FOREIGN REPRESENTATIVE OFFICES IN VIETNAM
WHAT YOU NEED TO KNOW
SUBMIT YOUR ANNUAL REPORT ON TIME BY JANUARY 30, 2025, WITH VIVA BUSINESS CONSULTING
January 30, 2025, marks the final deadline for submitting the 2024 Annual Operations Report for foreign representative offices in Vietnam. This is a mandatory legal requirement to ensure transparency and compliance in business activities.
Even minor delays in submitting the Annual Operations Report or providing incomplete information may result in:
- Administrative fines of up to VND 40 million.
- Unexpected inspections from regulatory authorities, impacting your reputation and operational history.
- Challenges in license renewal.
With extensive experience assisting thousands of businesses to operate efficiently in Vietnam, VIVA Business Consulting is proud to offer professional and comprehensive solutions to ensure foreign representative offices comply with legal requirements, operate seamlessly, and build a foundation for sustainable growth:
- Advisory services, preparation, and thorough review of documents in strict compliance with legal regulations.
- Prompt resolution of arising issues, ensuring timely approval of your reports.
- Support in regulatory compliance, operational stability, and reputation enhancement.
With only 20 days left to finalize your Annual Operations Report, contact VIVA Business Consulting today!!!
VIVA BUSINESS CONSULTING, the local expertise for local business procedures by laws since 2006. We have proudly been offering a one-stop solution for thousands of foreign representative offices to have fully complied with local regulations in optimal manners. VIVA provides practical advice and business process outsourcing for mandatory procedures regarding:
- Vietnam representative office registration and amend any content in the issued permit of representative office establishment.
- Tax management, tax planning, tax reports and settlement.
- Accounting, local bank accounts and cash books.
- Employment relations, payrolls and compulsory insurance, personal income tax.
- Foreign employees in Vietnam, work permits, labor contracts, taxable incomes, compulsory insurances, residence cards.
- Secretarial services: Judicial Records, consular legalization and translation papers from overseas, property management…
- Annual operation reports, dissolution of a foreign representative office or transform into a subsidiary.
Thanks to integrated experiences for hundreds of years into every solution and our exclusive resources, VIVA can understand and ensure most of the demands and expectations of multinational companies in Vietnam. Please scan for exploring our services:
Representative office in Vietnam
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Foreign representative offices in Vietnam
WHY FOREIGN REPRESENTATIVE OFFICE IN VIETNAM?
The foreign representative office in Vietnam is a dependent unit supporting business operations of the parent company, which is allowed to do basic business activities such as open a resident office, recruit employees, manage and promote local business contracts, market research., etc.
Representative Offices tend to be utilized by foreign investors in fields such as sourcing of products, quality control, and general liaison activities between the Head Office and the Representative Offices overseas.
The representative offices are generally easier to establish than a branch or subsidiary, as they are not used for actual “business” (e.g., sales) and therefore there is less incentive for them to be regulated.
The representative office is quite simple and cost-effective: No investment capital, no Value Added Tax, no Corporate Income Tax, no Accounting, no financial statements, no independent audit required … and easy to extend, terminate or dissolve when necessary.
Vietnam-based representative offices of foreign enterprises can conduct these activities:
- Act as a bureau of communication.
- Market research.
- Facilitate investment projects of foreign enterprises.
- Expedite and monitor the implementation of projects in Vietnam, which are sponsored by foreign enterprises.
- Representative offices of foreign enterprises in Vietnam shall not carry out business activities in Vietnam.
Establishing a foreign representative office is the optimal option for local customer care, market research, without having to invest capital or pay corporate income taxes.
- No investment capital required.
- No Value Added Tax, no Corporate Income Tax, no Accounting, no financial statements, no independent audit required.
- Easy to extend, terminate or dissolve when necessary.
- Allowed to recruit local and foreign employees.
- Based on the new Labor law in Vietnam, there is no limit on the number of foreign employees for a representative office. In case the office can prove its demand fair with commercial operations, the office entitled to determine the demand for foreign workers for every job position for which Vietnamese workers are underqualified and request acceptance from the local competent state agencies for work permits.
Foreign representative offices in Vietnam
How to establish a foreign representative office in Vietnam?
