Procedure for extension of license for establishment of representative office of foreign trader in Vietnam

According to the provisions of law, the License to establish a representative office of a foreign trader is valid for a maximum period of 05 years, but not exceeding the period stated on the Enterprise Registration Certificate or other equivalent documents of foreign traders (if any). After 5 years of operation, foreign traders wishing to maintain representative office operations must carry out procedures of extending the representative office establishment license for foreign traders.

Legal basis

• Decree 07/2016/ND-CP detailing the Commercial Law on representative offices and branches of foreign traders in Vietnam.
• Circular 11/2016/TT-BCT on forms for implementing Decree 07/2016/ND-CP.
• Decree 98/2020/ND-CP regulates penalties for administrative violations in commercial activities, production, and trading of counterfeit and banned goods and protects consumer rights.

Conditions for extending the representative office establishment license for foreign traders

• The foreign trader still operates under the law in the country where the trader was established;
• The representative office does not violate the provisions of Vietnamese law;
• Extendal procedures need to be carried out at least 30 days before the license for establishment of representative office expires.

Procedures for extending the representative office establishment license for foreign traders

• Deadline for submitting applications for extension of License for establishment of Representative Office in Vietnam.
• At least 30 days before the license expires, the foreign trader must apply to extend the operating term of the Representative Office.

Dossier to extend representative office license

• Application for extension (according to the form of the Ministry of Industry and Trade);
• Copy of the foreign trader’s Enterprise Registration Certificate or documents of equivalent value (must be translated into Vietnamese and legally stamped by the consulate);
• Copy of audited financial statements or confirmation of completion of tax obligations of foreign traders (must be translated into Vietnamese and notarized or certified);
• Copy of License for establishment of representative office;
• Letter of introduction or authorization for another individual to perform the procedure (in case the obligor does not directly perform the procedure).

The agency resolves the extension of the representative office operating license

• After fully preparing the above documents, the foreign trader has submitted them to the Department of Industry and Trade of the province where the License for the establishment of a representative office is issued.
• In case the representative office is located in the above areas, the application will be submitted to the Management Board of that area.

Processing time for extending the license

Within 05 working days from the date of receipt of valid documents.

Result

License to establish a representative office of a foreign trader (with a new term) or written refusal clearly stating the reason.

Penalties for violations due to the representative office expiring without carrying out extendal procedures

In case the representative office expires and the foreign trader does not carry out procedures to extend the term of license, a fine from 60,000,000 to 100,000,000 VND (the fine is doubled for violation of the representative office) will be applied for representative office.

Obligations to be performed by Foreign Traders Representative Offices in Vietnam

According to the provisions of the Commercial Law, representative offices of foreign traders in Vietnam have the following obligations:

• Do not carry out direct profitable activities in Vietnam, that is, do not directly sign contracts to buy and sell goods to serve business activities and collect money in Vietnam. However, if a representative office of a foreign trader buys and sells goods for its operations in Vietnam, it is not restricted.
• Trade promotion activities may only be carried out within the scope permitted by the Commercial Law.
• It is not allowed to enter into contracts, amend, or supplement contracts already signed by foreign traders, except in cases where the Head of the Representative Office has a legal power of attorney from the foreign trader or the cases specified in the provisions of Clauses 2, 3 and 4 of Article 17 of the Commercial Law.
• Pay special tax, personal income tax for employees working at Representative Offices, fees, charges and perform other financial obligations according to the provisions of Vietnamese law.
• Report on the activities of the Representative Office by Vietnamese law.
• Other obligations as prescribed by law.

Regulations on Head of Representative Office of a foreign trader

Clause 6, Article 33 of Decree 07/2016/ND-CP stipulates that the Head of a representative office of a foreign trader must not concurrently hold the following positions:

• Head of the Branch of the same foreign trader;
• Heads of branches of other foreign traders;
• The legal representative of that foreign trader or another foreign trader;
• Legal representative of an economic organization established by Vietnamese law.

According to legal regulations, the conditions to be named as the head of a representative office must meet the following specific cases:

• If the company director is not at the same time the legal representative of that foreign trader or another foreign trader or economic organization, he or she can still be appointed as Head of the representative office of the foreign trader in Vietnam.
• If the company director is also the legal representative of that foreign trader or another foreign trader or economic organization, he or she may not act as Head of the representative office of the foreign trader.

Some questions related to procedures for extending foreign trader representative office licenses in Vietnam

When must foreign traders extend their Representative Office Establishment License?

Applications for extension of Representative Office Establishment License or Branch Establishment License must be submitted at least 30 days before the License expires.

Because foreign traders must provide consular legalization of business registration and tax confirmation (documents proving the existence and operations of foreign traders in the most recent financial year), foreign traders and representative offices need to prepare documents early to meet the deadline for submitting extension documents.

Can traders both extend and carry out procedures to adjust the License to the Representative Office establishment?

In case when extending the license to establish a Representative Office there is a change in the License, the Trader submits the external application and the application to adjust the license to establish the Representative Office at the same time to be granted a new license.

At the end of the operating term of the Representative Office Establishment License, do traders have to carry out procedures to terminate the Representative Office?

In case the trader does not want to continue operating the Representative Office after the expiration date, the trader needs to apply to terminate the Representative Office operation according to the regulations on the Termination of Representative Office operation.

Services for extending the representative office establishment license for foreign traders in Vietnam

• Consulting on conditions and time to apply for extension of License to operate foreign representative offices in Vietnam;
• Support in drafting and completing documents and papers to extend the License to operate foreign representative offices in Vietnam;
• Representative submits application for extension of License to operate foreign representative office in Vietnam;
• Consulting and supporting procedures for submitting activity reports of foreign representative offices in Vietnam;
• Declare and pay personal income tax and social insurance for personnel of foreign representative offices in Vietnam;
• Support in completing internal documents of foreign representative offices in Vietnam;

Viet An Law is a reputable and professional unit providing consulting services and support for implementing procedures related to the fields of foreign investment; establishing a business; Applying for a license for conditional occupations and professions; intellectual property protection; and Work permit… If you have any questions about the details of the procedure for extending the license to establish a representative office, please contact Viet An Law Firm for more details.