Looking to establish a representative office in Vietnam? This guide covers process, steps, benefits, limitations, and costs.

What is a Representative Office in Vietnam?

A Representative Office (RO) is a dependent unit of a foreign trader, established in Vietnam to research the local market and conduct other permitted business promotion activities. The RO does not have independent legal status and is financially and operationally dependent on its parent company. Its permitted operation period is 5 years, with the option for extension. A foreign company may establish multiple representative offices in Vietnam, but only one office is allowed per province or city.

A Representative Office in Vietnam can:

• conduct liaison work
• market research
• promote business opportunities 
• hire local and foreign employees

Note: A RO of a foreign company, where the company is the owner of medical devices or authorized by the owner of the medical devices, is additionally permitted to announce applicable standards or register the circulation of medical devices in Vietnam. The RO in Vietnam is also eligible to register for fertilizer circulation recognition.

Here are 4 key benefits of having a representative office in Vietnam:

• Market Entry: It provides an initial, temporary, low-risk business presence in the Vietnamese market, allowing foreign companies to understand local market conditions, consumer behavior, and business culture before committing to larger investments.
• Enhanced Brand Presence: It allows for targeted promotional activities, brand building, and building relationships with local businesses, suppliers, and potential customers in Vietnam.
• Cost-Effective: it requires no investment capital, incurs no taxes, and involves lower setup and operational expenses.
• Simplified Setup & Compliance: It eliminates the need for complex ongoing compliance procedures, unlike FDI companies

Regarding limitations, a Representative Office in Vietnam cannot engage in direct sales or profit-generating activities, such as entering into business contracts, receiving business payments, issuing invoices or receipts, opening or receiving letters of credit, or providing services for a fee.

Setting up a Representative Office in Vietnam is a practical option for foreign companies exploring business opportunities in the country at a lower cost and with minimal risk. It’s a great alternative to a subsidiary company or a branch.

Requirements for establishing a RO

According to Article 7 Decree 07/2016/ND-CP, a foreign company can establish a Representative Office in Vietnam if:

• it is legally established in a country or territory participating in the international treaty of which Vietnam is a member;
• it has been in business operation for at least 1 year; 
• the scope of activities of a RO must comply with Vietnam’s commitments in international treaties to which Vietnam is a party; otherwise, the establishment of the RO must be approved by the Minister of the specialized management ministry

In general, foreign companies operating in manufacturing, international trade, wholesale, and other trade-related sectors can normally establish a representative office in Vietnam. However, foreign companies in sectors such as banking, finance, insurance, consulting, IT, legal services, etc might require additional approval.

In addition, the foreign company must rent a business location in Vietnam and appoint a local Chief Representative.

How to Set Up a Representative Office in Vietnam

Setting up a representative office (RO) in Vietnam involves 6 main steps:

• Step 1. Rent a business location
• Step 2. Appoint a local Chief Representative
• Step 3. Prepare required documents
• Step 4. Register the representative office
• Step 5. Register for a red stamp
• Step 6. Register for a tax identification number

Let’s take a closer look at each step.

Step 1. Rent a business location

Before registering to set up a representative office in Vietnam, the foreign company must rent a business address in the country as the main location for the RO. After that, the company should sign a lease agreement and get the necessary legal documents, such as a certificate of land use rights. In some cities, like Hanoi, a virtual address may be allowed.

Step 2. Appoint a local Chief Representative

The Chief Representative is an individual, either a foreigner or Vietnamese, appointed by the foreign company to lead the Vietnam RO.

Learn more: Requirements for a Chief Representative in Vietnam

Step 3. Prepare required documents

The following required documents will be prepared and submitted:

• Application for Issuance of Representative Office Establishment License (Form MD-01);
• A legalized Business Registration License of the foreign company;
• A legalized  audited financial statement of the latest fiscal year of the foreign company;
• A letter of appointment for Chief Representative;
• A certified true copy of passport/ID card of the Chief Representative;
• A lease agreement and legal documents for the RO’s headquarters.

Step 4. Register the representative office

The foreign company must submit the application to establish an RO to the Department of Industry and Trade. These procedures typically take from 10 to 20 business days to complete. If the application is referred to a managing ministry, approval may take up to 3 months.

Step 5. Register for a red seal

After receiving the RO License, the next step is for the RO to register for a red stamp with the Police Department. The application includes:

• RO License
• Passport or Vietnamese Citizen ID of the Chief Representative

The red stamp will be ready after 3 business days from the date of submission of the application. Please note that the Chief representative must personally visit the police department to collect the stamp and cannot authorize anyone else to pick it up on their behalf.

Step 6. Register for a tax identification number

The final step is for the RO to apply for its tax identification number. The application must be submitted to the tax authorities within 10 business days from the date of issuance of the RO License and includes:

• Tax registration form
• Notarized copy of the RO License

The tax identification number will be issued after 5 to 7 business days from the date the tax authorities receive the complete and valid application.

Costs

Post-Registration Management

Here’s a checklist of tasks a RO in Vietnam needs to complete after establishment to ensure compliance with local regulations and smooth operations:

1. Affix and maintain a RO’s sign in front of the office

The sign should include at least the representative office’s name

2. Opening bank accounts for the RO (optional)

The purpose of the RO bank accounts is to conduct financial transactions, for example: receiving funds from the mother company, making payments for expenses of the RO in Vietnam such as office rent, salaries, office supplies, etc.

3. Submitting reports

The RO must prepare reports regarding its activities throughout the year and submit the report to the Department of Industry and Trade before January 30th of the following year.

4. Tax obligations

In case the representative office hires employees, the RO is obligated to contribute to social insurance for employees and settle personal income tax for employees. In case the RO does not incur any salary expenses, it is not required to fulfill tax obligations.

FAQ

To Sum-up

Establishing a Representative Office in Vietnam is a great option for foreign companies to assess the business potential in Vietnam. However, the scope of activities of the RO is limited.

If you believe a Representative Office is the right structure for your business, Nova Law can assist you in setting it up. From initial registration to ongoing governance and compliance needs, Nova Law is here with responsive, professional, and tailored support.