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, with holding, 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.
