1. What is a foreign company representative office?

A foreign company representative office is an entity established by a foreign company in another country to represent the parent company (foreign company) in carrying out certain specific activities entrusted by the parent company.

A representative office is not allowed to carry out direct business but it usually carries out support activities for the parent company, such as market search, market research, marketing, introduction of products or services of the parent company, and management of relations with local partners.

The activities of a representative office must comply with the laws and regulations of the country in which it places itself. At the same time, representative offices do not have legal status and are often legally and financially dependent on the parent company.

2. Conditions for establishing a representative office of a foreign company in Vietnam

• Foreign companies that have been operating for atleast 01 year: Foreign companies wishing to establish a representative office in Vietnam must have at least 01 year of operation from the date of registration or establishment.
• Meet the operational requirements of representative offices:Representative offices must comply with regulations on objectives and scope of activities, not conduct direct business activities, and only carry out permitted activities as prescribed.
• Conformity with market opening commitments:The operation of representative offices must be consistent with Vietnam’s market opening commitments in international treaties to which Vietnam is a signatory.
• Do not violate the provisions of law:Foreign companies and representative offices must not violate the provisions of Vietnamese law.
• Relevant documents:Provide all required documents, information, and documents as prescribed by law.
• Legal representative:In addition to the conditions on foreign companies, it is necessary to have a legal representative in Vietnam, usually a Vietnamese citizen who has full capacity for civil acts and is not restricted in civil act rights.

The process of establishing a representative office will be carried out in accordance with specific provisions of law and relevant authorities. Choosing authoritative sources of information and reliable attorney advice is important to carry out this process correctly and efficiently.

3. Conditions for establishment and heads of foreign representative offices in Vietnam

Conditions for establishing a foreign representative office:

• Conformity with objectives and fields of operation of foreign companies: The operation of representative offices must be consistent with the objectives and main fields of operation of the foreign company.
• Do not carry out direct business activities in Vietnam: Representative offices are not allowed to carry out direct business activities in Vietnam, but only carry out activities according to permitted objectives.
• In line with Vietnam’s market opening commitments: The operation of representative offices must be consistent with Vietnam’s market opening commitments in treaties to which Vietnam is a signatory.
• Compliance with Vietnamese laws: Representative offices and foreign companies must comply with all provisions of Vietnamese law.

Head of a foreign representative office: usually bearing the title “Director of a representative office”.

• Be a foreign citizen: The head of a representative office is usually a foreign citizen.
• Have sufficient legal capacity: The head of a representative office must have full capacity for civil acts and not be restricted in civil act rights.
• Officially authorized and appointed: The head of a representative office needs to be officially authorized and appointed according to the regulations of the foreign company.

Specific conditions and procedures for appointing heads of representative offices may vary depending on the laws and regulations of each country. This should be done in accordance with the provisions of Vietnamese law and relevant laws.

4. Dossier of establishment of a representative office

• Application for establishment of a representative office: Includes information about the foreign company, objectives and fields of operation of the representative office in Vietnam.
• Decision and establishment license of foreign company: Need to enclose translation and notarization (if necessary) into Vietnamese.
• Field of operation of the representative office in Vietnam: A detailed description of the field of activity that the representative office will carry out in Vietnam.
• Regulations on organizational structure and personnel of representative offices in Vietnam: Description of organizationalstructure, number and position of personnel at representative offices.
• Letter of invitation to a representative in Vietnam:A letter of invitation to a representative in Vietnam (usually the director of a representative office) and his or her authority.
• Copy of identity card or passport of representative in Vietnam:Enclose translation and notarization (if necessary) into Vietnamese.
• Representative office lease contract:A copy of the contract for leasing a representative office in Vietnam and a certificate of use right or proof of ownership/registration.
• Address of registered representative office in Vietnam:Includes detailed address of representative office.
• Certificate of business registration of a foreign company:It is necessary to enclose a translation and notarization (if necessary) into Vietnamese.
• Power of attorney from foreign company: If the applicant is not a representative of the foreign company, a power of attorney from the foreign company is required.
• Some other documents required by authorities in Vietnam.