FAQS ON ESTABLISHMENT OF FOREIGN REPRESENTATIVE OFFICE
- How to prepare required papers and documents – Procedures – Cases and situations shall be anticipated in advance when setting up a foreign representative office in Vietnam.
- Annually budgeting for establishing – operating – maintaining a foreign representative office in Vietnam.
- Any query about local laws and regulations, direct consultation with the top experts on the establishment and operation of foreign representative offices in Vietnam.
CONDITIONS FOR BEING GRANTED LICENSES TO SET UP REPRESENTATIVE OFFICES IN VIETNAM
- The foreign investor is incorporated and registers for doing business in accordance with provisions of laws of countries or territories being parties to treaties to which Vietnam is a signatory or is recognized by the aforesaid countries or territories.
- The foreign investor has come into operation for at least 01 year from the date of establishment or registration.
- The Certificate of Business Registration or the equivalent document is valid for at least 01 more year from the date of submission of the application.
- The scope of operation of the representative office is consistent with that in Vietnam’s Commitments to treaties to which Vietnam is a signatory. Where the scope of operation of the representative office is inconsistent with Vietnam’s Commitments or the foreign investor is not located in the country or territory being party to treaties to which Vietnam is a signatory, the representative office can be established only if relevant Ministers, Heads of ministerial agencies have given approval for the establishment of the representative office.
04 STEPS TO ESTABLISH A REPRESENTATIVE OFFICE
Establishing a foreign representative office shall be executed by professionals only and usually consist of 04 main steps:
Understand scopes of activities, rights, obligations, conditions, and procedures for establishing a foreign representative office
Prepare and complete the required conditions, papers, and dossiers
Apply and manage procedures for granting representative office license
Complete the initial compliance procedures after granting a representative office license
REQUIRED PAPERS TO SET UP REPRESENTATIVE OFFICES IN VIETNAM
- Copies of the Certificate of Business Registration or equivalent documents of the foreign investor.
- A letter of appointment of the head of the representative office.
- Copies of audited financial statements or certificates of completion of tax liabilities or financial obligations of the last fiscal year or equivalent documents as proof of existence and operation of the foreign trader issued or certified by competent authorities where such foreign investor is established.
All above papers should be certified by overseas diplomatic missions or Consulates of Vietnam under the laws of Vietnam. Translated documents in Vietnamese and certified true for any papers from overseas.
- Copies of the passport or ID card (for Vietnamese) or copies of the passport (for foreigners) of the head of the representative office.
- Documents on the expected location of the representative office including:
- Copies of memorandum of understanding (MOU) or leasing agreements or documents as proof of the right to use a location as the representative office.
- Copies of documents on the expected location of the representative office in accordance with related laws.
- An application form for License for Establishment of the representative office using the form promulgated by the Ministry of Industry and Trade and signed by a competent representative of the foreign investor.
- Proper papers and documents of group 1 and group 2 above.
Foreign representative offices in Vietnam
THE REQUIRED COMPLIANCE PROCEDURES FOR A FOREIGN REPRESENTATIVE OFFICE IN VIETNAM
Although a representative office can enhance and support business for the parent company in Viet Nam, easy to manage and able to keep investor away from many compliance procedures… but, in fact that there are many representative offices have endured serious fines due to misconduct, violations of compliance requirements.
There are important required compliance procedures shall be complied in Vietnam:
THE GENERAL REQUIRED COMPLIANCE PROCEDURES:
Local bank accounts
Business record management
Standard folders | Daily records | Scan into soft files | Records completion…
Manage the labor relations
Employee profile | Labor contract | Payrolls | Compulsory insurances | PIT
Tax management and Accounting
Bank statements | Cashbook | Petty cash | Complete the reports and risk management
Expat management
Employee profile | WP | TRC | PIT
Office license and other secretary services
Office license | Electronic signature | Amending and adjusting the license | contracts | documentations…
SOME TYPICAL TASKS FOR DAILY TRANSACTIONS:
Management of employment relations
Accounting and Tax management
Required compliance reports
Consultation service for expats
Management of employment relations
- Employee profile.
- Labor regulations, labor contracts, labor agreements with employees.
- Implement and manage the labor contracts.
- Payrolls service.
- Internal Labor rules and codes of conduct.
- Compulsory insurances, labor regimes, labor disputes.
- Monthly and quarterly reports of Social and medical declaration.
- Representative, on behalf to manage and settle with the competent state agencies for any query or requirement.
