When it comes to investing in Vietnam, most foreign investors operate under the impression that creating a foreign-owned company, like LLC or JSC, is the only way through it. However, for a more pragmatic approach, a lot of new investors prefer setting up a Representative Office (RO) in Vietnam.
Setting up a representative office in Vietnam can be useful for an investor in various ways, but the misconceptions around ROs keep them from employing this approach. This is a result of the speculation of old laws, which have been changed and updated for convenience in order to attract foreign investment into the country.
This article will bring out information relevant to the foreign investors wanting to invest and expand by setting up representative offices in Vietnam.
How a Representative Office Could be a Better Alternative for You
When it comes to expanding to Vietnam, a representative office is the next best option. Before diving headfirst into the market, the parent business can get a better grasp and understanding of the market through a representative office.
Since it is regarded as a legal and formal presence in the country, a representative office is an excellent vehicle for entering the Vietnamese market. One can hire local and foreign staff to assist your non-commercial operations in the country through this establishment.
It might also be established to monitor the local market and report to the international parent firm on any opportunities or measures that need to be taken.
What are the business activities that are permitted
Representative offices in Vietnam are permitted to engage in the following activities under the country’s commercial law:
- Being the liaison office to the parent company overseas
- Doing market research
- Promoting investment opportunities on behalf of parent company overseas
Furthermore, a representative office can recruit both local and foreign people to carry out these responsibilities, as well as rent an office in Vietnam. However, opening a bank account for a representative office will be more complicated than usual. For a seamless experience of opening a bank account, the primary representative from the parent company’s foreign office can help with the arrangement.
What are the business activities that are restricted?
The Vietnamese government has made it illegal for representative offices to participate in or assist their parent company’s commercial activities in the country. Furthermore, representative offices are barred from overseeing and supporting the implementation of agreed contracts in the country by their overseas parent companies.
If a representative office is determined to be in violation of the limits, it is then considered a permanent establishment, and hence, the income will be subject to Vietnamese taxation.
Setting up Your Representative Office in Vietnam with Cekindo
In Vietnam, setting up a representative office entails a series of time-consuming and unnecessarily formal procedures. Having business registration specialists on your side, such as Cekindo, may save you a lot of time and ensure a stress-free process. Cekindo offers a wide range of auxiliary services related to registration, including legal advice, license and document acquisition, tax and accounting, and human resource services.