Regulations on tax for foreign representative offices in Vietnam

by DungTran

Regulations on tax for foreign representative offices in Vietnam. Procedures for closing tax identification numbers of foreign representative offices. Let us learn about this topic with LSX Law firm below:

Regulations on license tax for foreign representative offices in Vietnam

Economic organizations include:

Firstly, State-owned enterprises, limited liability companies, joint-stock companies; private enterprises, enterprises operating under the Law on Foreign Investment in Vietnam; foreign organizations and individuals doing business in Vietnam not under the Law on Foreign Investment in Vietnam; economic organizations of political organizations, socio-political organizations, social organizations; socio-professional organizations, people’s armed forces units, organizations other organizations, non-business units and other independent economic accounting business organizations;

Moreover, Cooperatives, Unions of Cooperatives and People’s Credit Funds (collectively referred to as cooperatives);

In addition, Business establishments that are branches, shops, shops (belonging to a company or a branch) … dependent accounting or reporting with business registration, tax payment registration, and tax identification numbers are granted (type 13 numbers)

When giving tax advice to a foreign representative office; it only receives money from the parent company in a foreign country for collection and expenditure for representative office activities and trade promotion; not doing business or not collecting. If you pay money (that is, make payment on behalf of the Company to pay debts from the Company’s business activities); you do not have to pay a license tax.

However, in the case of tax advice for foreign representative offices having business activities; or on behalf of the parent company to perform debt payment; collection, and payment operations, they must pay license tax in accordance with current Vietnamese laws. 

Regulations on personal income tax for foreign representative offices in Vietnam

Foreign traders have the right to establish representative offices in Vietnam. However, when providing tax advice to foreign representative offices; they are only allowed to carry out trade promotion activities, not directly profitable activities in Vietnam; Therefore, the tax liability of a foreign representative office is narrower than that of a corporation.

Tax consultants for foreign representative offices always note the right to recruit Vietnamese or foreign workers to work at the office and this is also the only basis for arising tax obligations.

The obligation to declare, withhold, pay tax and finalize personal income tax of employees working at a foreign representative office is the responsibility of the representative office itself.

Taxable objects at foreign representative offices can be residents and non-residents, tax consulting services for foreign representative offices should note the following distinguishing conditions: 

Resident individual:

– Being present in Vietnam for 183 days or more in a calendar year or 12 consecutive months or have a regular place of residence in Vietnam must prove by a temporary residence registration certificate, long-term house tax contract

– Tax period: by year. 

Non-resident individuals:

– Failure to meet the above conditions.

– Tax period: calculated according to each time income is generated. 

In addition, the tax finalization process also helps representative offices have grounds for a tax refund if the paid tax amount is more significant than the payable PIT amount. Tax finalization is a complex process and involves many legal regulations. However, hiring an accountant to do it is extremely expensive in labor costs and other related costs; businesses should make the right decision between two management methods to minimize costs but still comply with the law and enjoy the benefits.

What is tax code closure?

Tax identification number closure is terminating the validity of tax identification numbers at tax administration agencies. With businesses that want to dissolve. 

The procedure to close the tax identification number is the necessary procedure for dissolution at the tax office. To be able to complete a business tax code, the following conditions must be:

Submit all types of tax declarations and reports

Pay all taxes (no longer owe tax) 

Procedures for closing tax identification numbers of foreign representative offices

Procedures for closing tax identification numbers of foreign representative offices are prescribed as follows:

Firstly, conduct review and review whether the enterprise’s reports up to the time of closing the tax code have been completed.

Secondly, submit additional incomplete reports to carry out the procedures for closing the corporate tax code

Then, taxpayers fulfill their tax payment obligations with tax authorities

Next, prepare the tax code closing documents.

After that, apply to closing the tax identification number as prescribed

In addition, the tax authority receives and processes the tax identification dossier

Finally, complete the tax code closing procedure 

An application file for tax identification of a foreign representative office is specified as follows:

A written request for invalidation of tax identification numbers, form No. 24/DK-TCT attached to this Circular

The contract liquidation (if any) or the document on the transfer of the entire capital contribution to the oil and gas contract for the investor participating in the oil and gas contract

Written certification of the fulfillment of tax obligations for import-export activities by the General Department of Customs if the organization has import-export activities 

Finally, hope this article is helpful for you!

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

Related questions

Does the representative office in Vietnam have its own seal?

According to tax consultants for foreign representative offices, they have the right to register their own seals for convenience in the process of commercial activities. Contact to carry out the procedures for seal registration at the local police office of the province or centrally run city.

Can a representative office in Vietnam issue invoices?

Representative offices do not have the function to carry out business, have no income from selling goods and providing services, so they do not have to issue and use invoices.

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