The Representative Office VS The Foreign-Invested Company (FDI)
THE REPRESENTATIVE OFFICE
Vietnam-based representative office of a foreign trader means a dependent unit of the foreign trader, which is established under the provisions of Vietnamese law to conduct market survey and a number of commercial promotion activities permitted by Vietnamese law.
FUNCTION OF THE REPRESENTATIVE OFFICE
The operation of a representative office shall be solely confined to the conduct of
- liaison activities,
- market research, and
- promotion of its head office’s businesses
THE ROLE OF THE CHIEF REPRESENTATIVE
The Head of the representative office or branch shall be responsible for his/her action and the operation of the representative office or branch to his/her head office within the power of attorney.
REPORT ON ANNUAL ACTIVITIES OF THE REPRENTATIVE OFFICE
By January 30th of each year, every representative office and branch shall submit operation status reports using the form stipulated by the Ministry of Industry and Trade to the provincial licensing agency.
HIGH LEVEL COMPARISON BETWEEN THE REPRESENTATIVE OFFICE AND THE FDI
| ITEMS | The RO | FDI | |
| ESTABLISHMENT | License | The license of the RO establishment | Investment Registration Certificate (IRC)
Enterprise Registration Certificate (ERC) |
| Operation duration | Up to 5 year
Extension is allowable |
Up to 50 years
Extension is allowable |
|
| Scope of operation | The scope is limited to:
Performing function as a liaison office Promoting the corporative project in Vietnam Market research to promote business opportunities in Vietnam Supervising and speeding up project of foreign organization in Vietnam
The RO is not allowed to involve in profit-making activities |
The scope will be based on the requirement of the foreign investor and is subject to WTO Commitments and domestic regulation in Vietnam
FDI is allowed to undertake profit-making activities directly |
|
| Capital injection | No capital required
Funded by foreign organization |
The capital is required to registered with VN authority during set-up stage
The charter capital is required to fully injected into DICA account within 90 days or set timeframe The amount of proposed capital contribution should be commensurate with the scale of investment project |
|
| ONGOING COMPLIANCE | Taxation | No Business License Fee
Personal Income Tax (PIT) Other transaction taxes based on the nature of each transaction/ operation of the RO |
Value-Added Tax (VAT)
Corporate Income Tax (CIT) Personal Income Tax (PIT) Withholding Tax (WHT) Business License Fee Other statutory duties and fee |
| Periodical report | Labor report
Annual report on the RO activities (deadline is no later than 30 Jan of current year for previous year) |
Different types of report are required to submit to different competent authorities | |
| Accounting and auditing | No requirement on applying accounting regime
No requirement on auditing at year-end |
Compulsorily to comply with Vietnamese Accounting Standard (VAS)
Auditing is undertaken at year-end Audited FS is required to submit to VN authorities accordingly |
|
| Key personnel | The Chief Representative | Legal Representative
BOD based on organizational structure of FDI (Chairman, Members Council, Director etc.) |
|