From August 20, 2016, Circular No. 11/2016/TT-BCT, providing guidelines for Decree No. 07/2016/NĐ-CP (providing detailed regulations on establishment of representative offices of foreign traders in Vietnam), has become effective. There are many new regulations which regulate the dossier, procedures and operation of representative offices of foreign enterprises in Vietnam.
Conditions of establishment of representative offices of foreign traders in Vietnam:
A foreign traders shall be granted the Establishment of Representative Office License when the following conditions are satisfied:
- The foreign enterprise was established and registered under the law of the foreign country which is a member of any international agreement to which Vietnam is a member too or under the local law of the foreign country;
- The foreign enterprise has been operated in the foreign country at least 01 year from the day of registration or establishment;
- In case the foreign registration certificate regulate on the validity, then that certificate must be still valid at least 01 more year from the day on which the dossier is submitted in Vietnam;
- The scope of operation of the representative office includes: market research and promotion in Vietnam;
- If the scope of operation of the representative office is not inconsistent with the commitments of Vietnam or the foreign trader is not from the country or territory being a party of any international agreements to which Vietnam is a party, the establishment of the representative office must be approved by Ministers, Heads of ministerial agencies (hereinafter referred to as “relevant Ministers”).
A dossier for establishment of representative office of foreign trader in Vietnam includes:
- An application form for the Establishment of Representative Office License in Vietnam;
- Copies of the Certificate of Business Registration or equivalent documents of foreign traders which are confirmed by the state-authorized bodies in the foreign country where the enterprise was established;
- A letter of appointment of the head of the representative office;
- Copies of audited financial statements or confirmations of fulfillment of tax duties or financial obligations of the latest fiscal year or any equivalent documents proving the existence and operation of the foreign trader in the latest fiscal year. These documents must be issued by the stated-authorized in the country where the foreign trader was established;
- If the head of the representative office is Vietnamese: copies of ID card or passport; If the head of the representative office is a foreigner: copies of passport;
- Documents about intended location of the representative office includes:
– The lease agreement and the Certificate of Land Use Rights of the lessor;
If the lessor is an enterprise, the Business License which specifies its real-estate trading rights is required;
– Besides that, the location of the representative office of foreign trader must comply with regulations on security, occupational hygiene and safety and other relevant regulations.
Documents must be translated, notarized and consular legalized:
– Documents must be translated into Vietnamese, notarized and consular legalized: The Certificate of Business Registration.
– Documents must be translated into Vietnamese and notarized:
+ Passport of the head of the representative office;
+ Company’s charter;
+ Audited financial statements or documents confirming tax duties or financial obligations of the latest fiscal year.
Notice: All of the documents used during the procedures must be signed and stamped by the parent company. In case the company does not have a seal sample, consular legalization is required.
In the following cases, the state-authorized bodies will not issue the Establishment of Representative Office License:
- Foreign traders fail to satisfy the above requirements and conditions;
- Foreign traders whose business lines are subject to the List of restricted goods and services of Vietnam;
- Foreign traders apply for the license within 02 years from the day of revocation of the Establishment of Representative Office License;
- There are evidences indicate that the establishment of the representative office will harm national defense and security, social order, social security, historical traditions, cultures, social ethics, community health and natural resources and environment of Vietnam;
- The dossier is invalid and the applicant does not supplement as required by the state-authorized bodies.
Announcing the representative office’s information of foreign traders in Vietnam:
Within 15 days from the day of issuance, re-issuance, adjustment, renewal or revocation, the state-authorized bodies shall publish on their web portal the following information:
– Name and address of the representative office;
– Name and address of the foreign trader;
– The head of the representative office;
– The number, issue date, validity of the Establishment of Representative Office License;
– The scope of operation of the representative office;
– The date of re-issuance, adjustment, renewal or revocation of the Establishment of Representative Office License.
Procedures for report on operation of the representative office in Vietnam:
- By January 30 of each year, the representative office has the obligation to send the report on operation (using the form published by the Ministry of Industry and Trade) to the Department of Industry and Trade by post;
- The representative office has the obligations to report, provide documents or explanations about anything relevant to their operation when required by the state-authorized bodies.
Procedures must be followed after establishing the representative office:
- Open special credit purpose accounts in both foreign currency and foreign-currency-based Vietnam Dong in a bank which is licensed to operate in Vietnam. These account must be solely used for the operation of the representative office;
- By January 30 of each year, the representative office must send the report on their operation to the Department of Industry and Trade;
- Create cash book to record all of the expenditures and earnings during the operation of the representative office;
- Perform the procedures for issuance of work permits for foreign workers working at the representative office (if any);
- Make the annual report on operation (using the regulated form) to send to and to be confirmed by the Department of Industry and Trade;
- Sign labor contracts with the head of the representative office and workers working at the representative office;
- Annually confirm salary and earnings of the head of the representative and workers working at the representative office;
- Pay the personal income tax for the head of the representative office and workers working at the representative office (if any). Please notice that all of the tax-payment declaration forms and duty receipts should be saved to do the annual tax audit for the head of the representative office and other workers;
- Comply with other regulated duties as prescribed by the law.
Legal documents which should be saved during the operation of the representative office in Vietnam:
– The Establishment of Representative Office License;
– The seal sample and the certificate of the seal sample;
– Notification of the tax number of the representative office;
– All of the documents as mentioned above.
If clients have any question please feel free to contact Kim Huc company. We are willing to give legal advice and support you during the procedures!
KIM HUC CONSULT AND TRADING COMPANY LIMITED
Add: C36-TT8, Van Quan, Dist Ha Đong, Ha Noi, VietNam
Phone: 024.3225.2641 Fax: 024.3225.2640
Hotline: 024.3225.2641 / 0943.980.222
Email: consultant@kimhuc.com
