Legal basis
- Commercial Law 2005;
- Decree No. 07/2016/ND-CP dated January 25, 2016;
- Circular No. 11/2016/TT-BCT dated July 5, 2016.
Representative office of foreign trader
- A foreign trader is a trader who is established or registered for business by foreign law or recognized by foreign law.
- Foreign traders are allowed to establish their representative offices and branches in Vietnam by Vietnam’s commitments in international treaties to which Vietnam is a member.
- The representative office of foreign traders in Vietnam is a dependent unit of foreign traders, established by Vietnamese law to explore the market and carry out some trade promotion activities permitted by Vietnamese law.
Conditions for the establishment of foreign trader representative offices in Vietnam
Conditions for issuance of licenses for the establishment of representative offices
Foreign traders are granted a license to establish a representative office when meeting the following conditions:
- Foreign traders shall be established and registered for business by the laws of nationalities and territories parties to international treaties to which Vietnam is a member or recognized by the laws of these countries and regions;
- Foreign traders have been in operation for at least 01 year, from the date of establishment or registration.
- In case the business registration papers or papers of equivalent value of foreign traders have stipulated the operating term, that time limit must be at least 01 year from the date of submission of the dossier.
- The content of the representative office’s activities must align with Vietnam’s commitments in international treaties to which Vietnam is a member.
- In case the contents of the representative office’s activities are inconsistent with the commitments of Vietnam or foreign traders who are not part of the countries or territories participating in international treaties to which Vietnam is a member, the establishment of a representative office must be approved by the Minister, Heads of specialized ministerial-level agencies (hereafter referred to collectively as Ministers of Specialized Management).
Number of representative offices
A foreign trader may not establish more than one representative office of the same name within a province or centrally-affiliated city.
Conditions for the headquarters of the representative office
- The location of the representative office of foreign traders must be by the provisions of Vietnamese law on conditions of security, order, occupational safety and hygiene and other conditions as prescribed by law.
- The representative office is not allowed to lend or lease the headquarters.
Conditions for representative office name
- The name of the Representative Office must be written in letters in the Vietnamese alphabet, the letters F, J, Z, W, digits and symbols.
- The name of the representative office must bear the name of the foreign trader with the phrase “Representative Office”.
- The name of the representative office must be written or attached to the representative office headquarters. The name of the representative office is printed or written in smaller font sizes than the foreign trader’s name on the transaction papers, documents and publications issued by the Representative Office.
Operational content of representative office
The representative office performs the function of liaison office, market understanding, promotion of business investment opportunities of traders that it represents, excluding the service industry but the establishment of representative offices in that field is stipulated in specialized legal documents.
Representative Office Operation Reporting Mode
- Before January 30 of every year, the representative office is responsible for sending a report on the form of the Ministry of Industry and Trade on its activities in the previous year by post to the Licensing Authority.
- The representative office is obliged to report, provide documents or explain issues related to its activities at the request of competent state management agencies.
Head of Representative Office
The head of the representative office of a foreign trader may not assume the following positions:
- The head of the branch of the same foreign trader;
- The head of the branch of another foreign trader;
- The legal representative of that foreign trader or another foreign trader;
- The legal representative of the economic organization was established by Vietnamese law.
Cases where the license for establishment of foreign trader representative offices in Vietnam is not granted
The licensing agency that does not issue a license shall establish an office representing foreign traders in the following cases:
- Failing to meet one of the conditions specified in Article 7 of Decree No. 07/2016/ND-CP.
- Foreign traders request the issuance of a license to establish a representative office within 02 years from the date of revoking the license for the establishment of a representative office in Vietnam as prescribed in Article 44 of Decree No. 07/2016/ND-CP.
- The establishment of representative offices is restricted by law on national defense, national security, social order and safety, social ethics and public health.
- Other cases by the law.
Dossier on the establishment of foreign trader representative office in Vietnam
The 01-set of dossier includes:
- Application for issuance of a license to establish a representative office in the form of the Ministry of Industry and Trade shall be signed by a competent representative of a foreign trader;
- Copies of business registration papers or papers of equivalent value of foreign traders. This document must be certified or legalized by Diplomatic Representatives of Overseas Vietnamese diplomatic and consular agencies by Vietnamese law;
- Documents of foreign traders appointing/appointing heads of representative offices;
- A copy of an audited financial statement or a document confirming the performance of tax or financial obligations in the most recent fiscal year or papers of equivalent value issued or certified by competent agencies or organizations where foreign traders are established, proving the existence and activity of foreign traders in the most recent fiscal year;
- A copy of the passport or id card or id card (if a Vietnamese) or a copy of the passport (if a foreigner) of the head of the representative office;
- Documents on the location of the representative office are expected to include:
- A copy of the memorandum of memorandum or agreement on the lease of the place or a copy of documents proving that the trader has the right to exploit and use the location to set up the representative office;
- A copy of the paper on the site of the representative office is expected to be located by Article 28 of this Decree and relevant legal provisions.
