Are foreign traders allowed to set up representative offices? Or Are foreign traders allowed to set up representative offices? Let us learn about this topic with LSX Law firm below:
Are foreign traders allowed to set up representative offices?
In general, foreign traders may set up representative offices. In Document No. 1190/BCT-PC dated February 26, 2019, the Ministry of Industry and Trade has the following comments:
According to the provisions of the Commercial Law 2005
Accordingly, clause 1, Article 16 of the 2005 Commercial Law stipulates that “Foreign trader is a trader; established and registered for business under foreign laws or recognized by foreign law.”
In addition, clause 1, Article 6 of the 2005 Commercial Law stipulates that:
“Traders include lawfully established economic organizations and individuals conducting commercial activities independently; and regularly and having business registration under this provision”
According to the provisions of Decree 07/2016/ND-CP dated January 25, 2016 detailing the Commercial Law
Accordingly, clause 1, Article 7 of Decree No. 07/2016/ND-CP on conditions for granting representative offices establishment license stipulates that; “Foreign traders may establish and register a business under national laws; territories participating in international treaties to which Vietnam is a contracting party; also recognized by the laws of these countries and regions.
Besides, Article 10 of Decree No. 07/2016/ND-CP on dossiers for issuing representative offices establishment license stipulates “Copy of business registration certificate or equivalent document of trader foreign.”
So, foreign traders include individuals; (with business registration or recognized by foreign law) within the scope of Decree No. 07/2016/ND-CP, and the determination of commercial Foreigners will be based on foreign laws.
In case a foreign trader wishes to establish representative offices in Vietnam according to the provisions of Decree No. 07/2016/ND-CP, the foreign trader has to submit a dossier as prescribed in Decree No. 07/2016/ND-CP for the licensing authority to consider the licensing in accordance with the law.
Procedures for establishing representative offices of foreign traders
Step 1: Engrave and register the seal sample at the police department for administrative management and social order PC64 – Provincial Police (5 working days)
Step 2: Register tax code for representative offices at the Tax Department where representative offices of the foreign trader is located (5 working days)
After granted an operation registration certificate by the Department of Industry and Trade for representative offices of a foreign trader; the representative offices will have to carry out procedures for tax identification number registration. A dossier of tax code registration includes:
Firstly, tax registration form (According to form 01-DK-TCT in Circular 105/2020/TT-BTC)
Secondly, certificate of operation registration of the representative offices (certified copy)
Thirdly, letter of introduction for the applicant
Authority competent to settle: Tax Department of the province (City) where the representative office is located.
Processing time: 03 working days from the date of valid application
Notably, within 10 days from the date of the representative office’s registration certificate; the representative offices must carry out tax registration procedures. If the time limit on representative offices are exceeded, they will be administratively sanctioned for late registration of tax identification numbers.
What taxes do foreign traders’ representative offices have to pay?
According to the provisions of current law; the representative offices of foreign traders must pay personal income tax only to the head of the representative offices and the employees of the representative offices.
Note: In case the head of the representative office and employees of the representative office do not have a personal income tax code, representative office will have to carry out the procedures for applying for a unique income tax number.
How to pay personal income tax:
Firstly, Representative offices submit quarterly PIT declarations and pay them directly at tax offices.
Moreover, within 90 days from the end of the fiscal year, the representative office must submit the personal income tax finalization declaration and carry out PIT refund procedures (if any).
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Related questions
Accordingly, New issue: 3,000,000 (three million) VND/license (Point a, Clause 1, Article 4 of Circular 143/2016/TT-BTC) The license for establishment of a representative office or a license for the establishment of a branch of a foreign trader is valid for 5 years; but must not exceed the remaining term of the foreign trader’s business registration certificate or paper of equivalent value, in case such paper has provisions on the time limit.
Within 15 days from the date of issuance, re-issuance, modification, extension and revocation of the License for Establishment of Representative Offices or Licenses for Establishment of Branches, the License-issuing agency is responsible for publishing on the information page my electronic message
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