Note that specific requirements for documents may vary depending on the provisions of law and authorities at the time of submission. The preparation and thorough inspection of documents before submission is very important to ensure a smooth process of applying for a representative office.

5. Time for establishment of a representative office

• Application preparation:Application preparation time can last from a few weeks to a month depending on the ability to organize and complete the necessary documents.
• Submission andinitial review: After submitting a complete application, the authority will conduct an initial review. This period is usually from 1 to 2 months.
• Approval and licensing:
  • Issuance of License for establishment of a representative office of a foreign company: The completion time limit is from 07 – 10 working days;
  • Engraving the circular seal of the foreign company’s representative office: : Completion deadline: 05 working days;
  • Issuance of Notice of tax code paid by the foreign company’s representative office: : Completion time: 05 – 07 working days.

6. Competence and licensing agencies to establish representative offices

Department of Industry and Trade in the locality where the representative office is located.

The Department of Industry and Trade shall complete the appraisal and grant the foreign company the license to establish a representative office and send a copy of the license to the Ministry of Industry and Trade; People’s Committees of provinces and centrally-run cities; Tax authorities; Statistics Office, Provincial Public Security Agency where the Representative Office is located.

7. Cases of non-license for establishment of representative offices

• Violation of legal provisions:Foreign companies violate legal provisions, investment laws or other regulations related to the establishment of representative offices.
• Inappropriate activities:The objectives and activities of representative offices are not in accordance with the provisions of law or incompatible with national interests.
• National security and national interests:The belief that the foreign company’s activities at representative offices may affect Vietnam’s national security or national interests.

• Incomplete, inaccurate records and records: Incomplete, inaccurate,or unreliable records or information provided.
• Not meeting the necessary conditions:The foreign company does not fully meet the necessary conditions to be licensed to establish a representative office.
• Decisionof authorities: State management agencies decide not to grant licenses based on the overall assessment of the situation and the impact of the establishment of representative offices.

The above reasons may result in the refusal of the license or withdrawal of the license granted for the establishment of a representative office of the foreign company in Vietnam.

8. Disclosure of information about representative offices

Disclosure of information about foreign companies’ representative offices in Vietnam is an important process to ensure transparency, legal compliance and contribute to the business management of foreign company representative offices in Vietnam . Here is the information that needs to be disclosed:

• Information about the Parent Company (offshore company):
• Parent company name.
• Country of establishment and head office address.
• Tax identification number or business registration number (if any).
• Information about Representative Office:
• Name of representative office.
• Detailed address of the representative office in Vietnam.
• About the Representative in Vietnam:
• Name of representative in Vietnam.
• Position of representative.

• Contact information (phone, email) of the representative.
• Objectives, fields of operation and benefits of representative offices:
• The objective of establishing a representative office.
• The field of activity of the representative office.
• Rights, responsibilities and powers of representative offices.
• Term of operation:
• Estimated time of representative office operation in Vietnam.
• Legal documents and related documents:
• Number, date, month and year of issuance of the license for establishment of a representative office.
• Other legal documents and related papers.
• Other information:
• Any information should be disclosed in accordance with Vietnamese law.

Specific procedures and requirements on disclosure of information about representative offices of foreign companies in Vietnam may change in accordance with current laws. It is recommended to contact specialized regulatory authorities for more detailed and accurate information.

9. Reporting regime of representative office activities

• Annual report:Representative offices need to submit annual reports on their business activities in Vietnam. This report usually includes information about revenue, profits, number of employees, projects or activities undertaken, and other important information.
• Tax reporting: Representative offices need to comply with the tax reporting regime as prescribed by tax authorities. This includes filing reports on value-added tax (VAT), corporate income tax (CIT), and other taxes.
• Financial statements: Financial statements should be made according to the prescribed cycle and include information about assets, profits, liabilities, liabilities and other financial indicators.
• Reporting on investment projects:If representative offices are involved in investment projects in Vietnam, they need to report on the progress and results of that project.
• Reports on organizational structure and personnel:Regularly update information about organizational structure, number of employees and related changes.

