HOW FOREIGN ENTITY COULD SET-UP A BRANCH OFFICE IN VIETNAM

A foreign business entity or a foreign trader is allowed to set-up a branch in Vietnam to conduct business activities.

Having the right to conduct business activities and make profit are how a branch differs from a representative office in Vietnam.  A branch depends on the foreign business entity that set-up the branch while a foreign owned company set-up in Vietnam exists by itself.  The Vietnam Department of Industry and Trade will be approving the establishment of a branch in Vietnam while Vietnam Ministry of Planning and Investment will be the State agency that coordinate the setting up a company in Vietnam.

How Foreign Entity Could Set-up a Branch Office in Vietnam

In particular, the branch of a foreign business entity in Vietnam (referred to as the “Branch”) means a subsidiary unit of the foreign business entity, established in accordance with the law of Vietnam in order to enter into contracts in Vietnam and conduct activities being the purchase and sale of goods and other commercial activities consistent with its licence for establishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.

The Branch will need to apply and obtain the establishment license; and have a seal bearing the name of the Branch.

1. Rights of the Branch

• To rent offices and to lease or purchase the equipment and facilities necessary for the operation of the branch.
• To recruit Vietnamese and foreign employees to work for the branch in accordance with the law of Vietnam.
• To enter into contracts in Vietnam in accordance with the activities stated in the license for establishment of such branch and in accordance with the Vietnam Law.
• To open Vietnamese dong and foreign currency accounts at banks which are licensed to operate in Vietnam.
• To remit profits abroad in accordance with the law of Vietnam.
• To have a seal bearing the name of the branch in accordance with the law of Vietnam.
• To conduct activities being the purchase and sale of goods and other commercial activities consistent with its license for establishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.

2. Requested conditions for establishment the Branch in Vietnam

A foreign company which has effectiveness business activities will be allowed to open the Branch in Vietnam if this company has real demand to open the market in Vietnam and meet some conditions as below:

• Being a trader recognized by the law of the country where it has been lawfully established or made its business registration;
• Having been operating for at least five years after its lawful establishment or business registration.

3. Issuance the Certificate of Branch:

The issuance of the Certificate of Branch will be implemented by the Department of Industry and Trade Department  after the foreign company meets all of conditions as Vietnam legal requirements.

The issuing period will be within 20 working-days after the date of submitting the full valid documents as requested.

At ANT Lawyers, a law firm in Vietnam with offices in law office Hanoi and Ho Chi Minh City, we are available to assist clients in licensing and post-licensing matters to help clients with all questions and services in setting up and maintaining the company or other form of business entities in Vietnam. We could be reached at email:ant@antlawyers.vn or office tel: +848 35202779.

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HOW TO ESTABLISH A COMPANY IN VIETNAM

Foreign investors may invest in the form of 100% capital to establish a limited liability company, joint stock company, partnership company or other forms in investment in Vietnam.

Foreign investors that invest in Vietnam for the first time must have investment projects and fill in investment registration or examination procedures at state agencies in charge of investment in order to be granted investment registration certificates. Investment certificates shall concurrently be business registration certificates.  Company with 100% foreign capital has founded and operated from the date of issuance of the investment certificate.

A project dossier for establishing a company in Vietnam shall comprise:

• Registration/Request for issuance of Investment Certificate;
• A report on financial capability of the investor;
• Draft of the company’s charter;
• List of members of company: a) copy of the people’s identity card, passport or other lawful personal certification, for individual members; b) copy of the establishment decision, business registration certificate or other equivalent document, for member organizations; copies of the authorization document, the people’s identity card, passport or other lawful personal certification, for authorized representatives. Copies of the business registration certificates of the foreign member organizations must be authenticated within three months before the date of submission of the business registration dossier by agencies where such organizations are registered;
• Written authorization of the investor in case investor is organization and valid copy of the lawful personal certification of the authorized representative. Documents in foreign languages must be translated into Vietnamese, notarized and legalized;
• The joint-venture contract or Business Cooperation Contract (BCC);
• Other documents required by Vietnam law.

The establishment of a company in Vietnam would take from 30 days.  The extra time might be needed in case the investment area is conditional or the State government needs to examine the investment project.  Minimum capital, special licenses or other conditions might be required in certain investment projects.

At ANT Lawyers, a law firm in Vietnam with law offices in Hanoi and Ho Chi Minh City, we are available to assist clients in establishing foreign owned company in Vietnam.  We could be reached at email: ant@antlawyers.vn or office tel: +84 912 817 823.

