If a foreign company only plans to collect information and research Vietnam’s market regarding the demand of certain goods and services and to have a contact point in Vietnam then in addition to incorporating a company under both Investment Law 2014 and Enterprise Law 2014, the foreign company may consider setting up a representative office under the Commercial Law 2005 and Decree 72/2016. The advantages of having a representative office in Vietnam are:
· The timing and procedures to set up a representative office would be shorter and simpler than setting up a foreign invested company;
· Technically, a representative office can be operated and managed by one staff (who will be the chief representative in this case); and
· Operating a representative office would be simplier and less expensive cost because a representative office is not subject to tax declaration, preparation of financial statements, preparation and submission of labor and investment reports. Usually, a representative office only needs to submit annual operating report by 31 January each year.
Operating through a representative office has the following disadvantages:
· A representative office has no status of independent legal entity;
· The operation term of a representative office is 5 year at maximum (but can be extended); and
· A representative office is not entitled to enter into sale and purchase contracts or other business activities.
The following documents are required for setting up a representative office:
· Company Certificate of Incorporation and/or Business Registration of the foreign company;
· Audited financial statement of the immediately preceding year or equivalent document from tax body certified by competent authority proving the existence and operation of the foreign company;
· Passport of the Chief of the representative office;
· Curriculum Vitae of the Chief of representative office;
· Decision of Appointment of Chief of representative office;
· Office leasing contract (or an in-principle lease agreement) for the location of the representative office; and
· Documents evidencing ownership, safety and other relevant matters of the office area of the landlord.