Foreign companies interested in exploring potential business opportunities in Vietnam may set up a Representative Office first if not ready yet to commit to Vietnam fully. This option helps foreign investors explore the Vietnamese market at a lower cost and with minimal risk to decide if a full-fledged expansion is worth it. It is a great alternative to a subsidiary or a branch.

What is a Vietnam Representative Office?

Representative Office Vietnam (often shorted to “Rep Office” or “RO”) is an extension unit of a foreign company, established under the law of Vietnam, to research the market, and to perform other business-promoting activities (according to Article 3.6 Law on Commercial Vietnam)

A Rep Office is a good temporary option to study the Vietnamese market and strengthen business connections with local partners within a small budget. It also avoids the complexity of having to register a company in Vietnam and comply with ongoing filing requirements. Due to its simple operation, the representative office is only subject to declare the Personal Income Tax and cover compulsory insurance of its employees.

The operation duration of an RO is 5 years and can be extended afterward.

Functions of a Representative Office in Vietnam

The Rep Office is entitled to perform the functions of liaison, market research, and promoting business opportunities within the registered business scope of the foreign company. The Rep Office can hire local employees and/or foreign employees. 

It is important to note that a Rep Office has no independent legal status and cannot undertake any direct profit-generating activities. The RO is prohibited to: enter into business contracts, receive business payments, issue invoices or receipts, provide any services for a fee, open and receive letters of credit, etc.

Should you wish to make sales or provide services for a fee, you will need to consider a Subsidiary Company or Branch (not common choice).

A comparison between Company and Representative Office

Establish your Representative Office in Vietnam

Following are the conditions, requirements and procedures for registering a Representative Office in Vietnam:

1. Is your foreign company eligible?

A foreign company can establish a Representative Office in Vietnam if it fulfills these conditions:

• The foreign company is legally incorporated and has been in operation for at least 01 year
• The foreign company is in the manufacturing, trading, IT, consulting, construction, logistics, and other services sectors
• Having an audited financial statement for the latest fiscal year
• Having a physical office in Vietnam
• Having a head of Vietnam rep office

2. Required documents

Following required documents will be submitted along with the application:

• A legalized Business Registration License of the foreign company
• Its legalized audited financial statement of the latest fiscal year
• A letter of appointment, and passport/ID card of the Chief of RO
• A lease agreement and legal documents pertaining to the RO’s headquarters

3. Registration process to set up a Vietnam Representative Office

Here are 10 involved steps in setting up a representative office in Vietnam:

• Step 1: Consult with a local lawyer about the market entry conditions and other requirements
• Step 2: Find and rent a suitable office 
• Step 3: Prepare the required documents and appoint a Chief of RO
• Step 5: Apply for an Establishment License of the Representative Office at the Department of Industry and Trade
• Step 6: Apply for a Seal of RO at the Police Department
• Step 7: Apply for a Tax Code of RO at the Tax Department
• Step 8: Open business bank accounts for RO
• Step 9: Hire employees and apply for a work permit and a work visa for foreign employees (if any)
• Step 10: Start your daily operations.

4. Time and Cost

After submission of the application, it takes about 17-25 working days to fully obtain an Establishment License, a Seal and a Tax Code of the Representative Office. The practical licensing time could be longer. The total government fees are VND 3.440.000.

5. Converting to a subsidiary company

Once the foreign company decides that Vietnam is the right place for your business, it can set up a company in Vietnam. A Vietnam Rep Office, however, can’t be converted to a local company. In this case, the foreign company must close the Rep Office and separately form a new Vietnam company. It takes about 3 months to close a Rep Office.

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 Rep Office is limited. If you think a Rep Office is the right structure for your business, Nova Law can help you to set it up. Our legal team will consult all requirements, prepare paperwork, and apply to obtain: an Establishment License, a Seal and a Tax Code of the Representative Office.