These reports should be made on time and in accordance with Vietnamese law and management agencies. At the same time, it should be noted that regulations and reporting requirements may change from time to time.

10. The following procedures for establishment of representative offices

• Report to the local regulatory authority:Notify the regulatory authority of the establishment of a local representative office, usually the Department of Planning and Investment or a similar agency.
• Tax ID Number (MST) Registration: Register a tax identification number for a representative office at the local Tax Department.
• Financial and tax reporting: Carry out tax and financial reports in accordance with the law.
• Fulfillment of tax and accounting obligations: Comply with regulations on tax and accounting obligations under Vietnamese law.
• Representative office management: Comply with regulations on management and operation of representative offices.
• Protection of the rights and interests of the parent company:Ensure the representative office complies with regulations and does not cause damage to the rights and interests of the parent company.
• Make reports and update information: Regularly report on the activities of representative offices to the parent company and management agencies.

The above procedures may require assistance from legal experts to ensure full compliance with specific Vietnamese laws and regulations on foreign companies’ representative offices.

11. Legal records should be kept throughout the operation of representative offices

Initial Establishment Documents

• Decision and license for establishment of representative offices of foreign companies in Vietnam.
• Certificate of registration of tax identification number (MST) of the representative office.

Records of management and organization

• Operation regulations of representative offices.
• Regulation, processes and functions of departments in representative offices.

Personnel Profile

• Personal dossiers and labor contracts of heads of representative offices.
• Personal records and employment contracts of other employees in the representative office.

Financial and accounting records

• Financial statements, saving accounting documents in accordance with the provisions of law.
• Tax reports and other related financial documents.

Records of business activities

• Records of transactions, contracts, and business commitments of representative offices.
• Business performance reports, development plans, market reports, and performance reviews.

Records related to the authorities

• Written notices, requests, recommendations from regulatory agencies, tax authorities, audit agencies, and other agencies.

Records on the protection of the rights and interests of the parent company

• Documents, meeting minutes, decisions of the parent company related to the representative office in Vietnam.

These records should be kept and managed carefully, ensuring confidentiality, ease of access and full compliance with legal regulations.

12. Duration of license for establishment of representative office

The validity of the license to establish a representative office of a foreign company in Vietnam is 05 years, but must not exceed the remaining term of the business registration certificate or a document of equivalent validity, unless the foreign law provides for the duration of the business registration certificate of the foreign company. The license is renewable multiple times.

13. Service of establishing a foreign company representative office in Vietnam of KALF

• Legal consultancy: Provide information on legal regulations related to the establishment of a representative office of a foreign company in Vietnam.
• Determinationof conditions and requirements: Determine the conditions and requirements necessary to establish a representative office, including documents, procedures, and legal criteria.
• Establishment of a representative office:Assist in preparing documents, carrying out necessary procedures, and applying for a representative office establishment license.
• Participation in negotiations and representation:Assist in the negotiation process and represent clients in matters related to representative offices.
• Financial and taxassistance: Provide advice on finance, tax administration, and other financial matters related to representative offices.
• Legal and compliance protection:Assist clients in complying with applicable regulations and laws after setting up a representative office.

This service helps customers save time, effort and ensure full compliance with legal regulations when establishing a representative office in Vietnam.

14. Process of establishing a representative office of a foreign company in Vietnam of KALF

• In-depth and complete advice on difficulties and problems that customers are facing from the information provided by customers;
• Provide quotes over the phone to make it easier for customers to decide whether or not to partner with KALF;
• Conclude the contract and proceed to write the application as quickly as possible if the client provides all the documents requested by KALF;
• Documents that customers need to provide include business registration license, health certificate, …;
• Receive the business registration certificate and deliver it to the customer;
• Free consultation support on all difficulties after certification.

