Setting up a Representative Office (RO) is one of the first steps in founding your company in this newly emerged Southeast Asian market. How to set – up a Representative Office in Vietnam, especially in this Covid – 19 situation? This article will provide a cutting – edge starter-pack on how you’re going to set – up your company’s Representative Office.
READ MORE: Viettonkin Trade & Procurement Consulting service to help you set up your Representative Office in Vietnam
What is a Representative Office permitted to do and NOT to do ?
A Representative Office is enabled to engage in the following activities to help promoting its parent company:
- Conducting market researches;
- Playing as a contact point for its parent company;
- Promoting the activities of its head office through meetings and other activities, that leads to business at later stages
Representative offices may not conduct any other profitable business. A RO does not have the right to sign a separate contract on its own. The parent company bears all financial obligations arising from the operations of the Representative Office, so the accounting of the RO is dependent on the enterprise.
Thus, in case of wanting to establish more dependent units only with the function of assisting the business to access customers and partners not performing business functions, you may consider establishing representative offices to avoid having to fulfill complicated tax obligations. In addition, for the service industries not directly implemented at the address of representative offices such as tourism, construction, consulting, etc., the form of setting up one in other provinces is a wise option.
In general, a Representative Office is allowed to perform almost all activities the parent company does except direct trading and profits generating, all types of contracts must be signed by the parent company or the Representative Office. It doesn’t have the authority to sign sale and purchase contracts, all invoices and trading documents must be returned to the head office.
What you need to set up a Representative Office ? (Latest update 2020)
Pre – license checklist for setting up a Representative Office
- Application for establishment of representative offices of foreign companies in Vietnam;
- The legalization of the consular and the public certificate of business registration or the equivalent valuable papers of foreign traders where the foreign trader’ s establishment is established;
- Written appointment of the parent company;
- The notarized translation of the financial statement or the written certification of the fulfillment of the tax liability or financial liability in the latest fiscal year or the equivalent valuable paper issued by the competent agency or organization in the locality where the foreign trader is established or certified or proved;
- A notarized copy of the ID card (for Vietnamese) or a copy of the passport (for foreigners) of the Chief representative;
- Documents on the expected location, including:
- Certified copying office contract;
- The certificate of the land use right certificate of the lessor (if the enterprise is hired by the enterprise to provide additional business registration certificates);
- In addition, the location of the representative office of the foreign company must conform to the provisions of Vietnamese law on security conditions, order and hygiene and other conditions as prescribed by law.
- Note: the entire application dossier for shall be signed and stamped by the parent company. If the parent company in foreign countries has no marks, the whole dossier must be consular legalized.
Post – licenses check-list for setting up a Representative Office
Once submitting your application for license, you can start arranging staffs, taxes, annual reports. Apart from those, other basic operations of a representative office, including:
- Foreign currency account and VND accounts with foreign currency origin at banks licensed to operate in Vietnam. Only use this account for RO activities;
- Annually written report on its activities during the year to the Department of Industry and Trade;
- Set up a cash fund to record all revenues and expenditures during the operation of the RO;
- Apply for a work permit for the foreign worker at the RO (if any);
- Signing labor contracts with the representative and the employees of the RO;
- Annually certifying the salary and income for the chief representative and the operations of the representative office;
- Pay personal income tax, representative’s insurance and representative office employees (if any).
- Note, when submitting all tax returns and tax receipts from state agencies. Plus, annual income tax finalization for the representative and the employees of the representative office;
- Other duties in accordance with the current law;
What’s next ?
- The Business Registration Office shall issue the RO operation registration certificate to your company. It usually takes 03 working days since receipt of a valid application.
- Within 30 days after being granted the RO operation registration certificate, you should publish your RO operation registration information on the National Business Registration Portal.
How long does it take to set up a RO?
It can take from six to eight weeks in total, including getting a main license, operating license and stamp. We recommend hiring a professional service to deal with the laws and procedures.
Thanks to the absence of in-country revenue and associated licensing requirements, the setup process does not entail as many bureaucratic procedures as others.
A Representative Office license is valid for five years but can be extended for another five years.
To sum up, above are the very first guidelines to get started on your Representative Office setup in Vietnam. Once you get the basic principles of the Vietnamese RO establishing process, it can be much more simple. Our Viettonkin legal specialists are always ready to support you with any procedure, license and certification. If you come across any obstacle, feel free to contact us below. Viettonkin will always be ready to give you a helping hand !