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VISA, WORK PERMIT AND PIT – WHAT ENTERPRISES SHOULD CONSIDER WHEN EMPLOYING FOREIGN WORKERS IN VIETNAM

Enterprises employing foreign workers in Vietnam should be aware of issues on visa, work permit, liability of enterprise related to Personal Income Tax (PIT) of the foreign employee as declaration, payment and finalization to ensure legal compliance.

Visa

Foreigners eligible working in Vietnam are foreign investors whom contribute capital to set-up company in Vietnam, chief representative of NGO, lawyers licensed by Vietnam Ministry of Justice, foreigners workers with valid working permits in Vietnam. Working visa in Vietnam is granted to foreigner working legally in Vietnam. Working visa for foreigner in Vietnam has maximum length of 12 months. In the case the foreigner wishing to stay longer, he/she could apply for temporary residence card for a period of up to three years. The application must be submitted to the provincial Immigration Department, and may include supporting documents such as a housing lease contract and an employer’s certificate of incorporation.

Work permit

Decree No. 102/2013/ND-CP elaborating some articles of the Labour Code on foreign workers in Vietnam states that for foreigners that requires work permit in Vietnam, the employing enterprises will have to apply for work permit for such employee before they start working. The head of the provincial People’s Committee will have to approve the necessity to hire foreigners before the Vietnam Department of Labour, Invalid and Social Affairs (DOLISA) grants work permit in Vietnam. For foreigners belonging to one of the cases exempted from work permit, the employing enterprises will have to request the provincial DOLISA where foreign workers regularly work to certify that such foreign workers are exempted before the day on which they start to work.

Personal Income Tax obligation

Foreigners whom are subject of Personal Income Tax (PIT) in Vietnam are resident and non-resident workers. Foreigners who reside in Vietnam for less than 183 days in a tax year are considered non-residents for tax purposes. The first tax year is the consecutive 12 months period from arrival date in Vietnam, and the second tax year will follow the calendar year. Non-resident foreigners working and earning income in Vietnam are subject to PIT at a flat rate of 20%. Foreigners who reside in Vietnam for 183 days or more in a tax year are considered tax residents in Vietnam and subject to PIT at progressive rates on their world-wide employment income. Incomes of foreign workers in Vietnam are based on salaries, wages, allowances and other benefits such as housing allowances, memberships at sport and health clubs, personal entertainments. The expenses not being subject to PIT are including return air tickets between Vietnam and home country of the foreigners, school tuition fees of children of foreigners which employing enterprises pay on their behalf.

Vietnam has signed double tax agreements (DTA) with a number of countries, in which tax exemptions may be applied in specified circumstances. To request for tax exemptions, the application has to submit the request to the Ministry of Finance.

ANT Lawyers, the law firm in Vietnam in Hanoi and Ho Chi Minh City assist clients to provide visa, work permit, and Personal Income Tax (PIT) services that ensure clients to take advantage of international assignments, ensure mobility and legal compliance.  We could be reached at office tel +848 35202779, email:ant@antlawyers.vn or our partner directly at +84 912 817 823.

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CONDITIONAL INVESTMENT SECTORS AND INVESTMENT CONDITIONS IN VIETNAM

When setting up a trading company in Vietnam, beside other conditions, the foreign investors have to prove experience in trading area.  Areas such as banking, financial services, real estate, security services will require minimum investment.   Foreign investment lawyers should be consulted for advice on investment licensing matters.

In general, foreign investors making investment in Vietnam are encouraged.  However, there are areas although not prohibited, but are “conditional” areas including the project could affect national defense, security, social order and safety; finance and banking; field that affect public health; culture, information, press, publishing; entertainment services; the real estate business; prospecting, exploring and exploiting of natural resources, ecological projects and the environment; education and training.

The conditions required by Vietnam laws on investment toward the foreign investors are business requirements that the investor must meet after the incorporation of the company, not as a condition for receiving the investment license. However, in the case of a foreign investor applies for an investment license for a new project, the law requires that all business conditions must be satisfied before the grant of the investment license.

Conditions that the foreign investors have to meet when investing in conditional business could be related to the forms of the investment, the nationality of foreign investors, the professional expertise of the investor, the scale of investment projects, type of goods and services, time implementation of investment projects.

We at foreign investment practice of ANT Lawyers, a law firm in Vietnam with offices in Hanoi and Ho Chi Minh City would be able to assist clients in regulatory and licensing matters relating to the investment and the operation of the foreign investor enterprises in Vietnam.  We could be reached at email: ant@antlawyers.vn or office tel: +848 35202779.

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