Process to set up a representative office in Vietnam

A representative office is a dependent unit of an enterprise, authorized to represent the interests of the enterprise and protect those interests at a location different from the company’s headquarters to conduct transactions on behalf of the company but without engaging in business activities. The representative office is entitled to have its seal and account, but it is not permitted to perform business functions. Therefore, the representative office is not subject to the business license tax like other dependent units of the enterprise. In the following article, Viet An Law will update the regulations on the process of setting up a representative office in Vietnam for companies headquartered in Vietnam (including 100% Vietnamese-owned companies and foreign-invested companies).

Conditions for setting up a representative office in Vietnam

According to theEnterprise Law 2020, the following points should be noted when establishing a representative office:

• A representative office can only be established after the company has been established. Therefore, the procedures for establishing the company and the representative office cannot be carried out simultaneously.
• The name of the representative office must include the name of the company followed by the phrase “Representative Office.”
• The head of the representative office is not allowed to sign contracts that generate business activities, unlike a business location, which is allowed to conduct business activities.
• The office address of the company’s representative office must not be a collective or apartment house (similar to the company’s headquarters).
• Although the representative office does not engage in procedures with the tax authority, when the enterprise needs to change the address of the representative office to a different district, it still has to confirm its tax obligations with the old tax authority. Therefore, businesses should carefully choose an appropriate address when establishing a representative office to avoid having to change the address to a different district. Unlike business locations, when the enterprise changes the address of the business location, it does not need to complete tax obligation confirmation procedures at the tax sub-department.

Functions of a Representative Office in Vietnam

• A representative office does not have business functions and, therefore, is not allowed to conduct business activities or generate revenue.
• The primary function of a representative office is to act as a liaison office; it conducts research activities, provides information, and supports the enterprise in accessing new markets and partners.
• The head of the representative office is only permitted to sign contracts and use the representative office’s seal for transactions that serve the office’s operations, such as leasing contracts for the office, employment contracts with the office staff, and purchasing office supplies.

• Enterprises aiming to explore markets or promote their brand in provinces other than where their headquarters are located should consider establishing a representative office.

Dossier for the process to set up a Representative Office in Vietnam

The dossier for registering a representative office is specified in Clause 1, Article 31 of Decree 01/2021/ND-CP, and includes the following documents:

• A notice of establishment of the representative office, signed by the enterprise’s legal representative;
• Resolutions or decisions to establish the representative office (copies); the resolution or decision of the company owner for a single-member LLC on the establishment of the representative office;
• Minutes of meetings of the Members’ Council for a multi-member LLC, the partnership, or the Board of Directors for a joint-stock company (copies);
• One notarized copy of the ID card/Citizen ID/Passport of the head of the representative office;
• An introduction letter or power of attorney for the person submitting the dossier;
• One notarized copy of the ID card/Citizen ID/Passport of the person submitting the dossier.

In case the enterprise sets up a representative office abroad

• Follow the establishment procedures according to the regulations of the host country.
• Enterprises establishing a representative office abroad do not need to apply for an overseas investment certificate.
• The company only needs to register foreign exchange transactions to transfer money abroad for the office’s operations.
• After obtaining the license abroad, submit it to the business registration authority where the company’s headquarters are located to update the information on the National Business Registration Portal.

Procedure for Setting Up a Representative Office for a Vietnamese Company and a Foreign-Invested Company in Vietnam

The process to set up a representative office in Vietnam, as outlined in this article, applies to both the establishment of representative offices for Vietnamese-owned companies and foreign-invested companies in Vietnam (excluding foreign companies without an existing headquarters in Vietnam).

Step 1: Prepare the dossier for establishing a Representative Office

Clients need to provide Viet An Law with the following documents:

• One notarized copy of the ID card of the head of the representative office;
• Information on the name, office address, and phone number of the representative office;
• One copy of the company’s business registration certificate.

Step 2: Draft and sign the dossier for establishing a Representative Office

• After receiving information on the name, office address, phone number of the representative office, and the notarized ID card of the head of the representative office, Viet An Law will draft the dossier.
• The dossier will be completed within one day and sent to the client for signing and stamping.

