SOME NOTES WHEN ESTABLISHING A REPRESENTATIVE OFFICE IN VIETNAM - OTIS LAWYERS

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Advantages and disadvantages of establishing a representative office

Advantages

  • The biggest advantage of a representative office is that it does not incur procedures related to tax reporting or business license tax.
  • Enterprises can establish representative offices within the same province/city or in different provinces/cities;
  • Enterprises can establish representative offices abroad.

Disadvantages

  • Unable to conduct business activities at the representative office;
  • When changing the office address to another district, tax obligation confirmation must still be carried out at the Tax Department of the old address.

Alternative solution to establishing a representative office

When the enterprise needs to carry out business activities in another province, they have the option to establish a business location.

The difference between a business location and a representative office is that a business location can conduct business activities and only needs to pay business license tax for 1 location, which is 1,000,000 VND/year.

Business locations do not need to open tax declaration dossiers like branches but can still generate business activities.

Therefore, enterprises should consider between establishing a representative office or establishing a business location.

Some notes when establishing a representative office in Vietnam

Regarding the timeframe for completing the establishment procedures

Within 10 working days from the decision to establish the representative office, the enterprise sends a notice of establishment of the representative office to the Business Registration Office.

Regulations on representative office business license tax

According to legal regulations, representative offices are not allowed to engage in production and business activities. Therefore, representative offices are not subject to business license tax.

Regarding personal income tax for representative offices

According to Article 24, Circular No. 111/2013/TT-BTC, representative offices are responsible for paying tax on the income of employees working at the office.

Social insurance for personnel of representative offices

Representative offices can either pay social insurance for employees working at the office or transfer the responsibility to the parent company.

Related questions about the procedures for establishing representative offices

Can representative offices issue VAT invoices?

Since representative offices are not allowed to engage in business activities, they cannot issue and issue VAT invoices.

Does a representative office have legal entity status?

No, a representative office is a dependent unit of an enterprise and therefore does not have legal entity status.

How much is the state fee for establishing a representative office?

The state fee for establishing a representative office is specified in Circular No. 47/2019/TT-BTC.

  • 50,000 VND/time for directly submitting the dossier to the Business Registration Office (at the time of submission).
  • Exempt from fees for online registration dossiers, with a publication fee of 100,000 VND.

Who is the head of the representative office?

The head of the representative office can be the director of the company or a person appointed by the director of the company.

Procedures to be carried out after establishing a representative office?

Hang a sign at the representative office

The sign should contain information such as: Name of the representative office, office address, phone number, managing authority.

Update information of the representative office

If there are any changes related to the activities and information displayed on the Certificate of operation of the representative office, procedures for changes must be carried out.

Procedures for changing representative offices are carried out at the Business Registration Office - Department of Planning and Investment.

For any questions or comments, please contact:

OTIS AND PARTNERS LAW FIRM

Office address: 2nd Floor, CT3 Building, Yen Hoa Park View Urban Area, No. 3 Vu Pham Ham Street, Yen Hoa Ward, Cau Giay District, Hanoi

Email: [email protected]

Hotline: 0987748111

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