A Representative Office (RO) is obliged to represent the enterprise’s interests, conduct liaison activities, market research, and promotion of its head office’s businesses. ROs can help ease the execution of transactions between the overseas parent company and the local vendors.
So, what to take into consideration when establishing one in Vietnam?
Registration
In normal practice, within 20 working days upon receiving valid application documents, ROs may receive in full the legal certification of operating license, tax code, stamp registration as following diagram:
Tax-related Matters
Generally, a RO is not subject to common tax obligations such as License Fee, Value-Added Tax, Corporate Income Tax. However, since there are staff working at a RO, it is the RO’s responsibility to comply with Personal Income Tax regulations. Yet notably, under satisfied conditions, the Head of the RO could take advantage of the Treaty on avoidance of double taxation.
Accounting Compliance
There are no regulatory requirements for accounting filing. However, for better cost-control at the parent company as well as more transparent business activities for upcoming inspection by authorities, the RO should maintain simple records according to requirements from the parent company or send all accounting documents to the parent company.
Labor Notes
Working Permit
A working permit is usually a must for foreigners before starting working for RO.
Visa
A business visa is also statutorily required prior to a foreigner’s entry to Vietnam. Depending on the actual situation, the RO can apply for a special process.
Recruitment and social insurance contribution
If the RO of Foreign business entity recruits Vietnamese Labor, they have to submit recruitment requests for Vietnamese authorities and need to submit periodical labor reports. The compulsory insurances include social insurance, health insurance and unemployment insurance and must be registered for labor contract with term from one month, the rate of the insurances are as followings:
Insurances | Local | Foreign Resident | ||||
RO contribution rate | Staff contribution rate | Total | RO contribution rate | Staff contribution rate | Total | |
Social insurance | 17.5% | 8% | 25.5% | 3.5% | – | 3.5% |
Health insurance | 3% | 1.5% | 4.5% | 3% | 1.5% | 4.5% |
Unemployment insurance | 1% | 1% | 2% | – | – | 0% |
Total | 21.5% | 10.5% | 32% | 6.5% | 1.5% | 8% |
The RO must still contribute 2% of the salary fund as the trade union fee to the District Labor Confederation even if the RO does not set up its union.
Contact us at the ASTC office nearest to you or submit a business inquiry online.


-
Tax Guide – Sep 2019
In this issue:ASTC would like to introduce a collection of “COMMON MISTAKES WHEN CALCULATING PIT”.Union fee deductible from income before tax as insurrance compulsory?Employees have to sign the low-income commitment at the begin or when leaving jobWho have to declare global income?Are foreign experts exempted from PIT if they are sent by parent companies or
09/09/2019Read More -
Tax News Letter – Oct 2019
In this issue: Electronic Invoices – Circular 68/2019 guiding Decree 119/2018 Mandatory for all firms from November 01, 2020, until October 31,2020 following three froms of invoice are still valid: Paper Invoice (Decree 51/2010, Circular 39/2014); E-Invoice (Decree 51/2010, Circular 32/2011); E-Invoice (Decree 119/2018, Circular 68/2019). “Encourage” firms in Hanoi and Ho Chi Minh City
31/10/2019Read More -
News Letter – Nov 2019
In this issue: Labor welfare DECREE NO. 90/2019/ND-CP — Increase the region-based minimum wages; OFFICIAL LETTER NO. 4641/TCT-DNNCN — Wages for overtime working hours exceeding 200hrs/yr (300hrs/yr) will not be exempted from PIT; OFFICIAL LETTER NO. 611/QHLDTL-CSLD — Annual leave days for employees. Bill of Law on Enterprises BILL OF LAW ON ENTERPRISES — Enterprises may
30/11/2019Read More -
2020 New Year Holiday Announcement
2020 NEW YEAR HOLIDAY ANNOUNCEMENT Dear valued customers, Administration Solutions and Tax Consultancy Limited Company (“ASTC”) hereby would like to announce our schedule for 2020 New Year holiday as follows: Wednesday (01 January 2020): 2020 New Year holiday Thursday (02 January 2020): Re-open for business The For assistance during the holiday, please contact our hotline
25/12/2019Read More -
Special News 2019
In this issue: Administration Solutions and Tax Consultancy LLC (“ASTC”) is pleased to deliver you a special edition, summarizing the accounting works needed to be prepared by the end of FY2019. Tax Finalization FY2019 Register PIT codes for employees working in 2019 by March 20, 2020 at least; Collect documents to re-calculate PIT of employees
27/12/2019Read More