Toàn quốc: Representative Office In Vietnam

Vietnam has become an attractive destination for foreign businesses looking to expand their presence in Southeast Asia. One of the most popular ways for foreign companies to establish a foothold in Vietnam is by setting up a Representative Office (RO). This article provides a comprehensive guide to Representative Offices in Vietnam, covering their definition, benefits, establishment process, legal requirements, and operational restrictions.

2. What is a Representative Office in Vietnam?
A Representative Office (RO) is a legal entity established by a foreign company to conduct market research, promote business relations, and oversee activities in Vietnam without engaging in direct profit-generating operations. It serves as a liaison between the parent company and Vietnamese partners, customers, or suppliers.

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3. Benefits of Setting Up a Representative Office in Vietnam
Setting up an RO in Vietnam offers several advantages, including:

• Ease of Establishment: The process is relatively straightforward compared to setting up a foreign-invested enterprise (FIE).
  
  
• Low Initial Investment: Unlike fully operational businesses, an RO does not require significant capital investment.
  
  
• Market Presence: An RO helps establish a presence in Vietnam, facilitating communication with local stakeholders.
  
  
• Regulatory Compliance: Operating under specific legal frameworks, ROs have fewer compliance requirements than fully-fledged businesses.
  

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4. Key Restrictions of a Representative Office
While an RO provides many benefits, it also has notable limitations:

• No Revenue-Generating Activities: An RO cannot engage in direct business activities, such as selling goods or providing services for profit.
  
  
• Limited Scope of Activities: The primary functions of an RO include market research, business liaison, and promotional activities for the parent company.
  
  
• Dependency on the Parent Company: All financial and contractual matters must be managed through the parent company.
  
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5. Legal Framework and Regulatory Requirements
The establishment and operation of a Representative Office in Vietnam are governed by:

• Commercial Law of Vietnam (2005)
  
  
• Decree No. 07/2016/ND-CP on the establishment of ROs and branches of foreign businesses in Vietnam
  
  
• Circular No. 11/2016/TT-BCT guiding the implementation of Decree No. 07/2016/ND-CP
  

5.1. Eligibility Criteria
To set up an RO in Vietnam, a foreign company must:

• Be legally registered in its home country for at least one year.
  
  
• Have a business scope relevant to the Vietnamese market.
  
  
• Provide a detailed explanation of the need for an RO.
  

5.2. Required Documents
The following documents are typically required to establish an RO:

• Application form for the establishment of an RO.
  
  
• Business registration certificate of the parent company (notarized and legalized).
  
  
• Financial statements of the parent company for the latest fiscal year.
  
  
• Authorization letter appointing the Chief Representative.
  
  
• Passport copy of the Chief Representative.
  
  
• Lease agreement for the office space in Vietnam.
  

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6. Process of Establishing a Representative Office in Vietnam
6.1. Step 1: Prepare Necessary Documents
Ensure all required documents are prepared, translated into Vietnamese, and properly notarized/legalized.

6.2. Step 2: Submit Application
Submit the application to the Department of Industry and Trade (DOIT) in the province or city where the RO will be located.

6.3. Step 3: Receive the RO License
If the application is complete and valid, the DOIT will issue the RO License within 7-10 working days.

6.4. Step 4: Register Tax Code
Although an RO does not engage in commercial activities, it must obtain a tax identification number from the local tax authorities.

6.5. Step 5: Open a Bank Account
An RO must open a bank account in Vietnam for operational expenses and financial transactions.

6.6. Step 6: Notify Relevant Authorities
The RO must notify the Department of Labor, the local tax office, and other relevant authorities about its establishment and activities.

7. Obligations and Compliance Requirements
7.1. Annual Reporting
ROs must submit an annual report on their activities to the DOIT.

7.2. Tax Obligations
Although an RO does not generate revenue, it is still subject to:

• Personal Income Tax (PIT) for employees.
  
  
• Value Added Tax (VAT) on office-related expenses.
  

7.3. Labor Regulations
ROs must comply with Vietnamese labor laws when hiring local employees, including work permits for foreign staff.

8. Common Challenges and Solutions
8.1. Restrictions on Business Activities
ROs are limited in their operations. To overcome this, businesses often set up a Limited Liability Company (LLC) for revenue-generating activities.

8.2. Bureaucratic Procedures
Vietnam’s regulatory environment can be complex. Working with a professional legal or consulting firm can streamline the process.

8.3. Compliance with Changing Regulations
Vietnam’s business laws are subject to change. Companies should stay updated with legal developments to ensure compliance.

Setting up a Representative Office in Vietnam is a strategic move for foreign businesses looking to explore the Vietnamese market. While it comes with certain limitations, an RO provides a cost-effective way to establish a presence, conduct market research, and build local business relationships. By understanding the legal requirements, benefits, and challenges, companies can effectively leverage an RO as part of their market expansion strategy.

If you are considering establishing a Representative Office in Vietnam, consulting with legal and business experts can help ensure a smooth and compliant setup process.