Setting up a representative office in Vietnam

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.