Things to know about representative office in Vietnam. Things to know about the duties of a representative office in Vietnam. Can a representative office sign a contract? Let us learn about this topic with LSX Law firm below:
Commercial Law 2005
Enterprise law 2020
Things to know about the duties of a representative office in Vietnam
According to the provisions of the Enterprise Law 2020; a representative office is a dependent unit of an enterprise, does not operate profitably; and signs contracts unless authorized by the company.
Representative offices may be located in the same or different province as the company’s head office. The head office performs all activities of tax declaration and issuance of invoices. But the representative office must calculate tax deductions; declare tax and finalize personal income tax and contract or tax when paying salaries, liabilities, and service fees.
In addition, the representative office must carry out the mission of developing business lines that the competent authorities have licensed, and at the same time; make reports to the local authorities under the provisions of the law.
Coordinate with the enterprise’s head office; and other branches or representative offices in customer exploitation, human resource mobilization, and business development.
In addition, at the request of the parent company, the representative office can still prepare internal financial statements, report on business results; annual growth, and development results.
Things to know about some representative office activities in Vietnam
Main activities of a representative office in Vietnam
For a representative office, the main activities include:
Not carrying out activities with a direct profit role in Vietnam but conducting trade promotion under the provisions of the law.
Do not amend or supplement the signed contract, except in exceptional cases with a lawful power of attorney.
Entering into contracts in the following cases: renting, buying necessary equipment, renting office space, recruiting…
For personal income tax for employees working at representative offices: according to Article 24, Circular No. 111/2013/TT-BTC, the representative office is responsible for paying tax from the cash income. Wages and salaries of employees working in the office.
For license tax: if a representative office has the function of representing; marketing and has no role of production or business, it is not required to pay this tax.
For the issue and use of invoices, there is no income from selling goods or providing services. There is no need to issue and use invoices.
For filing tax returns: if taxes rise, the representative office must be responsible for submitting invoices.
Change of representative office
When there is any change related to the content recorded in the business registration; or the operation content of the representative office; the office needs to carry out the change procedures under what is specified in the business registration—the law.
Hanging sign for representative office
When a representative office is opened, it is necessary to put up a sign at that office. The signboard should contain the following information: office name, head office address, governing body, phone number.
Activity report of the representative office
Each year, the representative office must send an official report on its activities to the Department of Industry and Trade before January 30. At the same time, the representative office is also responsible for accountability when requested by any competent authority.
Head of a representative office
This is the person responsible for the operation of the office within the authorized scope. This person can be a foreigner or a Vietnamese.
Can a representative office sign a contract in Vietnam?
According to the 2005 Commercial Law, Article 18, Clause 3: “Representative offices may not enter into contracts, amend or supplement signed contracts of foreign traders; except for cases where the head of the representative office has a lawful power of attorney from the foreign trader or the cases specified in Clauses 2, 3 and 4, Article 17 of this Law.”
In case of being a representative of a foreign trader in Vietnam: According to Decree 72/2006/ND-CP detailing the Commercial Law, Article 20, Clause 3: “In case the foreign trader authorizes the head A representative office entering into a contract, amending or supplementing a signed contract must issue a written authorization for each time of entering into, amending and supplementing a signed contract.”
In this case, the head of the representative office of the foreign company in Vietnam may enter into a purchase and sale contract if authorized in writing by the Company. The authorization shall be in writing and for each contract only.
Thus, a representative office does not have the function of concluding or signing a contract unless it is a representative office of a foreign trader or company in Vietnam.
In addition to the important note on authority mentioned above when participating in transactions and signing contracts, enterprises need to consult the charters and company regulations of established enterprises to understand the administration and operations better. Of this subject, to best protect its interests.
Can a representative office issue invoices in Vietnam?
We can say that the accounting of a representative office depends on the enterprise. The enterprise bears all financial obligations arising from the operation of the representative office. Therefore, this office has no revenue and expenditure activities, so it will not process tax returns.
In case there is a purchase of goods and direct payment for operational purposes, an invoice can be issued in the name of the representative office. Then they will transfer the invoice to the head office for processing of making a tax return.
If in the case of a purchase of goods, but those expenses are directly paid by the head office, the invoice will write the information of the head office in the form “name, address, tax code of the buyer.”
Finally, hope this article is helpful for you!
The name of the representative office must be written with the letters of the Vietnamese alphabet, the letters F, J, Z, W, numbers, and symbols. Besides, the name of the representative office must bear the name of the enterprise together with “Representative office”. The name of the representative office must be written or attached at the head office of the representative office and printed or written in a font smaller than the Vietnamese name of the enterprise on transaction documents, documents, and publications issued by the branch. , the representative office issued.
According to Clause 1, Article 45 of the Enterprise Law 2020:
Enterprises have the right to set up branches and representative offices in the country and abroad. An enterprise can set up one or more branches and representative offices in a locality according to administrative boundaries.
So there is no limit to the establishment of a representative office.