- Other required relations between employees with a company in signing and implementation of labor contracts.
- Other required relations between a company withﾠ Insurances and Labor agencies in reporting and payments.
- Other required relations between a company with Tax Department in reporting, payments and annual settlement.
Accounting and Tax management
- Monthly and quarterly reports on tax declaration.
- Preparing Personal Income Tax declaration, tax settlement, and obtaining a certificate of tax completion of the chief or expat when they leave Vietnam.
- Preparing cashbooks, petty cash, vouchers and records for tax inspection. Transactions review, and complete legal documents for every transaction. Optimize tax payable amount, and risk management.
- Business record management: Standard folders | Daily records | Scan into soft files | Records completion…
- Representative, on behalf of clients to manage and settle with the competent authorities for any query or requirement.
Required compliance reports
- Annual operation reports and periodic reports for the Department of Industry and Trade of HCMC.
- Monthly, quarterly and annually reports and procedures at the Department of Labour and Social Welfare Services.
- Monthly, quarterly and annually reports and procedures relating to personal income tax for staff at the Department of Taxation.
- Manage all business records and make them ready for any inspections from authorities.
- On behalf of clients to settle any query or requirement from local competent state agencies.
Consultation service for expats
- Visa
- Work permit | Labor contracts | Employee profile according to local labor laws
- Temporary resident card
- Personal income tax
- Compulsory insurances
- Driving license
- Exclusive advice for the Chief of representative office and Legal representatives in Vietnam.
THE REQUIRED PROCEDURES FOR THE CHIEF OF REPRESENTATIVE OFFICE
- Know your employer and your title position
- Local job descriptions that shall be in-lined and consistent with the position
- Establish lawful employment relations in forms of appointment letters, labor contracts, internal assignments…
- Required papers to meet local conditions on foreign employment in Vietnam.
- Manage your work permits, and residence.
- Taxable incomes and tax exemption, methods of tax declaration and payment.
- Review and identify your sources of income, and tax deductions to avoid potential violations that may impact your good standing.
- Calculation of your tax payable amount and compulsory insurances in lawful and optimal manners.
- Review your tax reports and annual final settlement, apply for insurance benefits and avoid double tax payments according to the tax agreements.
- Representative on behalf to manage and settle any query or requirements from the local competent state agencies.
- Procedures for setting up representative offices / foreign invested companies.
- Procedures for amendment, supplementation, and termination of office license.
- Labor rules and regulations, forms and procedures.
- Personal income tax declaration and settlement.
- Requirements and queries from competent state agencies.
- Business records and internal reports.
- Managing establishment licenses, annual operation reports, renewal and adjustment.
- Optimizing – Managing employment relations – salaries – compulsory insurances.
- Optimizing – Managing personal income tax and inspection procedures from the tax department.
- Management Accounting.
- Visas, work permits and temporary residence cards for expats.
- Extension or termination of representative office license.
- Exclusive advice for the Chief of representative office and Legal representatives in Vietnam.
- Updating new laws and regulations on foreign representative offices and expats. Closuring and upgrading representative office into a subsidiary.
MANAGE THE CASHFLOW AND REQUIRED COMPLIANCES
There are many foreign representative offices in Vietnam that have been paying serious lessons for violations of unallowed transactions or lawful invoices.
The cashflow chart from VIVA business consulting may help you for an overview on cashflow of a foreign representative office, the main transactions in order to manage the required compliances properly:
- Local bank accounts – regulations on currency and investment
- Allowed activities of a foreign representative office
- Employment relations
- Compulsory insurances
- Personal income tax
According to the Laws on VAT invoices: The sellers should issue the lawful invoices for any service or goods sold and the buyers have responsibility to collect and keep the invoices.
Since 2012, together with the Anti-money laundering regulations and the latest updates on tax laws, the tax inspectors specially focus on representative offices for tax inspection.
Foreign representative offices in Vietnam
RiskS management on representative office operation in Vietnam
THE REQUIRED PROCEDURES FOR CHIEF OF REPRESENTATIVE OFFICE
- Managing risks related to business licenses for foreign representative offices in Vietnam.
- Managing risks related to labor relations – salaries – compulsory insurances while recruiting for foreign representative offices in Vietnam.
