International economic integration is a common development trend of the whole world. Can foreign traders who want to do business with Vietnam be able to set up a representative office or branch in Vietnam to make it easier to carry out commercial activities? Let’s find out with Lawyer X through the following situation: “Hello, our company is planning to cooperate with a foreign company, and assist them in setting up a base in Vietnam. LSX Lawfirm will give you an article about: “Foreign traders set up representative offices in Vietnam”, as follows:
Legal grounds
Commercial Law 2005
What is a foreign trader?
So the current commercial law recognizes and contains provisions governing commercial activities of Vietnamese foreign traders.
Then Traders according to Clause 1, Article 6 of the Commercial Law 2005 are understood to include legally established economic organizations and individuals conducting commercial activities independently, regularly and with business registration.
Foreign traders defined in Clause 1, Article 16 of the Commercial Law 2005 are traders established and registered for business in accordance with foreign laws or recognized by foreign laws.
Representative offices have the function of authorized
Representative offices have the function of authorized representation for the interests of enterprises. Therefore, the function of the representative office depends on the authorization of the enterprise.
However, in general, the RO is established with the function of an intermediary office to:
- Contact and transaction with business partners;
- Investment promotion, market research;
- Research, provide information, support businesses to access new markets and partners;
- Promotion and marketing of products;
- Reviewing the market, detecting infringements, acts of unfair competition, representing the company to complain about such violations.
Representative offices do not have the function of signing contracts as well as buying and selling. Therefore, representative offices can only introduce products, not buy and sell directly.
Although representative offices are not allowed to directly conduct business and sign economic contracts on their own behalf, representative offices still allowed to sign contracts under the authorization of the enterprise and stamp the enterprise.
Representative offices of enterprises engaged in production and trading of goods and services must pay license fees. In case the representative office not engaged in production and trading of goods and services, it is not required to pay license fees.
In addition, Representative Offices are required to have a tax identification number but are not required to file corporate income tax reports and perform accounting obligations as prescribed by law.
Right of foreign traders to set up representative offices and branches in Vietnam
Foreign traders in general have the right to set up representative offices and branches in Vietnam according to Clause 2, Article 16 of the Commercial Law 2005. However, it noted that in specific cases, foreign traders are traders of which country ? From there, considering the relevant international treaties and bilateral agreements; it is possible to conclude the possibility of setting up a representative office or branch of that foreign trader in Vietnam.
The legal regulations have also provided a definition of representative offices and branches of foreign traders in Vietnam; according to which:
- Firstly Representative offices of foreign traders in Vietnam are dependent units of foreign traders; established in accordance with Vietnamese law to study the market and carry out a number of trade promotion activities. as permitted by Vietnamese law.
- Secondly a branch of a foreign trader in Vietnam is a dependent unit of the foreign trader; then established and conducting commercial activities in Vietnam; in accordance with the provisions of Vietnamese law or an international treaty to which the Socialist Republic of Vietnam is a member. The Socialist Republic of Vietnam is a member.
Representative offices and branches of foreign traders in Vietnam have the rights and obligations as prescribed by Vietnamese law. Foreign traders must be responsible before Vietnamese law for all activities of their representative offices and branches in Vietnam.
Legal status of representative offices and branches of foreign traders in Vietnam
So the position of representative offices and branches of foreign traders in Vietnam; most clearly demonstrated through the legal provisions on rights; and obligations of representative offices and branches in Vietnam.
Rights of Representative Offices of Foreign Traders in Vietnam
– So, Operate for the right purposes, scope and time limit specified in the representative office establishment license.
– Then Rent the office, rent, buy the necessary facilities and equipment for the operation of the representative office.
– Then Recruit Vietnamese and foreign workers to work at representative offices in accordance with Vietnamese law.
– Open an account in foreign currency, in Vietnamese; dong with foreign currency origin at a bank that licensed to operate in Vietnam; and may only use this account for the operation of the Representative Office.
– So, have a seal bearing the name of the representative office in accordance with Vietnamese law.
– Other rights as provided for by law.
Obligations of Representative Office
– So not to conduct profit-making activities directly in Vietnam.
– So only carry out trade promotion activities within the scope permitted by this Law.
– Not to enter into contracts, amend or supplement signed contracts of foreign traders; unless the head of the representative office has a lawful power of attorney from the foreign trader or the cases; specified in Clause 1 of this Article. Clauses 2, 3 and 4, Article 17 of the Commercial Law
– Pay taxes, fees and charges and fulfill other financial obligations in accordance with Vietnamese law.
– So report on the operation of the representative office in accordance with the law of Vietnam.
– Finally Other obligations as prescribed by law.
Related articles
- Service for setting up branches and representative offices in Vietnam
- Procedures for changing the legal representative of Vietnam
- Representative office – points to note according to Vietnamese law
- Conditions for establishing a representative office of a foreign company in Vietnam
Related questions
– Pay taxes and fees according to regulations
– Business activity report
– Some other obligations depending on each specific case
– Doing business and operating in accordance with the provisions of the license
– Have the right to rent offices, buy business equipment
Implement the labor recruitment process
– Have the right to open accounts at Vietnamese banks
– Engrave the seal and use the seal according to regulations
– Some other benefits
To be able to be granted a license to set up a representative office, a trader applying for a permit must meet the conditions prescribed by Vietnamese law, the following cases will not be granted a license.
Failing to satisfy one of the conditions specified in the application for a License to establish a representative office.
Foreign traders apply for a license to establish a representative office within 2 years from the date of withdrawal of the license to establish a representative office.
The establishment of a representative office is restricted in accordance with law for reasons of national defense, security, social order and safety, social ethics and public health.
Other cases as prescribed by law.
Contact LSX Lawfirm
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