A representative office is one of the easiest ways to establish a legal business presence in Vietnam. It is a form that many foreign companies take during early development stages of investing in Vietnam. A representative office is basically a legal agent of the foreign company that is permitted to engage in price negotiations, provide quotations, participate in tenders, and sign procurement agreements. However, a representative office is not permitted to engage in income-generating business activities such as signing sales contracts, providing services, or receiving funds from clients.
Advantage of Representative Office
- The most efficient form of entity to set up in Vietnam
- There are neither VAT nor corporate income tax filing, financial statement requirements for representative offices.
- However, RO still need to make responsible for personal income tax on the salary paid to employees as well as perform the obligations related to insurances regulated by Vietnam’s regulation.
Disadvantage of Representative Office
- Cannot issue invoices to customers or import goods to Vietnam.
- Cannot claim for VAT refund.
Procedure for setting up a Representative Office
Only businesses recognized as legally established companies in a foreign country are allowed to establish a representative office in Vietnam. The foreign investor should submit an Application form with the DPI and obtain its letter of approval.