06 Jun Important Notes on Foreign Representative Office Operation in Viet Nam
Managing compliance procedures for representative office operation of foreign businesses, especially procedures such as labor relations management, insurance, personal income taxes, invoices, income statement, updating, license adjustment and extension and annual report, etc. is an important task that should be closely monitored from the beginning and continuously throughout the operation. This article updates some important notes for representative office activity along with the latest penalties, as well as how to overcome and prevent them.
Notes on cases when the license of representative office of foreign business must be amended
A foreign business must carry out the procedures for adjusting its representative office’s license in the following cases:
- Change of the name or address of the foreign business (parent company).
- Change of the head of the representative office.
- Change the name of the Representative Office.
- Change of the activities of the Representative Office.
- Change of the address of the representative office in a province or city under central authority or in a geographical area under the management of a management unit.
Adjustment period: within 60 working days from the date of change, adjustment procedures must be carried out
Penalties for violations: From VND 20,000,000 to VND 40,000,000;
Within 10 (ten) days from the date of change in information included in the License, the Representative Office must notify the tax authority of the changes.
Penalties for violations: From VND 700,000 to VND 2,000,000
Notes on Procedures for License Renewal
A foreign business may extend its licenses of representative office upon expiry of the time limit specified in its license.
Renewal time: At least 30 days before the expiry of the License.
Penalties for violations: From VND 60,000,000 to VND 100,000,000;
Notes on annual reports in management of representative office operation
Before January 30 every year, representative offices must send reports in the form set out by the Ministry of Industry and Trade on their operations in the preceding year to the permit issuers.
Representative offices are obliged to report on, supply documents or explain matters related to their operations at the request of competent state authorities.
In addition, representative offices need to collect valid invoices and make cashbooks for tax final settlement in the following years, especially in the procedures for dissolution.
Representative offices must actively manage foreign workers, register and extend work permits and temporary residence cards and cancel permits for their employees who have left the offices or when the offices are dissolved.
Penalties for violations: From VND 20,000,000 to VND 40,000,000.
Failure to properly adhere to the basic regulations will have many potential risks later on. At present, the heads of representative offices or parent companies can be completely assured about the management of licenses and compliance procedures of representative offices with the support of prestigious local consulting companies. Service packages include direct telephone or email consultation. Tailor-made packages are provided according to the scope and requirements of each client, on a case-by-case basis, including such services as risk review and remediation, completion of documentation systems, fulfilment of emerging requirements and application of new regulation in a cost-optimized manner.