Establishment of Foreign Representative Office
Foreign traders are entitled to establish representative offices in the Vietnamese territory. Foreign traders must meet the conditions and functions of representative office operations in accordance with the laws of Vietnam. With our experience and highly qualified team, we regularly advise on procedures for establishing foreign representative offices.
ABA VISA & LAW SERVICES instructing foreign traders the points to note before deciding to establish a representative office as follows:
Legal basis:
- Commercial Law 2005 provides for foreign companies conducting commercial activities in Vietnam; Decree 07/2016/ND-CP regulating the establishment of representative offices of foreign companies.
- Circular 11/2016/TT-BCT promulgating the form on the establishment of representative offices of foreign companies; Law on Personal Income Tax No. 26/2012/QH13 promulgated by the National Assembly and regulates personal income tax.
- Circular 111/2013/TT-BTC; Circular 92/2015/TT-BTC regulating and guiding the calculation of personal income tax.
BASIC CONDITIONS AND FUNCTIONS OF REPRESENTATIVE OFFICES OF FOREIGN COMPANY
Conditions for setting up a representative office
Quoting Article 7 of Decree 07/2016/ND-CP on conditions for granting a license to establish a representative office, a foreign trader shall be granted a license to establish a representative office when the following conditions are satisfied:
1. 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 permitted by the laws of these countries and territories. recognition.
2. Foreign traders have operated for at least 01 year from the date of establishment or registration.
3. In case the foreign trader's business registration certificate or paper of equivalent validity stipulates an operation term, such time limit must be at least 01 year from the date of application submission.
4. The operation contents of the representative office must be consistent with Vietnam's commitments in international treaties to which Vietnam is a contracting party.
5. 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 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).
Rights of Representative Office
Citing Article 17 of the 2005 Commercial Law on Rights of Representative Offices Acting in accordance with the purposes, scope and duration specified in the representative office establishment license.
- Renting an office, renting or buying the necessary means and supplies for the operation of the Representative Office. Recruiting Vietnamese and foreigners to work at Representative Offices in accordance with Vietnamese law.
- Open an account in foreign currency, in Vietnamese dong with foreign currency origin at a bank licensed to operate in Vietnam and only use this account for the operation of the Representative Office. Having a seal bearing the name of the representative office in accordance with Vietnamese law. Other rights as provided for by law.
Functions of Representative Office
Quoting Article 18 of the Commercial Law 2005 on the operation of representative offices Not to conduct direct profit-making activities in Vietnam.
Trade promotion activities may only be carried out within the scope permitted by this Law. Not to enter into contracts, to amend or supplement signed contracts of foreign traders, unless the head of the representative office has a lawful power of attorney from the foreign trader or the cases specified in the relevant regulations. Clauses 2, 3 and 4, Article 17 of this Law.
Pay taxes, fees and charges and fulfill other financial obligations in accordance with the laws of Vietnam. Report on the operation of the representative office in accordance with the law of Vietnam. Other obligations as prescribed by law.
Conditions for Head of Representative Office
Quoting Clause 6, Article 33 about the Head of a Representative Office The head of a representative office of a foreign trader may not hold the following positions:
a) Head of branch of the same foreign trader;
b) Heads of branches of other foreign traders;
c) The legal representative of such foreign trader or other foreign trader;
d) The legal representative of an economic organization established in accordance with the laws of Vietnam. establish foreign representative office
NOTE: Conditions on the head of a foreign representative office are very important. Before considering appointing Traders need to consider carefully.
Periodic reporting regimes for foreign representative offices according to regulations
a) Tax reporting regime On a quarterly basis, the representative office must carry out the procedures for declaring personal income tax (PIT) for cases where the employee incurs PIT payable.
Note: Must declare, but the representative office pay on behalf of or the employee himself to the collection management agency can pay.
b) Annual report on operation Quoting Article 32 of Decree 07/2016/ND-CP on operation reporting regime Before January 30 of each year, Representative Office.
The branch is responsible for sending a report according to the form of the Ministry of Industry and Trade on its activities in the previous year by post to the License-issuing Agency.
Representative offices and branches are obliged to report, provide documents or explain issues related to their operations at the request of competent state management agencies.
PROCEDURES FOR ESTABLISHMENT OF FOREIGN REPRESENTATIVE OFFICES
Quoting Article 10 of Decree No. 07/2016/ND-CP on Dossier for License for Establishment of Representative Offices, Required Documents:
- 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 (the prescribed form);
- A copy of the business registration certificate or equivalent document of the foreign trader; The document of the foreign trader appointing/appointing the head of the representative office.
- 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 an equivalent document issued by a competent agency or organization where the trader is located. foreign traders establish or certify, prove the existence and operation of foreign traders in the latest fiscal year;
- Copy of passport or identity card or citizen identification card (if Vietnamese) or passport copy (if foreigner) of the head of the representative office; 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;
- Copies of documents on the proposed location of the representative office's head office as prescribed in Article 28 of this Decree and relevant laws. establish foreign representative office
NOTE:
Documents specified in Sections 2, 3, 4 and 5 (for the case where the passport copy of the head of the representative office is a foreigner).
This must be translated into Vietnamese and authenticated in accordance with Vietnamese law. Documents specified at Point b of this Article must be certified or consularly legalized by Vietnamese diplomatic missions or consulates abroad in accordance with Vietnamese law.
License period: 15 working days (In case the application is valid).
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