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How to invest in Vietnam – Branches and representative offices of foreign organizations in Vietnam

How to invest in Vietnam – Branches and representative offices of foreign organizations in Vietnam

Under the Commercial Law, foreign enterprises are entitled to establish representative offices or branches in Vietnam. Foreign businesses must be responsible before Vietnam’s law for all activities of representative offices and branches in Vietnam.

1. Branches

Unlike representative offices, branches of foreign businesses are allowed to conduct activities of goods purchase and sale and other commercial activities in accordance with the license established under the laws of Vietnam and any treaties. which international community to which the Socialist Republic of Vietnam is a member.

A branch of a foreign enterprise has the following rights and obligations:

  • Leasing offices and leasing or buying equipment and facilities necessary for the operation of the branch;
  • Recruiting Vietnamese employees and foreigners to work for the branch in accordance with the law of Vietnam.
  • Contracting in Vietnam under the activities stated in the license to establish that branch and in accordance with this Law.
  • Opening Vietnamese and foreign currency accounts at banks licensed to operate in Vietnam.
  • To transfer interests abroad according to the provisions of Vietnamese law.
  • There is a seal bearing the name of the branch in accordance with the law of Vietnam.
  • Through the accounting system in accordance with the law of Vietnam; in case of necessity to apply another commonly used accounting system, the approval of the Ministry of Finance of the Socialist Republic of Vietnam is required.
  • Report on the operation of the branch in accordance with the law of Vietnam.

2. Representative office

Representative offices of foreign enterprises are not allowed to (i) directly conduct profit-making activities in Vietnam except to conduct trade promotion activities to the extent permitted by the license and the law. laws, (ii) enter into foreign commercial contracts or amend or supplement those contracts that have been signed unless the head of the representative office has a valid power of attorney from the foreign business unit. . Representative offices of foreign enterprises have the following rights and obligations:

  • Operate in accordance with the purpose, scope and time limit stated in the license to establish that representative office.
  • Leasing offices and leasing or buying equipment and facilities necessary for the operation of representative offices.
  • Recruiting Vietnamese employees and foreigners to work for representative offices in accordance with the law of Vietnam.
  • To open accounts in foreign currencies and Vietnamese Dong with foreign currency origin at banks licensed to operate in Vietnam and to use such accounts only for operations of representative offices.
  • There is a seal bearing the name of the representative office in accordance with the law of Vietnam.
  • Pay taxes, fees and charges and fulfill other financial obligations in accordance with the laws of Vietnam.
  • Report on the operation of the representative office of the local department of commerce in accordance with the law of Vietnam.

3. Conditions for grant of licenses for setting up representative offices and branches

3.1. Representative office

A foreign enterprise that meets all of the following conditions will be granted a license to establish a representative office in Vietnam:

  • It is a business entity recognized by the laws of the country or territory where the business entity is established or has a business registration;
  • It has been in operation for at least 1 year from the date of its legal establishment or business registration in the country of the business unit.

A dossier of application for a license for setting up a representative office comprises, among others, an application for a representative office establishment license, signed by the competent representative of a foreign trader; copy of business registration of foreign trader or equivalent document certified by the competent authority of the locality where the foreign trader has been established; and an audited financial statement or other documents of equivalent validity proving the actual existence and operation of the foreign business in the latest fiscal year.

3.2. Branch

A foreign enterprise that meets all of the following conditions will be granted a license to establish a branch in Vietnam:

  • It is a business entity established by the laws of the country where it is established or has a business registration;
  • It has been in operation for at least 5 years from the date of its legal establishment or business registration.business in the latest fiscal year.

A dossier of application for a branch establishment permit comprises, among others, an application for a branch establishment license signed by the competent representative of a foreign trader; a copy of the branch’s operational charter, outlining the scope of authorization for the head of the branch; and an audited financial statement or other documents of equivalent validity proving the actual existence and operation of the foreign

4. Time limit for establishing License of Representative Office or Branch of foreign organization

The license to set up a representative office or branch of a foreign enterprise in Vietnam is valid for 5 years, but in cases where foreign laws specify the time limit for business registration certificates of business units for foreign countries, the time limit may not exceed the remaining duration of the business registration certificate or the equivalent of a foreign business unit.

Source: GOV

To find more about guide for business and investment in Vietnam, you can click here: https://lookoffice.vn/economy-business-investment/guige/

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