How Foreign Entity Could Set up a Branch Office in Vietnam

 How Foreign Entity Could Set-up a Branch Office in Vietnam

A foreign business entity or a foreign trader is allowed to set up a branch in Vietnam to conduct business activities.

Having the right to conduct business activities and make profit are how a branch differs from a representative office in Vietnam. A branch depends on the foreign business entity that set-up the branch while a foreign owned company set-up in Vietnam exists by itself. The Vietnam Department of Industry and Trade will be approving the establishment of a branch in Vietnam while Vietnam Ministry of Planning and Investment will be the State agency that coordinate the setting up a company in Vietnam.

In particular, the branch of a foreign business entity in Vietnam (referred to as the “Branch”) means a subsidiary unit of the foreign business entity, established in accordance with the law of Vietnam in order to enter into contracts in Vietnam and conduct activities being the purchase and sale of goods and other commercial activities consistent with its licence for establishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.

The Branch will need to apply and obtain the establishment license; and have a seal bearing the name of the Branch.

1. Rights of the Branch

To rent offices and to lease or purchase the equipment and facilities necessary for the operation of the branch.

To recruit Vietnamese and foreign employees to work for the branch in accordance with the law of Vietnam.

To enter into contracts in Vietnam in accordance with the activities stated in the license for establishment of such branch and in accordance with the Vietnam Law.

To open Vietnamese dong and foreign currency accounts at banks which are licensed to operate in Vietnam.

To remit profits abroad in accordance with the law of Vietnam.

To have a seal bearing the name of the branch in accordance with the law of Vietnam.

To conduct activities being the purchase and sale of goods and other commercial activities consistent with its license for establishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.

2. Requested conditions for establishment the Branch in Vietnam

A foreign company which has effectiveness business activities will be allowed to open the Branch in Vietnam if this company has real demand to open the market in Vietnam and meet some conditions as below:

Being a trader recognized by the law of the country where it has been lawfully established or made its business registration;

Having been operating for at least five years after its lawful establishment or business registration.

3. Issuance the Certificate of Branch:

The issuance of the Certificate of Branch will be implemented by the Department of Industry and Trade Department after the foreign company meets all of conditions as Vietnam legal requirements.

The issuing period will be within 20 working-days after the date of submitting the full valid documents as requested.

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How Foreign Entity Could Set-up Representative Office in Vietnam

 A foreign business entity or a foreign trader is allowed to establish Representative Office in Vietnam according to the Commercial Law.

Representative office of a foreign business entity in Vietnam (referred as “Representative Office”) means a subsidiary unit of the foreign business entity, established in accordance with the law of Vietnam in order to survey markets and to undertake a number of commercial enhancement activities permitted by the law of Vietnam. Representative Office will need to apply and obtain the establishment license; and have a seal bearing the name of the representative office.

Setting up a Representative Office is less complicated than setting up company in Vietnam. The Vietnam Department of Trade will be approving the establishment of Representative Office in Vietnam while Vietnam Ministry of Planning and Investment will be the State agency that coordinate the setting up a company in Vietnam. The time duration to establish a Representative Office is shorter than to establish a company. There are fewer conditions to meet than conditions in setting up company in Vietnam. The main difference between a Representative Office and a company in Vietnam is that the Representative Office could not directly conduct profit making activities.

Rights of the Representative Office:

To operate strictly in accordance with the purposes, scope and duration stated in the license for establishment of such representative office;

To rent offices and to lease or purchase the equipment and facilities necessary for the operation of the Representative Office;

To recruit Vietnamese and foreign employees to work for the Representative Office in accordance with the law of Vietnam;

To open accounts in foreign currency and in Vietnamese Dong sourced from foreign currency at banks which are licensed to operate in Vietnam, and to use such accounts solely for the operation of the Representative Office.

Obligation of the Representative Office:

Not to directly conduct profit making activities in Vietnam;

Not to enter into commercial contracts of the foreign business entity or to amend or supplement such contracts already signed except where the head of the Representative Office has a valid power of attorney from the foreign business entity;

To pay taxes, fees and charges and to discharge other financial obligations in accordance with the law of Vietnam;

To report on the operation of the Representative Office in accordance with the law of Vietnam

A foreign company which has effectiveness business activities will be allowed to open the Representative Office in Vietnam if this company has real demand to open the market in Vietnam and meet conditions as below:

Being a business entity or trader recognized by the law of the country or the territory (hereinafter referred to collectively as the country) where it has been lawfully established or made its business registration;

Having been operating for at least one year after its lawful establishment or business registration in its country.

The issuing period will be within 20 working-days after the date of submitting the full valid documents as requested.

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Note on Setting up a Representative Office in Vietnam

 Setting up a representative office is considered one of the simplest forms of investment in Vietnam.

The representative office will help the foreign trader to lease office, hire people, open bank account, and promote the business activities in Vietnam market. The chief representative if being foreigner will then could apply for work permit and temporary residence card to stay in Vietnam. There is no income tax as the representative office therefore the liability to maintain a representative office is less hassle. When the purpose of setting up representative office in Vietnam has been achieved, the closing down of the business shall be not as challenging as closing down a company.

