Opening A Vietnam Rep Office
November 3, 2007
The Representative Office (RO) is the most simplified structure for gaining a toehold in Vietnam. The strategy behind the RO is to make a minimum investment as you learn about the inner workings of the country, understand the costs, established a market channel, and investigate the capabilities of the people. Following are the key step required for opening an RO in Vietnam.
Establishment of the RO
To establish a representative office in Vietnam, a foreign company must apply for a license issued by the Provincial Trade Department, and complete post licensing procedures including notice of operations and obtaining a seal. Application files for establishment of the representative office must be submitted to the Provincial Trade Department. To obtain a seal, the chief representative of the representative office or its staff may be required to personally lodge the applications due to security reasons. The following documents must be submitted to the licensing authority for obtaining the License:
- Application (standard form)
- A certified/legalized copy of the Certificate of Incorporation and any amendments of the parent company
- A certified/legalized copy of the Memorandum and Articles of Association of the parent company (if any)
- A certified/legalized copy of the audit report of the parent company for its latest financial year issued by an auditing company
- A notarized copy of Office Lease Contract
- A notarized copy of Chief Representative’s passport
Scope of Activities
Generally the RO is a subordinate unit of the foreign enterprise established under the laws of Vietnam in order to seek, promote trade and tourism opportunities, but not allowed to engage in any direct profit-making activities.
- Act as a liaison office, conduct market research activities
- Facilitate the execution of signed contracts and commercial, technical and investment agreements between the head office (the entity that established the RO in Vietnam) and its Vietnamese counterparts in accordance with laws of Vietnam
- Promote and develop economic, commercial, and technical cooperation projects of the head office in Vietnam
Timing Schedules
A RO license will be 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 RO shall have to publish on three consecutive issues of a printed or online newspaper licensed in Vietnam the following contents:
- Name and registered address of the RO
- Name and registered address of parent company
- Name of Chief Representative
- Serial number, date of issue and valid term of the license and licensing authority
- Scope of activities of the RO
Tax Obligations
The RO is not treated as a tax entity. The RO is not allowed to carry any trading or revenue generating activities. As long as the RO is active only in the areas defined in point, the foreign company will have no exposure to Vietnam corporate taxes.
- There will be no corporate tax as long as there is no profit generating activities. If the entity does generate profit it will be exposed to taxes and high penalties.
- Personal income tax will be imposed on both local and foreign employees. The tax is the liability of the employee rather than the employer, but the obligation to withhold or pay the taxes in with the employer.
- A foreign employee is considers a none-tax resident in Vietnam if they are physically present in the country for less than 183 days during the tax year. In this case, they would pay 25% of the Vietnamese sourced income.
- If the employee has more than 183 days in the country then the tax rates can be as high as 40% of the income sourced in Vietnam.
For more information, see our other articles about Vietnam.
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