Step 3: Submit the dossier for establishing the representative office and announce the establishment

• The dossier for establishing the representative office is submitted to the Department of Business Registration of the province/city where the representative office is located.
• Pay the announcement fee to publish the information of the representative office on the National Business Registration Portal.

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

• Within three working days from the date of receiving a valid dossier, the Department of Business Registration will issue an operation registration certificate for the representative office to the enterprise.
• In the case of establishing a representative office abroad: After obtaining an operation license abroad, the enterprise submits the dossier to the business registration authority. The Department of Business Registration will update the enterprise’s representative office information in the National Database of Business Registration.

Step 5: Engraving the seal for the Representative Office

To facilitate signing documents and paperwork for the representative office’s operations, it is advisable to have a seal engraved for the representative office.

Advantages and disadvantages of establishing a Representative Office in Vietnam

Advantages of a Representative Office

• The biggest advantage of a representative office is that it does not involve procedures related to tax reporting and does not have to pay the business license tax.
• Enterprises can establish a representative office in the same province/city or in a different province/city.
• Enterprises can establish a representative office abroad.

Disadvantages of a Representative Office

• A representative office cannot engage in business activities.
• When changing the representative office address to a different district, tax obligations must still be confirmed at the Tax Sub-Department of the old address.

Alternative solutions to establishing a Representative Office

• When an enterprise needs to conduct business activities in another province, it has the additional option of establishing a business location.
• The difference between a business location and a representative office is that a business location can conduct business activities and only needs to pay the business license tax for one location, which is 1,000,000 VND/year.
• A business location does not have to open tax declaration records like a branch but can still conduct business activities.

Therefore, enterprises should consider whether to establish a representative office or a business location.

Some notes when establishing a Representative Office

Regarding the time limit for completing establishment procedures:

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

Regulations on the business license tax for representative offices:

According to Decree 139/2016/ND-CP on business license fees, representative offices engaging in production and business activities must declare and pay the business license tax of 1,000,000 VND/year.

However, according to Official Letter No. 658/TCT-CS of the General Department of Taxation, representative offices that do not engage in production and business activities are not required to pay the business license tax as stipulated.

According to the law, representative offices are not allowed to engage in production and business activities. Therefore, they do not have to pay the business license tax.

Regarding personal income tax for representative offices:

According to Article 24 of Circular No. 111/2013/TT-BTC, representative offices are responsible for paying tax on the income from salaries and wages of employees working at the office.

Social insurance contributions for employees of representative offices:

Representative offices can pay social insurance contributions for employees working at the office or transfer the responsibility to the parent company to pay insurance for the employees.

Questions related to procedures for establishing a representative office

Does a Representative Office have to pay the business license tax?

Representative offices do not engage in business activities, so they are not required to pay the business license tax.

Can a Representative Office engage in business activities?

No, a representative office only conducts research activities, provides information, and supports enterprises in accessing new markets and partners.

Can a Representative Office issue vat invoices?

Since representative offices are not allowed to engage in business activities, they cannot issue or provide VAT invoices.

Does a Representative Office have legal status?

No, a representative office is a dependent unit of the enterprise and does not have legal status.

What are the state fees for the procedures to set up a representative office in Vietnam?

The state fees for the procedures to set up a representative office are specifically regulated in Circular No. 47/2019/TT-BTC.

• 50,000 VND per submission for dossiers submitted directly at the Business Registration Office (payable at the time of dossier submission). Fees are waived for online registration dossiers.
• Publication fee of 100,000 VND.

Who is the head of the representative office?

The head of the representative office can be the company’s director or a person appointed by the company’s director.

Procedures to be completed after establishing a representative office:

Hang a signboard at the Representative Office:

The signboard should include the following information: Name of the representative office, office address, phone number, and supervisory authority.

Change information of the Representative Office:

If there are any changes related to the operational content and the content shown on the operation certificate of the representative office, the change procedures must be carried out.

Procedures for changing the Representative Office:

The procedures are conducted at the Business Registration Office – Department of Planning and Investment.

Clients who need to establish representative offices for domestic and foreign companies, please contact Viet An Law for the most effective support!