According to Vietnam laws, representative office is a dependent unit, representing the foreign entity’s interests in Vietnam. Representative office is established by foreign entities to help them liaise, implement research activities, provide information and support them in seeking new partners as well as having understanding of the new market.

The foreign entity has to meet certain conditions before setting up representative office in Vietnam. It has rights and duties in accordance with Vietnam laws.

When preparing the application for license of representative office in Vietnam, the foreign entities have to note the following.

Prepare the application forms

The application forms as issued by Ministry of Industry and Trade. The application must be signed by legal representative of the foreign entity;

Notarize, legalize and authenticate documents

The foreign entity has to prepare and provide business registration certificate, audited financial report, charter, and office lease memorandum of understanding, passport of the legal representatives of the Representative Office in Vietnam. The documents issued in foreign countries have to be notarized, legalized and authenticated (apostille procedures) in accordance with Vietnam laws to be used in Vietnam. If the business registration certificate or alternative documents have expiry date for business entity’s operation, the remaining time must be at least one year;

Who should be the chief representative?

The Chief Representative of the Representative Office in Vietnam must be different from the Director of the foreign entity.

How long does it take?

It would take around 20 business days since application until receiving the business operation registration of representative office.

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How to Terminate Representative Office in Vietnam

 Foreign Traders wishing to terminate the operation of representative office in Vietnam need to complete the procedure at Tax authorities, the Provincial Department of Industry and Trade and the procedure to return the seal at the police.

Pursuant to the provisions of the Vietnam laws, the termination of operation of representative offices of foreign traders in Vietnam at the Provincial Department of Industry and Trade shall be conducted as follows:

Preparation of dossiers for termination of operation of representative offices includes:

Notice of termination of operation of the representative office, made according to the form set by the Ministry of Industry and Trade, signed by the competent representative of the foreign trader.

List of creditors and unpaid debts, including tax debts and social insurance premiums;

List of employees and their respective current interests;

Original License for establishment of representative office.

Documents evidencing that the representative office has fulfilled all tax and financial obligations to the State of Vietnam

The order and procedures for termination of operation of representative offices at competent agencies shall be as follows:

The foreign trader submits a dossier for termination of operation of the representative office directly or via post or online (if applicable) to the Provincial Department of Industry and Trade (or the Management Board of Industrial parks, export processing zones, economic zones and hi-tech parks) where the representative office is licensed.

Within three working days from the date of receipt of the file, the competent authority shall examine and request the supplement if the dossier is incomplete and invalid. Requests for supplementary records are made at most once during the process of processing applications;

Within a time-limit of five (05) working days from the date of receipt of a complete and valid file, the competent authority shall be responsible to publish on its website the termination of operation of the representative office.

Foreign traders shall publicly post up the termination of their operation at the representative office.

Foreign traders whose representative offices have terminated of operation shall be responsible for performing contracts, paying debts, including tax debts and settling lawful interests for laborers who have worked at the representative office in accordance with the laws.

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How Foreign Entity Could Set-up Representative Office in Vietnam

 A foreign business entity or a foreign trader is allowed to establish Representative Office in Vietnam according to the Commercial Law.

Representative office of a foreign business entity in Vietnam (referred as “Representative Office”) means a subsidiary unit of the foreign business entity, established in accordance with the law of Vietnam in order to survey markets and to undertake a number of commercial enhancement activities permitted by the law of Vietnam. Representative Office will need to apply and obtain the establishment license; and have a seal bearing the name of the representative office.

Setting up a Representative Office is less complicated than setting up a company in Vietnam. The Vietnam Department of Trade will be approving the establishment of Representative Office in Vietnam while Vietnam Ministry of Planning and Investment will be the State agency that coordinate the setting up a company in Vietnam. The time duration to establish a Representative Office is shorter than to establish a company. There are fewer conditions to meet than conditions in setting up company in Vietnam. The main difference between a Representative Office and a company in Vietnam is that the Representative Office could not directly conduct profit making activities.

Rights of the Representative Office:

To operate strictly in accordance with the purposes, scope and duration stated in the license for establishment of such representative office;

To rent offices and to lease or purchase the equipment and facilities necessary for the operation of the Representative Office;

To recruit Vietnamese and foreign employees to work for the Representative Office in accordance with the law of Vietnam;

To open accounts in foreign currency and in Vietnamese Dong sourced from foreign currency at banks which are licensed to operate in Vietnam, and to use such accounts solely for the operation of the Representative Office.

Obligation of the Representative Office:

Not to directly conduct profit making activities in Vietnam;

Not to enter into commercial contracts of the foreign business entity or to amend or supplement such contracts already signed except where the head of the Representative Office has a valid power of attorney from the foreign business entity;

To pay taxes, fees and charges and to discharge other financial obligations in accordance with the law of Vietnam;

To report on the operation of the Representative Office in accordance with the law of Vietnam

A foreign company which has effectiveness business activities will be allowed to open the Representative Office in Vietnam if this company has real demand to open the market in Vietnam and meet conditions as below:

Being a business entity or trader recognized by the law of the country or the territory (hereinafter referred to collectively as the country) where it has been lawfully established or made its business registration;

Having been operating for at least one year after its lawful establishment or business registration in its country.

