{"id":2459,"date":"2023-09-08T08:37:12","date_gmt":"2023-09-08T08:37:12","guid":{"rendered":"https:\/\/iris-international.co\/?p=2459"},"modified":"2024-12-09T14:38:04","modified_gmt":"2024-12-09T14:38:04","slug":"representative-office-in-vietnam-what-you-need-to-know","status":"publish","type":"post","link":"https:\/\/iris-international.co\/vi\/2023\/09\/representative-office-in-vietnam-what-you-need-to-know\/","title":{"rendered":"Representative Office in Vietnam \u2013 What you need to know"},"content":{"rendered":"
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Opening a Representative Office (RO) in Vietnam can have its advantages and disadvantages, depending on your business goals and needs. Here are some reasons why you might consider opening a RO in Vietnam.<\/em><\/p>\n<\/blockquote>\n\n\n\n

The advantages of the Representative Office<\/h5>\n\n\n\n
Simple Operations<\/h6>\n\n\n\n

Operating a V\u0103n Ph\u00f2ng \u0110\u1ea1i Di\u1ec7n<\/a> is less complex compared to managing a business. Representatives are exempt from adhering to tax regulations since they are not authorized to conduct commercial operations. Consequently, a Representative Office in Vietnam is not obligated to file regular tax reports, financial statements, or tax payments.<\/p>\n\n\n\n

The RO only becomes subject to Personal Income Tax (PIT) when it enters into employment agreements with its staff. Annually, representative offices in Vietnam are required to submit a single Operational report summarizing their activities throughout the year.<\/p>\n\n\n\n

Low cost<\/h6>\n\n\n\n

Setting up a representative office in Vietnam generally incurs lower costs compared to establishing a company. Additionally, due to the small-scale and straightforward nature of a RO’s operations, its ongoing operational expenses are significantly reduced.<\/p>\n\n\n\n

Be able to hire<\/h6>\n\n\n\n

A representative office is a legally recognized business entity with the authority to enter into labor contracts and employ individuals, both Vietnamese and foreigners, for various non-sales tasks. Therefore, if your goal is to establish an entity primarily for the purpose of hiring staff for non-sales roles, a representative office is a cost-effective and straightforward option to consider for business setup in Vietnam.<\/p>\n\n\n\n

The disadvantages of the Representative Office<\/h5>\n\n\n\n
Limit in the scope of operation<\/h6>\n\n\n\n

A Representative Office in Vietnam is strictly prohibited from engaging in any commercial activities. It cannot generate revenue, issue invoices, or employ individuals with job titles related to sales or sales-related activities.<\/p>\n\n\n\n

Short License Validity<\/h6>\n\n\n\n

The license for a Representative Office (RO) in Vietnam is valid for a period of 5 years. After this initial period, an extension is required if the RO wishes to continue its operations. This duration is considerably shorter compared to the 50-year term available for companies in Vietnam.<\/p>\n\n\n\n

RO small size<\/h6>\n\n\n\n

Under the Labor Law in Vietnam, a representative office (RO) has the legal authority to enter into labor contracts and hire employees. Typically, ROs operate on a small scale, employing around 10-15 people. However, if the number of employees exceeds this range, it may attract scrutiny from the authorities.<\/p>\n\n\n\n

It’s important to note that there are restrictions on certain job titles within a RO. Positions related to sales, field force, account executives, business development, and similar roles should not be hired under a RO. Additionally, a RO is allowed to have only one Chief Representative, who serves as the legal representative of the office.<\/p>\n\n\n\n

Only one legal representative for RO<\/h6>\n\n\n\n

To open a Representative Office (RO) in Vietnam, there are specific conditions and requirements that must be met:<\/p>\n\n\n\n

1. The parent company must be at least 01 year old.<\/p>\n\n\n\n

2. The primary business of the parent company must be eligible to open a Representative Office in Vietnam.<\/p>\n\n\n\n

3. The parent company must provide an audited financial statement or tax return for the last 01 year.<\/p>\n\n\n\n

4. The Head of the Representative Office in Vietnam cannot be the owner or legal representative of other business entities.<\/p>\n\n\n\n

Additionally, the legal representative of the RO must obtain resident status in Vietnam, which means they must reside in the country for at least 183 days per year.<\/p>\n\n\n\n

The timeline to set up a RO in Vietnam is approximately 4-6 weeks. It’s important to note that not every company is allowed to open a representative office in Vietnam, and the eligibility is determined by the parent company’s business line.<\/p>\n\n\n\n

During the registration process, the RO can use a virtual office as a temporary arrangement, but it is recommended to move to a proper address after the office is successfully established.<\/p>\n\n\n\n

Read more about: The Differences Between A Company Vs. A Representative Office Vs. A Branch In Vietnam<\/a><\/p>\n\n\n\n

For more detailed information about the process and assistance in opening a Representative Office in Vietnam, you can contact Iris International\u2019s professional consultant.<\/p>\n\n\n\n\t\t\t\t\t\t