15. Frequently Asked Questions

What responsibilities and roles does the head of a foreign company’s representative office in Vietnam have?

−     Legal representative for the parent company: The head of a representative office is a person authorized to represent the parent company in Vietnam. He/she must ensure that all activities of the representative office comply with laws and regulations.

−     Operational management of the representative office: The head is responsible for managing and administering the activities of the representative office, ensuring that the parent company achieves the set goals and plans.

−     Compliance with laws and regulations: Ensure that the representative office complies with all laws, regulations and terms related to the foreign company’s operations in Vietnam.

−     Reporting and communication: The head needs to communicate and report regularly with the parent company, providing information on the situation and operation of the representative office in Vietnam.

−     Human resource and financial management: Responsible for the personnel management of representative offices and financial management, ensuring operations are carried out efficiently and with good performance.

−     Protection of the rights and interests of the parent company: Ensure that the rights and interests of the parent company are protected and maintained in all situations.

−     Participate in strategic decisions: The head of the representative office has a role in proposing and participating in the development strategy and business plan of the representative office.

−     Consulting and support: Provide advice and support to the parent company in understanding and adapting to the business environment in Vietnam.

These responsibilities and roles play an important role in maintaining the stable and efficient operation of foreign company representative offices in Vietnam.

What are the benefits of establishing a representative office?

−     Market expansion and business opportunities: Representative offices help foreign companies expand their business activities in Vietnam, seize new market opportunities and seek business partners.

−     Increase credibility and prestige: Having a physical presence and a representative office in Vietnam helps increase credibility and credibility for domestic customers, partners, and investors.

−     Optimize local communication and support: Representative offices are close points of contact between foreign companies and local partners, which optimizes local communication and support effectively.

−     Update market information: Being present locally helps foreign companies update the latest information on the market, trends, regulations and economic policies in Vietnam.

−     Favorable for management and development: Representative offices provide facilities and personnel to help foreign companies manage and develop business activities effectively.

−     Cost savings and risk reduction: Compared to setting up a subsidiary, setting up a representative office usually requires less capital and procedures, which saves costs and reduces financial risks.

−     Support for investment and project expansion: Representative offices can assist in market research, finding partners, and supporting the investment and expansion of business projects in Vietnam.

What are the costs and financial factors associated with setting up a representative office in Vietnam?

−     Initial Establishment Cost: Includes the cost of registration, filing, paperwork, business registration, and other costs directly related to the initial incorporation process.

−     Daily operating expenses: Including office rental costs, land rent, electricity, water, internet, telephone, and daily office operating expenses

−     Salary and HR benefits: Costs related to salaries, bonuses, insurance, and other benefits for employees are an important factor. This includes the salary of the head of the representative office.

−     Taxes and other financial obligations: Other taxes, fees, and financial obligations to the company and its employees.

−     Marketing and promotion costs: The cost of promotion, marketing, and branding to increase market recognition and reach.

−     Employee training and development costs: The cost to train and develop employees, ensuring they have enough skills and knowledge to do their jobs effectively.

−     Expenses related to the market and customers: This includes expenses for travel, event organization, client meetings, market research, and expenses associated with maintaining relationships with customers.

−     Legal and compliance costs: Costs related to legal compliance, legal support, and compliance with local and national regulations.

−     These costs and financial factors need to be thoroughly assessed and managed effectively to ensure the sustainability and success of the representative office in Vietnam.

During the research process, if you have any questions, please contact us through the following information:

 K & ASSOCIATES LAW FIRM

Address: Floor 04, No. 05 Nguyen Thi Nhung, Van Phuc Urban Area, Thu Duc City, HCM.

Email: info@k-associates.vn

Phone: (+84) 338747705 (Zalo, Facebook, Viber, Instagram)

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