The issuing period will be within 20 working-days after the date of submitting the full valid documents as requested.

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How to Set-up a Branch Office in Vietnam

  How Foreign Entity Could Set-up a Branch Office in Vietnam

A foreign business entity or a foreign trader is allowed to set-up a branch in Vietnam to conduct business activities.

Having the right to conduct business activities and make profit are how a branch differs from a representative office in Vietnam. A branch depends on the foreign business entity that set-up the branch while a foreign owned company set-up in Vietnam exists by itself. The Vietnam Department of Industry and Trade will be approving the establishment of a branch in Vietnam while Vietnam Ministry of Planning and Investment will be the State agency that coordinate the setting up a company in Vietnam.

In particular, the branch of a foreign business entity in Vietnam (referred to as the “Branch”) means a subsidiary unit of the foreign business entity, established in accordance with the law of Vietnam in order to enter into contracts in Vietnam and conduct activities being the purchase and sale of goods and other commercial activities consistent with its licence for establishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.

The Branch will need to apply and obtain the establishment license; and have a seal bearing the name of the Branch.

1. Rights of the Branch

To rent offices and to lease or purchase the equipment and facilities necessary for the operation of the branch.

To recruit Vietnamese and foreign employees to work for the branch in accordance with the law of Vietnam.

To enter into contracts in Vietnam in accordance with the activities stated in the license for establishment of such branch and in accordance with the Vietnam Law.

To open Vietnamese dong and foreign currency accounts at banks which are licensed to operate in Vietnam.

To remit profits abroad in accordance with the law of Vietnam.

To have a seal bearing the name of the branch in accordance with the law of Vietnam.

To conduct activities being the purchase and sale of goods and other commercial activities consistent with its license for establishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.

2. Requested conditions for establishment the Branch in Vietnam

A foreign company which has effectiveness business activities will be allowed to open the Branch in Vietnam if this company has real demand to open the market in Vietnam and meet some conditions as below:

Being a trader recognized by the law of the country where it has been lawfully established or made its business registration;

Having been operating for at least five years after its lawful establishment or business registration.

3. Issuance the Certificate of Branch:

The issuance of the Certificate of Branch will be implemented by the Department of Industry and Trade Department after the foreign company meets all of conditions as Vietnam legal requiraements.

The issuing period will be within 20 working-days after the date of submitting the full valid documents as requested.

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Renewal of License for the Establishment of Branches Office in Vietnam

   How to extend branch license in Vietnam?

The extension of the license for the establishment of a foreign trader’s branch in Vietnam shall be following the regulation of the commercial law and the relevant guiding decrees and circulars under Vietnam laws.

Preparation of dossiers for extension of license for the establishment of branches includes:

Application for extension of license for the establishment of branches, made according to the form set by the Ministry of Industry and Trade, signed by a competent representative of the foreign trader;

A copy of the business registration certificate or equivalent paper of the foreign trader that is translated into Vietnamese and certified by a Vietnamese diplomatic mission or consulate abroad consular legalization in accordance with the law of Vietnam;

Copies of audited financial statements or documents certifying the fulfillment of tax or financial obligations in the latest fiscal year or papers of equivalent value issued by competent agencies or organizations (where the foreign trader established) to prove the existence and operation of the foreign trader in the latest financial year, it must be translated into Vietnamese and authenticated in accordance with the provisions of Vietnamese law;

A copy of the license for the establishment of the branch.

The order and procedures for extension of the license for the establishment of the branch at a competent agency shall be as follows:

A dossier for extension of the license for the establishment of the branch must be submitted within 30 days at the latest before the license expires;

Foreign traders submit applications directly or via post or online (if applicable) to the Ministry of Industry and Trade;

Within 03 working days from the date of receipt of the dossier, the Ministry of Industry and Trade shall check and request the supplement if the dossier is incomplete and invalid. Requests for supplementary records are made at most once during the process of processing applications;

Within 05 working days from the date of receipt of the complete and valid dossier, the Ministry of Industry and Trade shall renew the branch establishment permit. In case of non-renewal, the reasons therefor must be clearly stated in writing;

In case the extension of the license for the establishment of the branch is not governed in specialized legal documents, the Ministry of Industry and Trade shall send a written request for comment to the specialized management ministry within 03 working days from the date of receipt of a complete and valid file. Within 5 working days from the date of receiving the Ministry of Industry and Trade’s written request, the specialized managing ministries shall clearly state whether they agree or disagree with the license extension. Within 5 working days after receiving the opinions of the specialized management ministry, the Ministry of Industry and Trade shall extend or not extend the branch establishment permit to the foreign trader. In case of non-renewal, the reasons therefor must be clearly stated in writing;

Within 15 days from the date of extension of the license for the establishment of the branch, the Ministry of Industry and Trade shall publish on the website of the Ministry.

Our lawyers in Vietnam constantly follow up with changes of law to provide the client with update for better decision making process.

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