Do representative offices have to register for tax in Vietnam?

by DungTran

Do representative offices have to register for tax in Vietnam? then the answer is that the representative office needs to register for tax and have a tax code in accordance with the law. Let us learn about this topic with LSX Law firm below:

What is a representative office in Vietnam?

A representative office is in Clause 2, Article 44, Enterprise Law 2020 as follows:

A representative office is a dependent unit of an enterprise; which has the task of representing by authorization for the interests of the enterprise and protecting those interests. Moreover, the representative office will not perform the business function of the enterprise. 

Representative offices will have some of the following characteristics:

Firstly, the representative office acts as a liaison office between the company and its customers; performing tasks such as understanding the business market; support the company to assess the market; business promotion; carry out business expansion for the enterprise in introducing products or services to customers outside the head office of the enterprise; On behalf of foreign enterprises, they are well aware of market and customer information in the investment country.

Secondly, representative offices may not directly conduct business, purchase, and sell products and goods; commercial activities.

In addition, representative offices may not enter into goods sale and purchase contracts with third parties for commercial purposes.

Moreover, the financial obligations from the operation of the representative office will depend on the company and the business that created it to pay in full. 

Do representative offices have to register for tax in Vietnam?

Do representative offices have to register for tax in Vietnam? According to Vietnamese law, a representative office must have a tax identification number and tax registration.

Accordingly, representative offices in particular or taxpayers in general must register for tax and have tax identification numbers by tax authorities before starting production and business activities; or have obligations to the state budget. Although a representative office does not directly conduct commercial activities; and is not required to submit corporate income statements or maintain an accounting system according to Vietnam’s audit regime; the representative office still has to record; maintain bank books and cash book to explain cash flows from parent company to representative office. Therefore, a representative office needs to register for tax and be provided with a tax code of 13 digits; and other characters by law because the representative office is one of the dependent units specified at Point b; Clause 2, Article 30 of the Law on Tax Administration 2019. 

Do representative offices have to register for tax in Vietnam? then the answer is that the representative office needs to register for tax and have a tax code in accordance with the law.

Taxes that the representative office must pay under the tax law in Vietnam

What type of taxes do representative offices have to register in Vietnam?

License tax in Vietnam:

For a representative office that only conducts transactions; performs administrative work and trade promotion but does not conduct business activities; buy and sell goods, provide services and sign contracts, it is not must proceed to pay license tax even though the representative office has a tax code; but it is not required to submit a corporate income tax report.

In case the representative office of an enterprise engages in the production and trading of goods and services, the license fee must be paid.

Value added tax in Vietnam:

If the representative office does not directly buy and sell goods and does not generate any revenue; the representative office will make a centralized declaration at the head office of the parent company. Accordingly, the invoices related to the operating expenses of the representative office will be declared withholding VAT if the conditions for tax deduction are met. 

Personal income tax in Vietnam:

In case a representative office directly pays salaries to employees; the representative office must perform tax registration, tax withholding, declaration and payment of personal income tax to the tax office. In case the parent company establishes its representative office, it directly pays salaries to employees working at the representative office; then the parent company will be responsible for paying personal income tax at the headquarters of the parent company. 

Finally, hope this article about “Do representative offices have to register for tax in Vietnam?” is helpful for you!

If you have any questions; please contact Lawyer X for quick and best legal services: 0833102102.

Related questions

What is tax?

Tax is a compulsory, non-reimbursable revenue of the State for organizations and individuals to meet the spending needs of the State for the common good.

What is the role of taxes?

Taxes play an important role in today’s society without taxes the state would not be able to function properly.

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