Doing Business In Viet Nam
Representative office ("RO") is not a separate legal entity under the laws of Vietnam. The activities of a RO are limited to business promotion; identification and accelerating the trade opportunities; and supervising the implementation of contracts signed between its parent/ represented company(ies) and local partners. However, a RO may sign commercial contracts on behalf of its parents companies, with appropriate authorization, on a case-by-case basis.
In this Section, only ROs of foreign businesses, which fall within the jurisdiction of the city/ province-level Departments of Industry and Trade ("DoIT") are focused (ROs of foreign banks, auditing companies, law firms, tourism organizations, fall within the power of the State Bank of Vietnam ("SBV"), the Ministry of Finance, and the Ministry of Justice ("MoJ"), respectively). It is noted that a foreign business shall be entitled to set up one or several ROs, each in a different city or province in Vietnam.
The Commercial Law dated 14 June 2005 constitutes the legal ground for representative offices and branches of foreign businesses in Vietnam, which is further specified by Decree No.72/2006/ND-CP, on representative offices and branches of foreign businesses in Vietnam, issued by the Government on 25 July 2006, as amended and supplemented by Decree No.120/2011/ND-CP, dated 16 December 2011, of the Government ("Decree 72").
Implementing the Decree is the Circular No.11/2006/TT-BTM, dated 28 September 2006, of the Ministry of Trade [now the Ministry of Industry and Trade ("MoIT")].
Under Article 4 of the Decree 72, a foreign business entity duly established and operating for at least one year under the laws of the country of its head office may apply for establishment of a resident representative office in Vietnam. The foreign company is entitled to establish representative offices in any province in Vietnam. The number of representative offices in Vietnam of foreign company is unlimited.
To establish a representative office in Vietnam, a foreign company must apply for a license issued by the Provincial DoIT, and complete post licensing procedures including notice of operation and obtaining a seal. A set of application files for establishment of the representative office must be submitted to the Provincial DoIT.
To obtain a seal, the Chief Representative of the representative office or its staff may be required to personally lodge the application due to security reasons.
The following documents must be submitted to the licensing authority for obtaining the License:
(i) Application (standard form);
(ii) A legalized copy of the Certificate of Incorporation and any amendments of the parent company;
(iii) A certified/ legalized copy of the Memorandum and Articles of Association of the parent company (if any);
(iv) A legalized copy and Vietnamese translation of the audited financial statements of the parent company for its latest financial year issued by an auditing company;
(v) A notarized copy of Office Lease Contract; and
(vi) A notarized copy of Chief Representative's passport.
6.4 Licensing Timing
A RO license will be granted within 15 days from the receipt of the satisfactory file. The applicant is required to pay the license fee of VND1 million for a license. The license fee would be paid upon the approval of the application file.
Within 45 days from the date of issuance of the license, the RO shall have to publish on three consecutive issues of a printed or online newspaper licnesed in Vietnam the following contents:
(i) Name and registered address of the RO;
(ii) Name and registered address of parent company;
(iii) Name of Chief Representative;
(iv) Serial number, date of issue and valid term of the license and licensing authority; and
(v) Scope of activities of the RO.
Besides, the RO must be officially commence its operation and provide to the Provincial DoIT written notice about commencement of operation at the registered office.
6.5 Permitted Activities
According to Decree 72, a RO will be entitled to do the functions as stipulated in the granted license. Operational functions of a RO are limited to:
(i) Business promotion;
(ii) Identification, accelerating the trade opportunities in Vietnam;
(iii) Supervising the implementation of contracts signed between its parent/ represented company(ies) and local partners.
A RO shall have the following rights and obligations:
(i) RO shall be entitled to do the functions as stipulated in the granted license;
(ii) The Chief Representative of the RO shall have the right to sign goods purchase contracts, service supply contracts with other foreign and local businesses;
(iii) RO staff shall be subject to relevant tax obligations in accordance with the laws of Vietnam;
(iv) RO shall have to report PCs, once a year, the RO's operations.
6.6 Term of License
The license of a representative office has a term of five years. If the parent company's business license or establishment certificate expries, the license of the representative office will also expire. In other words, the term of the representative office cannot exceed any term of existence of its parent company. The license of a representative office may be extended if its parents satisfies all the following conditions:
(i) It has a requirement to continue operating in Vietnam in the form of a representative office;
(ii) The foreign business entity is legally operating pursuant to the law of country in which it was established; and
(iii) The foreign business entity has not committed a serious breach of the laws of Vietnam regarding the operations of its representative office. The procedures for extension of the license must be carried out at least thrity days prior to the expiry of the license.
No taxes are applicable to RO's operation, except for personal income tax charged their staff which will be further described in Section 16 hereunder.
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