Vietnam-based
representative office of a foreign trader means a dependent unit of the foreign
trader, which is established under the provisions of Vietnamese law to conduct
market survey and a number of commercial promotion activities permitted by
Vietnamese law.
Representative office
of foreign trader in Vietnam has the rights and obligations in accordance with
the law of Vietnam. Foreign trader is responsible before the law of Vietnam for
all operations of its representative office in Vietnam.
Accordingly,
representative office in Vietnam is not allowed to conduct business activities,
nor carry out other activities for profit-generating purposes. The
representative office in Vietnam only performs the activities for the right
purposes, scope and duration specified in the certificate to establish the
representative office. Besides, the representative office in Vietnam has the
right to rent the head office, rent and buy the facilities and materials
necessary for the operation of the representative office; to recruit Vietnamese
and foreign employees to work at the representative office in accordance with
the provisions of Vietnamese law; to use an account in foreign currency, in
Vietnam dong of foreign currency origin opened by a foreign trader at a bank
licensed to operate in Vietnam and only use this account for the operation of
the representative office; to have a seal bearing the name of the
representative office according to the provisions of Vietnamese law. Representative
office in Vietnam can sign contracts, perform transactions with partners when
authorized by the enterprise.
Hence, due to the
limited scope of activities, the tax
liability of a foreign representative office in Vietnam is narrower than
that of an enterprise. As the
representative office does not produce or trade in goods and services, it is
not required to pay license fees as prescribed. Representative office of
foreign trader in Vietnam is dependent unit of foreign trader, established to
investigate the market and carry out some trade promotion activities permitted
by Vietnamese law, does not carry out production and business activities, so it
is not required to pay license fees.
The fact that the
representative office has the right to recruit Vietnamese or foreign employees
to work at the office is the basis for arising personal income tax obligation.
At the same time, representative office of foreign organization is subject to
personal income tax registration. For employees working at foreign
representative office in Vietnam, the taxable incomes are based on salaries and
wages. Declaring, withholding, paying taxes and settling personal income tax of
employees working at foreign representative office is the responsibility of
such representative office.
ANT Lawyers, a law firm in Vietnam with offices
in Hanoi, Da Nang and Ho Chi Minh City could help client to set up
representative office in Vietnam and advise on the compliance on regular basis.