- Risks management related to personal income tax and inspection procedures from the tax department after every 3 to 5 years operating foreign representative offices in Vietnam.
THE COMMON LESSONS DUE TO VIOLATIONS OF LOCAL LAWS AND REGULATIONS
- Violation in declaringe labor use and compulsory insurances.
- Violation in registration of internal labor
- Labor contract without proper terms and conditions.
- Improper labor titles (not inlined with the office scopes)
- Without required employee profiles and monthly payrolls.
- Without work permit for expats.
- Without paid medical insurance for expats.
- Without annual labor reports to competent state agencies.
- Without required tax completion certificate for the chief and expats.
- Violation in declaration for expats.
- Violation in methods of tax declaration and settlement.
- Violation in applying tax exemption / payable amount.
- Violation in accounting, cashbook, petty cash, invoices and records for tax inspection.
- Violation in lawful invoices for some paid expenditures. Some paid amount will be recognized as the benefit of employees or the chief and it is taxable.
- Violation in using personal bank accounts for office payment.
- Violation in receivinge incomes from other parties.
- Violation in transactions/activities which are not allowed for office activities.
- Violation in lending/borrowing money from third parties.
- Fail to renew / extend the office license before the expired date.
- Operate beyond the allowed scope of activities: Buying machines/materials/equipment… for manufacturing lines; inventory, directly create sale and profitable activities.
- Violation in registration and declaration of new office location.
- Violation in annual operation reports to the Department of Industrial and Trade.
- Violation in amending/updating the content in the office license when there are changes from the parent company.
- In case of dissolution, not closure of the office license completely or failure to manage the final tax settlement procedures.
Risks management of foreign representative offices operating in Vietnam is professional job that requires integrated depth expertise knowledge and experience related to the Commercial Law, Labor, Tax accounting, and other administration regulations…
Properly managing when operating foreign representative offices in Vietnam not only helps your team focus well on the competitive business activities from of parent company but also avoid legal risks, cost-saving, and competitive advantage.
Being an in-depth pioneer and unbreakable competitiveness in services for foreign representative offices in Vietnam, not only providing the service of “Managing foreign representative offices in Vietnam according to local regulations.”, VIVA also offers clients free consultation on daily operation transactions – dissolution procedures – transforming an office into a subsidiary, free-of-charge on work permits or temporary resident cards for the chief of representative offices…
Foreign representative offices in Vietnam
HOW TO CLOSE A FOREIGN REPRESENTATIVE OFFICE IN VIETNAM?
To closure a foreign representative office in Viet Nam, we would like to suggest our professional service as follow:
THERE ARE 03 KEY STEPS TO CLOSURE A FOREIGN REPRESENTATIVE OFFICE IN VIET NAM:
- Preparing for the official dissolution decision and applications and submit to the competent state agencies for closuring any further obligation. This step aims to suspend, terminate any new obligation, especial for the tax reports and other compliance procedures. From the date of proper notice to the local competent state agencies, the office is in closured standby status.
- To collect, complete the compliance business records and arrange for any certificates of obligation completion. Especial for the liquidation of employment, the certificate of tax, social insurance. This is legal requirement to guarantee that the office has no more pending obligation before allowed to closure under legal procedures.
- Upon the certificates of obligation completion, the office will closure the bank accounts, return the business licenses, return the legal stamp as final step of company closuring. This is the final paper work as completion.
FINAL TAX SETTLENTMENT AND TAX COMPLETION CERTIFICATE:
In which, Step 2 is most complicated because of tax inspection procedures. The officers will review all the remittance transactions from head office, all the paid expenses to make sure things are complied with local tax, anti-money laundry regulations. There will be 02 options:
- Pursuant to the tax regulations and anti-money laundering laws, since years 2012, after every 3 to 5 years of office operation, the Department of Taxation requires foreign representative office to provide the cashbook, petty cash, bank statements, employee profiles as well as payroll vouchers and together with lawful documents for tax inspection.
- Tax officers will review each transaction to ensure that the office’s expenditures have been made legally and duly, without violating the tax or anti-money laundering laws. In addition, in case of dissolution, before the office’s closing, the tax authorities will also carry out similar tax inspection for final settlement procedures.
Foreign representative offices in Vietnam
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WHICH FORM OF BUSINESS FOR YOU IN VIETNAM?
Foreign representative offices in Vietnam
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