Procedures for establishing a foreign company branch – In Vietnam

Refer to detailed procedures for establishing a branch of a foreign company in Vietnam and conditions for foreign traders to establish a branch in this article of fdiinvietnam.com.

The need to expand business to other countries is a trend of businesses around the world. In particular, Vietnam is a developed country that is attracting a lot of resources as well as the attention of businesses around the world. Therefore, this article of fdiinvietnam.com will provide you with useful information about the procedures and necessary conditions for foreign traders or companies to establish branches in Vietnam.

What is a branch of a foreign trader (company) in Vietnam?

Before learning about foreign traders’ branches in Vietnam, we need to understand the concept of what a company branch is? 

• According to Clause 1, Article 44 of the Enterprise Law 2020, a branch is defined as a dependent unit of an enterprise, responsible for performing all or part of the functions of the enterprise, including the function of authorized representation. The branch’s business lines must be consistent with the business lines of the enterprise;
• Branches of foreign traders in Vietnam also operate in the same form as branches of domestic companies. Branches of foreign traders are allowed to operate and do business like companies, have their own tax codes and seals, and can sign contracts with partners and customers. Branches of foreign traders in Vietnam can register for digital signatures and invoices to operate if needed;
• Each foreign trader is only allowed to establish a maximum of 1 branch in each province or centrally-run city.

Conditions for establishing a branch of a foreign trader in Vietnam

Foreign traders are allowed to establish branches in Vietnam if they meet the following conditions:

• Foreign traders are established or registered to do business in accordance with the laws of countries or territories participating in international treaties to which Vietnam is a party or recognized by the laws of such countries or territories;
• Foreign traders have been operating for at least 5 years from the date of establishment or registration;
• In case the business registration certificate or equivalent document of a foreign trader states the term of operation, that term must be at least 1 year from the date of submission of the application for a license to establish a branch;
• The branch’s operations must be consistent with Vietnam’s market opening commitments in international treaties of which Vietnam is a member and consistent with the business lines of foreign traders as prescribed by Vietnamese law;
• In case the branch’s operations are inconsistent or inconsistent with the foreign trader’s commitment that is not from a country or territory participating in an international treaty of which Vietnam is a member or of Vietnam, the establishment of a branch in Vietnam must be approved by the Minister of the specialized management ministry.

Procedures for establishing a branch of a foreign trader in Vietnam

1. Application for a license to establish a branch of a foreign trader in Vietnam

Note: 

• Documents and papers in foreign languages ​​such as passports, business registrations, documents appointing branch heads, etc. must be translated into Vietnamese and accompanied by valid copies when submitted;
• Documents proving that the location is eligible to set up a branch office include: Photocopy of the land use right certificate (if it is a house or land); construction permit/investment license and certificate of fire prevention and fighting eligibility if it is an office building or complex building with the function of a business office;
• Foreign enterprises may replace audited financial statements with written confirmation of financial obligation performance in the most recent fiscal year issued by a competent authority or organization in the host country where the foreign trader was established, proving that the foreign trader was active in the most recent fiscal year.

2. Procedures for establishing a foreign company branch in Vietnam

Procedures for establishing a branch for foreign traders in Vietnam are as follows:

Agency receiving and processing documents: 

The Ministry of Industry and Trade is the unit directly responsible for receiving and processing dossiers on the establishment of branches of foreign traders in Vietnam.

Procedures and time for applying for a license to establish a branch:

• Foreign traders submit their applications directly to the Ministry of Industry and Trade;
• Within 3 working days, the Ministry of Industry and Trade will check and request additional documents if the documents are incomplete or invalid (note that the request for additional documents can only be made once during the process of processing the documents);
• Within 7 working days from the date of receiving a complete and valid dossier, the Ministry of Industry and Trade shall issue a license to establish a branch to a foreign trader. In case of refusal to grant a license, there must be a written document stating the reasons for refusal;
• Within 15 days from the date of license issuance, the Ministry of Industry and Trade will publish information of the branch on the Ministry of Industry and Trade’s website.

Special:

• In case the branch’s operations are inconsistent or inconsistent with Vietnam’s commitments, or the foreign trader is not from a country or territory participating in an international treaty of which Vietnam is a member, and the establishment of a branch is not yet regulated in specialized legal documents, the Ministry of Industry and Trade shall send a document to seek opinions from the specialized management ministry within 3 working days. 
• Within 5 working days from the date of receipt of the request for comments from the Ministry of Industry and Trade, the specialized management ministry will have a written response agreeing or disagreeing to grant a license to establish a branch. 
• Within 5 working days from the date of receipt of the written response from the specialized management ministry, the Ministry of Industry and Trade shall issue a license to establish a branch to the foreign trader. In case of refusal, a written document stating the reasons shall be issued.

Notes when establishing a branch of a foreign company in Vietnam

1. Cases where foreign traders are not granted a license to establish a branch 

The Ministry of Industry and Trade does not grant a license to establish a branch to a foreign trader in the following cases:

• Foreign traders do not meet the conditions to establish a branch;
• The application for a license is invalid and not supplemented as required by the Ministry of Industry and Trade;
• Foreign traders requesting a license to establish a branch within 2 years from the date of license revocation;
• The establishment of branches for foreign traders is restricted by law for reasons of national defense, national security, social order and safety, social morality and public health.

2. Things to do after establishing a foreign company branch in Vietnam

• Engrave the branch’s own legal seal;
• Buy digital signature, electronic invoice;
• Declare taxes for branches, submit quarterly reports and annual financial reports as prescribed;
• Branches are obliged to report and provide documents or explain issues related to their operations as required by the Ministry of Industry and Trade. Branches are responsible for submitting reports on their operations according to Form BC-2 issued with Circular 11/2016/TT-BCT dated July 5, 2016 on their operations in the previous year before January 30 of each year.

3. Term of license to establish a branch of a foreign trader in Vietnam

• The license to establish a branch of a foreign trader in Vietnam has a maximum term of 5 years but does not exceed the remaining term of the business registration certificate or equivalent document if such document has a provision on the term;
• A branch establishment license may be reissued for a term equal to the term of the previously issued license.

4. Regulations on heads of branches of foreign traders in Vietnam

• The head of a branch shall be responsible to the foreign trader for his or her activities and the branch’s activities within the scope of authorization;
• The branch manager shall be responsible for his/her activities if he/she performs activities outside the scope of authorization;
• When the head of a branch leaves Vietnam, he/she must authorize another person in writing to exercise the rights and obligations of the head of the branch in accordance with the law. The head of the branch is still responsible for exercising the authorized rights and obligations. The authorization must be approved by the foreign trader;
• If the authorization period expires and the branch head has not returned to Vietnam and there is no other authorization, the authorized person has the right to stop or continue to exercise the rights and obligations of the branch head as authorized until the branch head returns to work or until the foreign trader appoints another person;
• Foreign traders must appoint another person as the head of the branch if the head of the branch does not return to Vietnam for more than 30 days without authorizing another person or is dead, missing, detained, sentenced to prison, or has limited civil capacity;
• The head of a branch of a foreign trader is not allowed to hold the following additional positions:
  + Head of the representative office of another foreign trader;
  + Head of the representative office of the current foreign trader;
  + Legal representative of an economic organization established in Vietnam.

Some questions about establishing a branch for foreign companies in Vietnam

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