By law, the procedures for RO establishment would take around 1,5 months including the timeline for preparing the application dossier, submitting the application to the provincial licensing authority, following up for the processing until obtaining the approval from the licensing authority. 

In addition, upon obtaining the RO Establishment Licence, the RO is also required to complete a number of post-licensing procedures including (i) making the stamp of the RO (ii) registering for RO's Tax Code. 

These post-licensing procedures will take around 2 weeks. 

Establishing a RO in Vietnam requires meeting certain conditions. 

The first condition is relating to the legal status of the Foreign Trader which must be legally established and operating in its home country for at least one year before applying to establish the RO in Vietnam. This requirement ensures that the foreign company is stable and has a track record of operation.

The second condition involves the scope of activities of the RO. The activities must comply with Vietnam’s commitments in international treaties to which Vietnam is a party. If the activities do not align with these commitments, approval from the relevant Minister is required. This condition ensures that the activities of the RO are in line with Vietnam’s international obligations and do not conflict with its laws and regulations.

The third condition is related to business registration. The Foreign Trader must have a valid Incorporation Certificate/Business Registration Certificate or an equivalent document that is valid for at least one more year from the date of submission of the application. This requirement ensures that the Foreign Trader is legally registered and has the necessary documentation to operate a RO in Vietnam.

Finally, if the foreign company is not from a country participating in international treaties with Vietnam, the establishment of the RO must be approved by the Minister of the specialized management ministry. This condition ensures that the Foreign Trader's operations in Vietnam are closely monitored and regulated.

In summary, establishing a RO in Vietnam involves meeting conditions related to legal establishment, scope of activities, business registration and approval from the relevant authorities. These conditions ensure that the Foreign Trader operates in compliance with Vietnam’s laws and regulations and contributes to the country's economic development.

For licensing procedures, Foreign Trader must provide the following supporting documents:

1. Incorporation Certificate and/or Business Registration Certificate;

2. The latest Audited Financial Statement;

3. Business Profile (if any); and

4. Copy of passport of the Chief Representative of the RO in Vietnam.

All above documents must be notarised/legalised in home country and translated into Vietnamese.

The establishment and operation of an RO allows Foreign Trader to have a commercial presence in Vietnam, without creating a Permanent Establishment as long as it confines its activities to those in its licence. 

Under the commercial law, the RO can conduct activities regarding liaison office, exploration of the market opportunities and commercial promotion. The scope of permitted activities for an RO is explicitly stipulated (and restricted) in the RO’s license and must be strictly adhered to, otherwise local licensing authorities may withdraw the license of the RO or impose penalties. If the license is withdrawn, the parent company will not be able to get a new RO license within two (2) years of the withdrawal.

A limitation of scope of activities is that the RO is not allowed to engage in any “direct profit-making” activities. 

The Chief Representative of an RO shall be responsible for his/her action and the operation of the RO to the foreign trader and should not concurrently hold the following positions:

1. The head of a branch of the same foreign trader in Vietnam;

2. The head of a branch of another foreign trader in Vietnam;

3. The Legal Representative of the same foreign trader or others;

4. The Legal Representative of a business organization incorporated in accordance with Laws of Vietnam. 

The Estabishment Licence of an RO is normally valid for the period of five (05) years and it would not exceed the remaining effective period of the licence (i.e.: Incorporation Certificate, Business Registration Certificate…) of Foreign Trader. The Foreign Trader is allowed to extend the duration of the RO Estabishment Licence by submitting the application dossier to the local licensing authority for their verification and issuing a new licence with equal period of the existing licence. 

The RO is not allowed for any direct profit making activity. However, the Chief Representative of the RO may sign commercial contracts with Vietnamese entities on behalf of Foreign Trader under a specific power of attorney for each specific contract 

The RO is permitted to hire local and foreign employees. However, the foreign employees must comply with the regulations on Work Permit requirements. Please kindly refer to this link for our presentation of Work Permit requirements.

When a RO’s license expires it can be renewed by lodgement of an application for renewal to the licensing authority at least 30 days prior to the date of expiry.  The licensing authority will then process the application within the next 15 working day following its receipt of all required application documents, including evidence of fulfilment of all applicable tax obligations (i.e. employees’ PIT and statutory insurance contributions) and evidence of the RO’s on-going concerns.  In practice, the process of renewal of a RO’s license is relatively fast and straightforward.

In addition to a limitation of scope of activities is that the RO is not allowed to engage in any “direct profit-making” activities, the RO is also not allowed for the following:

1. Conducting directly profit-making activities in Vietnam;

2. Acting as representative of other business entities/credit institutions rather than the immediate parent company;

3. Sub-leasing its office; and

4. Transferring its licence to other organizations or individuals.

A RO is not a taxable entity and is therefore not subject to corporate tax, provided that it operates within its permitted scope of activities and such activities do not give rise to presence of a permanent establishment in Vietnam. However, a RO is required to pay VAT on local expenditures and to withhold and pay Personal Income Tax (“PIT”) and the statutory insurance contributions in respect of the employment of its personnel. 

In addition, if the RO engages a foreign contractor in Vietnam, it will be required to withhold the applicable withholding taxes, file tax returns, and remit the taxes withheld to the tax office, on behalf of its foreign contractor. 

A RO may open and maintain bank accounts in both local currency (VND) and in foreign currency (typically in USD).  However, all   transactions within Vietnam must be conducted in local currency.  If a RO needs to pay a foreign contractor, it may do so using the foreign currency bank account or buying foreign currency from a local bank to fulfil such a need. 

By law, no later than 30 January of each year, the RO is required to submit an Annual Report to report the operations of the RO in the previous year. Failure to comply with this requirement, the RO will be subjected to administrative penalty for non-compliance violation. In addition, the RO is also required to report, provide documentation, or explain matters related to their activities at the request of competent state management agencies. 

A RO may be closed in the following circumstancies:

1. Under a decision of the Foreign Trader; 

2. The foreign trader ceases to operate according to laws of the country or territory in which such foreign trader is established or registered.

3. The License for Establishment of the Representative Office is expired but its Foreign Trader does not apply for extension of the license;

4. The licensing agency refuses to grant an extension of the expired Establishment License for the Representative Office; 

5. The Establshment License of the Representative Office is revoked if the Representative Office (i) fails to come into operation within 01 year and fails to enter into any transaction with the licensing authority (ii) fails to submit report on annual operation for 02 consecutive years (iii) fails to submit report as requested by the competent authority within 06 months from the deadline set out by the competent authority and (iv) other cases governed by the prevailing regulations; 

6. The Foreign Trader or its Representative Office is no longer satisfies one of the requirements of RO establishment in Vietnam.

The Foeign Trader is required to submit an application for closure to the licensing authority, which will then process the application within the 15 working days following its receipt of all required application documents,  including debt clearance documents such as clearances of employees’ salaries, tax debts and statutory insurance contributions etc.  In practice, the process of closing a RO often takes considerable amount of time due to delays caused by the closing tax audit and tax clearance processes. In most cases, the whole process for RO closure would take from 8-11 months or more.