In case the copy of the passport of the head of the representative office is a foreigner must be translated into Vietnamese and certified by Vietnamese law.
Order and procedures for granting licenses for the establishment of representative offices
Step 1: Prepare a dossier
- Prepare 01 set of applications for a license to establish a representative office of foreign traders in Vietnam.
- All licensing documents for establishing representative offices are signed and stamped by the parent company.
- Foreign traders submit their applications in person or by post or online (if eligible for application) to the Licensing Authority where the representative office is expected to be located.
Step 2: Receive applications and issue establishment licenses
- Within 03 working days from the date of receipt of the dossier, the licensing authority shall examine and request additional if the dossier is incomplete and valid. Other requests for records are made up once during the processing of the application.
- Within 07 working days from the date of receipt of a valid dossier, the licensing agency shall issue or fail to issue a license to establish a representative office for foreign traders. In case of refusal of a license, there must be a written state of reason.
In case the contents of the representative office’s operations are inconsistent with the commitments of Vietnam or foreign traders who are not part of the countries or territories participating in international treaties to which Vietnam is a member and in case the establishment of a representative office has not been specified in specialized legal documents:
- The licensing agency sends a written opinion of the Specialized Management Ministry within 03 working days from the date of receipt of a valid dossier.
- Within 05 working days after receiving the written request for comments of the licensing agency, the Specialized Management Ministry shall issue a written opinion stating the consent or non-approval of the establishment of a representative office.
- Within 05 working days after receiving the opinion of the Specialized Management Ministry, the licensing agency shall issue or fail to issue a license to establish a representative office for foreign traders. In the case of non-licensing, there must be a written state of the reason.
Step 3: Engrave a round mark and register the representative office’s mark template
The marking procedure shall be carried out at the Administrative Management Department of social order and safety of the provincial/municipal police where the head office of the representative office is located.
The inscription of the record includes:
- Certified copy of the license for establishment of a representative office;
- Certified copy of ID card/passport of the head of the representative office;
- Power of attorney for Viet An Law on behalf of the procedure. A power of attorney must be certified or legalized by Diplomatic Representatives of Overseas Vietnamese and Consular Officers by Vietnamese law.
Completion time limit: 05 working days.
Step 4: Register to issue tax identification numbers to the Trader’s Representative Office
Dossiers for issuing tax identification numbers to representative offices must be submitted to tax authorities within ten days from the date of issuance of the Certificate of establishment of representative offices.
Applications for tax identification numbers include:
- Tax registration declaration
- Certified copy of representative office establishment license
- Power of attorney for Viet An Law on behalf of the procedure.
Tax identification time limit: 05-07 working days from the date the tax authority receives all valid dossiers.
Competence to issue licenses for the establishment of representative offices
- Departments of Industry and Trade of provinces and centrally cities where traders are expected to set up representative offices outside industrial parks, export processing zones, economic zones, high-tech parks shall grant, reissue, adjust, extend and revoke the license to establish representative offices and terminate the operation of representative offices in case of establishment of offices representations are not specified in specialized legal documents.
- Management boards of industrial parks, export processing zones, economic zones, high-tech parks (heretly collectively referred to as management boards) shall grant, reissue, adjust, extend and revoke the license for the establishment of representative offices and terminate the operation of representative offices located in industrial parks, export processing zones, economic zones and high-tech parks in case the establishment of representative offices has not been specified in specialized legal documents.
Advantages of foreign trader representative office in Vietnam
- The establishment of a representative office in Vietnam helps foreign investors to have a legitimate office in Vietnam, recruit employees to manage and promote sales contracts with local business partners, find and develop products, look for opportunities for the sale of goods and the provision of services…
- Foreign workers working for representative offices may be issued work permits and temporary residence cards for 02 (two) years equivalent to multiple visas for themselves and their family members.
- The representative office can support many business activities for foreign traders but it is easy to manage, save costs and avoid risks arising from local administrative procedures such as not being subject to tax, not having to make accounting books or carrying out independent audit procedures.
Disadvantages of the Representative Office of Foreign Traders in Vietnam
- The representative office does not have a business function so there is no profit.
- Operating time is limited to 5 years.
- No contracts may be concluded, no arrangements have been amended or supplemented signed by foreign traders.
- Only spent within the budget from foreign traders moving in, without receiving additional income from any other source.
Customers wishing to set up a representative office of foreign traders in Vietnam, please contact Viet An Law Firm for the best support!
