representative office can register the number of the unit paying social insurance premiums for the employees working at the representative office.
Customers wishing to establish a representative office of a foreign LLC in Vietnam, please contact Viet An Law Firm for the best support!
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