Currently, the representative office model of foreign organizations in Vietnam is increasingly popular, this is a dependent unit of the enterprise, established under Vietnamese law with the function of conducting market survey. market and carry out trade promotion activities to the extent permitted by Vietnamese law.

1. Conditions for granting a representative office establishment license

Pursuant to Article 7 of Decree 07/2016/ND-CP detailing the Commercial Law on Representative Offices of Foreign Traders in Vietnam dated January 25, 2016 on the conditions for issuance of License to establish Office represented as follows:

Foreign traders are granted a License to establish a representative office when meeting the following conditions:

First, foreign traders may establish and register their business in accordance with the laws of the countries or territories participating in international treaties to which Vietnam is a contracting party or approved by the laws of other countries and territories. This recognition;

Second, the foreign trader has operated for at least 01 year from the date of establishment or registration;

Thirdly, in case the business registration certificate or paper of equivalent validity of the foreign trader stipulates the operation term, such time limit must be at least 01 year from the date of application submission;

Fourthly, the operation contents of the Representative Office must be consistent with Vietnam’s commitments in international treaties to which Vietnam is a signatory;

Fifth, in case the operation contents of the representative office do not conform to the commitments of Vietnam or the foreign trader is not a member of a country or territory participating in an international treaty to which Vietnam is a contracting party, the The establishment of a representative office must be approved by the Minister, the head of the ministerial-level agency in charge of specialized management (hereinafter referred to as the Minister of specialized management).

2. Dossier for establishment of representative office

Pursuant to Article 10 of Decree 07/2016/ND-CP detailing the Commercial Law on representative offices of foreign traders in Vietnam dated January 25, 2016, the dossier includes:

First, an application form for a license to establish a representative office, made according to the form of the Ministry of Industry and Trade, signed by a competent representative of the foreign trader;

Second, a copy of the business registration certificate or an equivalent document of the foreign trader;

Third, the document of the foreign trader appointing/appointing the head of the representative office;

Fourth, a copy of the audited financial statement or a written certification of the fulfillment of tax or financial obligations in the latest fiscal year or a paper of equivalent value issued by a competent agency or organization. the place where the foreign trader is established issues or certifies and proves the existence and operation of the foreign trader in the latest fiscal year;

Fifth, a copy of the passport or identity card or citizen identification card (if Vietnamese) or passport copy (if foreign) of the head of the representative office;

Sixth, documents on the proposed location of the representative office’s headquarters include:

– A copy of the memorandum of understanding or agreement to rent the location or a copy of the document proving that the trader has the right to exploit and use the location to locate the representative office;

– A copy of the document on the proposed location of the representative office’s head office as prescribed in Article 28 of this Decree and relevant laws.

Note: Documents specified at Points b, c, d and dd (for the case where the passport copy of the head of the representative office is a foreigner) Clause 1 of this Article must be translated into Vietnamese. and authenticate in accordance with the law of Vietnam. Documents specified at Point b, Clause 1 of this Article must be certified or consularly legalized by Vietnamese diplomatic missions or consulates abroad in accordance with Vietnamese law.

3. Order and procedures for establishing representative offices of foreign traders

– Foreign traders submit dossiers directly or by post or online (if eligible) to the licensing agency (specifically the Department of Planning and Investment under the province/central city). where the representative office is expected to be located.

– Within 03 working days from the date of receipt of the dossier, the licensing agency shall examine and request supplementation if the dossier is incomplete or invalid. The request for additional records is made at most once during the processing of the application.

– Except for the case specified in Clause 4 of this Article, within 07 working days from the date of receipt of a complete and valid dossier, the licensing agency shall grant or refuse to grant a license to establish a representative office for a foreign trader. outside. In case of refusal, there must be a written explanation clearly stating the reason.

– In the case specified in Clause 5, Article 7 of this Decree and where the establishment of a representative office has not been prescribed in specialized legal documents, the licensing agency shall send a written request to the Ministry of Industry and Trade for opinions. specialized managers within 03 working days from the date of receipt of complete and valid dossiers. Within 05 working days from the date of receipt of the written request for opinions from the licensing agency, the Ministries of specialized management shall issue a written document stating their agreement or disagreement with the licensing of establishment of a representative office. face. Within 5 working days from the date of receipt of opinions from the specialized management ministry, the licensing agency shall grant or refuse to grant a license to establish a representative office for the foreign trader. In case of refusal, a written reason must be clearly stated.

4. Does the representative office of a foreign enterprise fulfill any tax obligations?

Representative offices of foreign enterprises in Vietnam will have to fulfill tax obligations for the following taxes:

1. Excise.
2. Personal income tax.

Pursuant to Clause 1, Article 1 of Circular 65/2020/TT-BTC regulating license fee payers as follows:

License fee payers are organizations, individuals, groups of individuals and households engaged in production and trading of goods and services specified in Article 2 of Decree 139/2016/ND-CP, except for schools accordance with the provisions of Article 3 of this Decree and Clause 1, Article 1 of Decree 22/2020/ND-CP.

License fee payers are organizations and individuals engaged in the production and trading of goods and services, except for the case specified in Article 3 of this Decree, including:

– Enterprises established in accordance with the law.

– The organization is established under the Law on Cooperatives.

– Non-business units established in accordance with law.

– Economic organization of political organizations, socio-political organizations, social organizations, socio-professional organizations, people’s armed forces units.

– Other organizations engaged in production and business activities.

– Branches, representative offices and business locations of the organizations specified in Clauses 1, 2, 3, 4 and 5 of this Article (if any).

– Individuals, groups of individuals and households engaged in production and business activities.

Thus, representative offices of foreign enterprises are subject to license tax.

However, in Clause 2, Article 1 of Circular 65/2020/TT-BTC, the case of license fee exemption is as follows:

Cases of exemption from license fees comply with the provisions of Article 3 of Decree 139/2016/ND-CP and Clause 1, Article 1 of Decree 22/2020/ND-CP. Particularly for the cases of license fee exemption specified in Clauses 1 and 2, Article 3 of Decree 139/2016/ND-CP and Clause 1, Article 1 of Decree 22/2020/ND-CP.

It includes the provisions:

Exemption of license fees in the first year of establishment or production and business activities (from January 1 to December 31) for:

– Newly established organization (granted a new tax code, new enterprise code).

– Households, individuals, and groups of individuals starting production and business activities for the first time.

– During the license fee exemption period, when an organization, household, individual or group of individuals establishes a branch, representative office or business location, the branch, representative office, business location license fees are exempted during the period when organizations, households, individuals, and groups of individuals are exempt from license fees.

Thus, if the representative office of a foreign enterprise is established during the time the enterprise is exempt from license fees, it may not have to pay the license fee.

In addition, regarding personal income tax,

Representative offices are responsible for withholding, declaring and paying personal income tax on income from wages and salaries of representative office employees according to Clause 1, Article 1 of the Amended Personal Income Tax Law. 2012 and Point b, Clause 1, Article 25 of Circular 111/2013/TT-BTC.

Thus, a foreign enterprise can establish its representative office in Vietnam if it fully meets the prescribed conditions. Tax obligations for Representative Offices include payment of license fees (unless exempted) and personal income tax for employees of Representative Offices.

Above is Khoa Tin‘s advice on procedures for establishing representative offices of foreign traders in Vietnam.

Above is the advice of  Law of Faculty of Credit  on “Things to keep in mind when marrying a foreigner”.

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Best regards./.