Essential Guidelines For Setting Up A Representative Office Of A Foreign Trader In Vietnam

A representative office of a foreign trader in Vietnam is only allowed to carry out trade promotion activities and is not permitted to engage in activities that directly generate profit. However, despite not generating direct income from business activities, the representative office still has tax obligations, legal procedures, and employee-related requirements to comply with. This article will highlight important points to keep in mind after registering a representative office in Vietnam.

1. Post-Licensing Procedures

Once your representative office registration is completed, you need to handle the stamp. The foreign trader will decide on the stamp’s quantity, form, and content of the stamp (a logo or symbol).

2. Tax Procedures

Tax registration

• Prepare and submit the form to register a tax code. This is an important step because: According to Vietnamese law, a representative office of a foreign organization in Vietnam is required to directly register for taxes with the tax authorities.  And the representative office must submit the form to obtain a tax code within 10 working days after receiving the representative office certificate.
• Purchase a token key from the token supplier. This token is used for online tax declaration, registering social insurance, and e-tax payment.

Tax declaration

Personal income tax (PIT):

Your representative office will need to handle monthly PIT declarations and annual finalizations. 

Value added tax (VAT):

Representative offices usually do not engage in the sale of goods or services and therefore are not subject to VAT declaration.

3. Accounting And Finance Setup

Bank account registration

You’ll also need to open a current bank account when operating in Vietnam. 

Monthly management reporting

Even though it’s not legally required, it’s a good idea to set up monthly management reports. These reports help the foreign trader keep track of financial performance and make better business decisions.

Annual report

An annual report for the Department of Industry and Trade will be required for the representative office  by 30 January each year.

4. HR Setup

Once your representative office is established, you need to take care of some key registrations and policy setups:

• Register your representative office’s Social Insurance code.
• Draft labour regulations and set up payroll policies.
• Create a salary scale.
• Register for Trade Union payments if required.

Ensure you have the necessary HR document templates ready for monthly payroll processing each month.

Payroll setup

• Gather all necessary HR and payroll information.
• Draft a standard labour contract according to Vietnamese Labour Law.
• Set up the payroll template and design standard reports and payslips.

Work with the bank to set up monthly payroll payments and any additional functions related to staff payments.

Compliance with Social – Health – Unemployment Insurance 

After signing labor contracts, make sure to complete employees’ insurance registration.
Don’t forget about labour reports, like:

• Semi-annual and Annual Report on Changes to Employment 
• Semi-annual and Annual Report on the Employment of Foreign Employees 
• Semi-annual and Annual Report on Labour Accidents 
• Annual Report on Occupational Safety and Hygiene 
• Annual Report on Unemployment Insurance Contribution

5. Other Procedures

If your RO employs foreign staff, they must obtain a work permit before starting their job in Vietnam. 

In addition, they’ll need a Temporary Residence Card (TRC) or a visa. The TRC usually lasts between two to five years, depending on the validity of the work permit.

Contact TPM Tax Agent now to receive detailed and professional advice from our team of experts.
We are committed to helping you maximize tax policies while ensuring sustainable development for your business in the current challenging legal environment.

Van Le