With fdiinvietnam.com, let’s distinguish between representative offices of Vietnamese companies and representative offices of foreign companies through functions, conditions, and documents for establishing representative offices…
Concept of Vietnamese company representative office
Pursuant to the provisions of Clause 2, Article 44 of the Law on Enterprises 2020:
- The representative office (RO) of a Vietnamese company is a dependent unit of the enterprise, with the task of representing the interests of the enterprise by authorization and protecting those interests;
- A company’s representative office is not allowed to perform business functions (i.e. profit-making activities that generate revenue) of the enterprise.
Concept of representative office of foreign trader
Pursuant to Clause 6, Article 3 of the 2005 Law on Commerce, a representative office of a foreign company (a representative office of a foreign trader) in Vietnam is a subsidiary unit of a foreign company, established in accordance with the provisions of Vietnamese law for the purpose of market research and carrying out trade promotion activities permitted by Vietnamese law to promote investment and business opportunities for foreign companies.
Comparison of Vietnamese company representative office and foreign company representative office
To easily and accurately distinguish between a Vietnamese company’s representative office and a foreign trader’s representative office, you can rely on the basic similarities and differences shared by fdiinvietnam.com below:
1. Similarities
- Representative offices of Vietnamese and foreign companies in Vietnam are both dependent units of enterprises, operating under authorization in the name of the enterprise, the head of the organization or the parent company;
- No legal status, no business license;
- Not allowed to carry out activities that directly generate profits for enterprises in Vietnam;
- Basically, the naming principles of representative offices of Vietnamese companies and foreign traders in Vietnam are the same;
- There may or may not be a seal, depending on the decision on the seal of the representative office according to the company charter (based on Article 43 of the Law on Enterprises 2020);
- Business license fees and personal income tax must be paid. The parent company must be responsible before Vietnamese law for all activities of the representative office.
2. Differences
2.1 Duties and functions of representative offices
| Vietnam company representative office | Foreign company representative office |
| – Represent and protect the interests of the business;
– Act as an intermediary to perform non-revenue generating tasks. |
– Act as a liaison and market researcher;
– Promote and boost business investment of enterprises (1). |
Explain:
(1): Except for service sectors that have separate regulations on the establishment of representative offices in specialized legal documents.
2.2 Document certifying the entity’s status
| Vietnam company representative office | Foreign company representative office |
| Certificate of registration of representative office activities | License to establish a representative office |
>> FREE DOWNLOAD: Sample document certifying subject status.
2.3 Conditions for establishing a representative office
While a representative office of a Vietnamese company does not need to meet any conditions when establishing, a representative office of a foreign trader in Vietnam must meet many conditions (Article 7 of Decree 07/2016/ND-CP), specifically:
- Comply with the provisions of the laws of countries and territories participating in international treaties of which Vietnam is a member or recognized by these countries and territories;
- The company has a minimum operating period of 1 year, calculated from the date the company is registered or established;
- The remaining term of operation of the business registration certificate or other equivalent documents of a foreign trader must be at least 1 year from the date of submission of the application for a license in Vietnam (if there are regulations on the term of operation);
- The activities of a representative office of a foreign company include market research and trade promotion in the Vietnamese market;
- In case the foreign trader does not belong to a country or territory that is a party to an international treaty of which Vietnam is a member or the activities of the foreign company’s representative office are not consistent with Vietnam’s commitments, the establishment of the representative office must be approved by the Minister or Head of the specialized ministerial-level agency.
2.4 Documents and procedures for establishing a representative office
➧ Vietnam company representative office:
Details of registration documents for representative office of Vietnamese company:
- Notice of establishment of representative office signed by the legal representative of the enterprise;
- Document appointing the head of representative office;
- Copies of documents:
- Resolution, decision and meeting minutes on the establishment of a representative office of the Board of Directors (for joint stock companies) or of the Board of Members (for partnerships, LLCs with 2 or more members);
- Resolution, decision of the company owner (for a single-member LLC) on the establishment of a representative office;
- Legal documents of the individual for the head of the representative office.
See also:
>> Instructions on how to establish a representative office of a Vietnamese company;
>> Representative office registration service – 700,000 VND.
➧ Representative office of foreign traders in Vietnam:
The dossier for establishing a representative office of a foreign trader in Vietnam includes:
- Application for a license to establish a representative office signed by an authorized representative of the foreign trader (using the form of the Ministry of Industry and Trade);
- Document of appointment/assignment of head of representative office of trader (1);
- Copies of documents:
- Business registration certificate or other equivalent documents of foreign traders (2);
- Financial statements with documents/audits confirming the implementation of financial/tax obligations in the most recent fiscal year or other similar documents issued/confirmed by the competent authority or organization where the foreign trader is established, proving the existence and operation of the foreign trader in the most recent fiscal year (3);
- Passport (if foreigner) or passport/ID card/CCCD (if Vietnamese) of the head of representative office (4);
- Documents proving the right to exploit and use the location or memorandum/agreement to lease the location to set up the representative office of the trader;
- Documents on the location where the trader intends to set up the representative office.
