Setting up a Reppresentative Office in Vietnam

A representative office (“RO”) is nornally a first step for foreign investment in Vietnam.

A RO is a dependent unit of the foreign trader which is established under the provisions of Vietnamese law to conduct market surveys and a number of commercial promotion activities permitted by Vietnamese law. 

• The RO is not allowed to carry out activities directly generating profits in Vietnam. 

• The  RO is not allowed to enter into commercial contracts, except with authorization of the foreign trader via a power of attorney granted to the Chief Representative Officer (“CRO”) of the RO on a case-by-case basis or to lease an office, purchase goods, employ staff members and/or to serve the operations of the RO. 

The foreign trader will appoint a CRO to manage the operations of the RO in Vietnam. The CRO must manage the operations of the RO in accordance with the authorization of the foreign trader.

As the RO is not allowed to conduct business activities nor carry out other activities for directly profit-generating purposes, the tax liability of a foreign representative office in Vietnam is narrower than that of an enterprise. Specifically, corporate income tax is not applicable. Rather, the RO is required to withhold and pay personla income tax of its employees to pay to the tax authority.