Doing Business In Viet Nam
Company BranchForeign banks, auditing firms, law firms, and foreign economic organizations can set up their branches in Vietnam. The licensing agencies are varied, of which e.g. SBV grants licenses to foreign banks' branches, MoF grants licenses to foreign auditing firms' branches, and MoIT is authorized to grant licenses to foreign businesses.
In this Section, only branches of foreign business/ traders, which fall within the sole power of MoIT, are focuses, with note that the new establishment thereof shall be all conditional to the Vietnam's WTO commitments, pursuant to which the establishment of branches of foreign service providers is unbound, except for the following sectors and sub-sectors:
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 Decree 72, the conditions for obtaining a Branch license are quite simple. Normally, a Branch license shall be granted if the applicant satisfies the following conditions:
(i) Having legal certificate on business registration, in accordance with the laws of applicant's country;
(ii) Being established for a period of not less than 5 years, from the business registration.
To establish a Branch in Vietnam, a foreign company must submit a set of application files for a license issued by the MoIT. 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 legalized copy and Vietnamese translation of the Memorandum and Articles of Association of the Branch specifying the scope of power authorized to the Branch head;
(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 Branch head's passport.
7.4 Licensing Timing
A Branch license will be normally 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 Branch shall have to publish on three consecutive issues of a printed or online newspaper licensed in Vietnam the following contents:
(i) Name and registered address of the Branch;
(ii) Name and registered address of the parent company;
(iii) Name of the Branch head;
(iv) Serial number, date of issue and valid term of the License and licensing authority; and
(v) Scope of activities of the Branch
Besides, the Branch must be officially commence its operation and provide written notice to to the MoIT and the Provincial DoIT about commencement of operation at the registered office.
7.5 Permitted Activities
A Branch is permissible to trade the products and carry out the trading-related activities in accordance with the provisions of the Commercial Law; concretely:
(i) Lease the office, lease and/ or purchase the utilities necessary for the operation of the Branch;
(ii) Recruit staff;
(iii) Execute the contract in Vietnam in accordance with the License;
(iv) Open the bank accounts;
(v) Remit profits abroad;
(vi) Have stamp in the name of the Branch;
(vii) Carry out the trading activities and other activities specified in the License.
7.6 Term of License
The license of a Branch has a term of five years. The license of a Branch may be extended if its parent satisfies all the following conditions:
(i) It has a requirement to continue operating in Vietnam in the form of a Branch;
(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 Branch.
The procedures for extension of the license must be carried out at least thirty days prior to the expiry of the license.
Branches of foreign businesses shall be subject to the taxes prevailing in Vietnam, which are well described in the Section 16 hereunder.
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