>> FREE DOWNLOAD: Application for license to establish a representative office.
In there:
- (1): Must be certified or consularly legalized by a Vietnamese diplomatic mission or consular agency abroad in accordance with the provisions of Vietnamese law;
- (1), (2), (3), (4): Must be translated into Vietnamese and certified according to Vietnamese law if the passport copy of the head of the representative office is a foreigner.
>> See more : Service of establishing foreign company representative office – from 23,000,000 VND.
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2.5 Place to process representative office registration documents
| Vietnam company representative office | Foreign company representative office |
| Business Registration Office under the Department of Planning and Investment where the enterprise plans to locate its headquarters. | – Department of Industry and Trade of provinces and centrally-run cities where the trader plans to locate its head office (if the head office is located outside the high-tech zone, economic zone, export processing zone, industrial park);
– Management board of the high-tech zone, economic zone, export processing zone, industrial park where the trader plans to locate its head office (if the head office is located in the high-tech zone, economic zone, export processing zone, industrial park). |
2.6 Time limit for granting operating license of representative office
| Vietnam company representative office | Foreign company representative office |
| 3 working days from the date of receipt of valid documents. | 7 working days from the date of receipt of valid documents (2). |
Note:
(2) Except in the case of:
- Foreign traders not from countries or territories participating in international treaties of which Vietnam is a member;
- The activities of the representative office are not consistent with Vietnam’s commitments;
- The establishment of a representative office is not yet regulated in specialized legal documents.
2.7 Number of representative offices established
| Vietnam company representative office | Foreign company representative office |
| There is no regulation on quantity (based on Clause 1, Article 45 of the Law on Enterprises 2020). | Not more than 1 representative office with the same name within a province or centrally-run city. |
2.8 Reporting mode
| Vietnam company representative office | Foreign company representative office |
| Not implementing reporting regime with state agencies, implementing accounting in dependent form. | Implement the reporting regime of activities according to Article 32 of Decree 07/2016/ND-CP:
– Before January 30 of each year, the Representative Office must send a report on its activities in the previous year according to the form of the Ministry of Industry and Trade to the licensing authority by post. – Report, provide documents or explain issues related to the operations of the representative office at the request of competent state management agencies. |
2.9 Term of operation of representative office
| Vietnam company representative office | Foreign company representative office |
| There is no regulation on the term of operation. | Operating under the license to establish a representative office for a period of 5 years.
However, it must not exceed the remaining term of the business registration certificate or equivalent document of the foreign company if such document has a term (based on Article 9 of Decree 07/2016/ND-CP). |
>> See more: Comparison of company branches and representative offices.
Frequently asked questions when distinguishing between Vietnamese company representative offices and foreign company representative offices
1. Do representative offices of Vietnamese companies and representative offices of foreign companies in Vietnam have legal status?
Representative offices of Vietnamese companies and representative offices of foreign companies in Vietnam are dependent units of the company, only performing tasks and activities under the authorization of the enterprise, the head of the organization or the parent company and have no independent assets. Therefore, representative offices do not have legal status.
2. What are the basic differences between a Vietnamese company representative office and a foreign company representative office in Vietnam?
The basic differences between a Vietnamese company’s representative office and a foreign company’s representative office in Vietnam include:
- Reporting mode;
- Tasks, functions;
- Document certifying the entity’s status;
- Conditions for establishing a representative office;
- Documents and procedures for establishing a representative office;
- Number of representative offices established;
- Place to process representative office registration documents;
- Time to grant representative office operating license;
- Term of operation of representative office.
>> See more: Differences between Vietnamese company representative offices and foreign company representative offices.
3. Can representative offices of Vietnamese and foreign companies in Vietnam have their own seals?
Representative offices of Vietnamese companies and foreign companies in Vietnam may or may not have their own seals, depending on the decision on the seal of the representative office according to the company charter (based on Article 43 of the Law on Enterprises 2020).
4. Are the tax obligations that Vietnamese company representative offices and foreign company representative offices must fulfill the same?
Tax obligations of representative offices of Vietnamese companies and representative offices of foreign companies are 100% similar. Specifically, representative offices must pay business license fees and personal income tax. In case the parent company is in the period of exemption from business license fees, the representative office will also be exempt from business license fees.
5. Procedures for opening a representative office of a Vietnamese company and a representative office of a foreign company?
Procedures for opening a representative office of a foreign company include the following steps:
- Step 1: Prepare the registration documents for establishing a representative office suitable for each type;
- Step 2: Submit the application to the Business Registration Office where the enterprise plans to locate its head office (Representative Office of Vietnamese companies), to the Department of Industry and Trade of the provinces and centrally-run cities or to the management board of the high-tech zone, economic zone, export processing zone, industrial park where the trader plans to locate its head office (Representative Office of foreign companies);
- Step 3: Receive a license to register to establish a representative office.
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