How to Set Up a Representative Office in Vietnam

• Setting up a representative office offers a low-cost entry for investors to better understand Vietnam’s business climate.
• Representative offices are forbidden to earn revenue and their activities are limited to mainly market research, and acting as a liaison office for their parent companies.
• Foreign investors should seek the help of registered local advisors to ensure they understand the set up process.

A Representative Office (RO) offers a low-cost entry for companies seeking to gain a better understanding of the Vietnamese market. As such, this option is among the most common for first-time entrants to the Vietnamese market and often precedes a larger presence within the country.

What are ROs permitted to do?

ROs are permitted to engage in the following activities:

1. Conducting market research;
2. Acting as a liaison office for its parent company;
3. Promoting the activities of its head office through meetings, and other activities, that leads to a business at later stages.

Representatives offices are dependent on their parent company and are not allowed to generate their profits or enter directly into contracts. They are also not allowed to issue invoices.

 

What do you need to get a license?

Pre-licensing checklist for setting up an RO:

1. File an application for setting up an RO with company chop or seal;
2. Appointment letter of Chief of RO with identification documents and company seal;
3. Power of attorney in favor of consultant to submit the application dossier;
4. Certificate of Incorporation for the Company and/or Business Registration Certificate of the Company;
5. Audited financial report of the company for the latest fiscal year;
6. Memorandum of Understanding (MoU) of leasing office or leasing contract;
7. Documents providing legal rights of landlord regarding the right of the leasing office.

For steps 1 to 6, the foreign entity would require one notarized and consularized copy of each document and a translated copy in Vietnamese by a Vietnamese competent authority.

A signed leasing contract is also required before registering an RO in Vietnam.

What do you need to do after you get the license?

Post-licensing checklist for setup an RO:

8. Make a seal for the RO;
   • License on the establishment of RO
   • Passport of Chief of RO if a foreigner or passport/ID card if Chief is Vietnamese
9. Register a Tax code for RO;
   • Declaration to register a tax code
   • Power of attorney
   • Certificate of seal registration
   • Certificate of RO in Vietnam
10. Open a bank account of RO;
    • License on the establishment of RO
    • Certificate of seal registration
    • Certificate of tax code registration
    • Letter of authorization appointing the authorized signatories of the bank accounts
11. Announcement of the establishment of RO of Company.

For steps 8 to 10, notarized and translated documents will be required to complete the process.

How long does it take to set up an RO?

ROs can be set up in between six to eight weeks. We recommend hiring a professional service to deal with the myriad of laws and procedures.

Given the absence of in-country revenue and associated licensing requirements, the setup process for this option does not entail as many bureaucratic procedures as others.

An RO license is valid for five years but can be extended for another five years.

What comes next?

Hiring, tax, and reporting.

There is no cap on the number of local and expatriate employees that a representative office can hire as long as their employment is properly documented.

All expatriate hires including the chief representative are required to have a work permit. ROs can hire staff directly or use the assistance of recruiting agencies.

An RO is not subject to Vietnamese corporate income tax (CIT). However, it is responsible for declaring its employees’ personal income tax (PIT).

To determine payable tax, ROs have to undertake a tax audit which checks all revenues and expenses during the tax term to establish grounds for declaring and paying tax.

The RO also has to send reports of its activities of the previous year to the Department of Industry and Trade before January 30 of each year.

This article was originally published by Vietnam Briefing on March 22, 2019, and was re-posted by ASEAN Briefing on January 17, 2020.

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