How to Open a Representative Office in Vietnam
Over the past decade, Vietnam has transformed from an emerging economy into one of Asia’s most dynamic business hubs. Its steady growth, strategic location, and growing middle class make it an attractive gateway for international companies seeking expansion in Southeast Asia. Yet for many businesses, entering a new market requires a cautious first step. Establishing a Representative Office (RO) offers precisely that a low-risk way to understand the local environment, build partnerships, and lay the groundwork for future investment.
Here’s a specific guideline on how to open a Representative Office in Vietnam, the legal framework, key requirements, and how to avoid common mistakes.
What Is a Representative Office?
A Representative Office (“Văn phòng đại diện”) is a dependent unit of a foreign company that serves as a liaison in Vietnam. It cannot conduct profit-making activities, issue invoices, or sign contracts on behalf of the parent company.
Instead, it performs non-commercial functions such as:
• Conducting market research and promotion.
• Liaising with Vietnamese clients and partners.
• Supervising contracts signed by the parent company.
• Coordinating marketing and technical support.
An RO is therefore best suited for companies testing the Vietnamese market before committing to full-scale investment.
Legal Framework and Eligibility
Relying on Decree No. 07/2016/ND-CP and Circular No. 11/2016/TT-BCT, foreign companies can establish ROs in Vietnam if they:
1. Are legally established in their home country.
2. Have operated for at least one year.
3. Intend to conduct activities consistent with their parent business scope.
Advantages of an RO
• Low cost and easy setup: Establishing an RO is simpler and faster than creating a subsidiary. It requires no registered capital and involves fewer regulatory steps.
• Tax simplicity: Since ROs cannot generate revenue, they are not subject to corporate income tax (CIT), but must handle personal income tax (PIT) and social insurance for staff.
• Market entry flexibility: Companies can study the market, promote products, and build networks before launching a full commercial presence.
• Brand credibility: Having an official presence in Vietnam increases visibility and trust with local partners and authorities.
Step-by-Step Process
Step 1: Prepare Documents
You will need:
• Application form for RO establishment.
• Legalized Business Registration Certificate of the parent company.
• Financial statement showing at least one year of operation.
• Power of Attorney for the authorized representative in Vietnam.
• Passport of the Chief Representative.
• Office lease agreement in a commercial building.
All foreign documents must be consularly legalized, translated into Vietnamese, and notarized.
Step 2: Submit Application
Applications are submitted to the Department of Industry and Trade (DOIT) where the office will be located (e.g., Hanoi or Ho Chi Minh City).
Step 3: Obtain the License
If the dossier is complete, the DOIT issues the RO Establishment License within about 7 working days. The license is valid for five years and renewable.
Step 4: Post-Licensing Procedures
Once licensed, the RO must:
• Register its seal and tax identification number (TIN).
• Open a bank account for operational expenses.
• Hire staff and register social insurance.
While ROs don’t pay CIT, they must still declare PIT and insurance contributions for employees.
Compliance Obligations
Even with limited activity, ROs must comply with annual reporting and filing duties:
• Submit an annual activity report to the DOIT by January 30 each year.
• Maintain accounting records and expense evidence.
• Declare and pay PIT and social insurance for staff.
• Renew the RO license every five years.
Failure to meet these obligations can result in administrative penalties or suspension.
Common Mistakes and How to Avoid Them
Foreign companies often face delays or rejections due to:
• Incomplete legalization of documents.
• Leasing non-commercial office space (e.g., residential buildings).
• Misunderstanding the scope of allowed activities.
• Communication gaps with authorities or language barriers.
To avoid these common problems when setting up in Vietnam, companies should:
• Engage a local legal or business consultant.
• Verify document requirements before submission.
• Use qualified translators and notaries.
• Maintain regular communication with the DOIT.
Converting an RO into a Company
Once a business gains market traction, it may wish to expand operations. In that case, the RO can be converted into a Limited Liability Company (LLC).
This involves closing the RO, settling all obligations, and establishing a new legal entity under the parent company. Planning this early helps ensure smooth transition and continuity.
Practical Tips for Success
To operate effectively:
• Hire bilingual staff to bridge communication with authorities.
• Maintain transparent accounting records and audit trails.
• Engage local advisors for tax and HR compliance.
• Network actively with business chambers and associations.
• Keep updated on changes in Vietnamese investment laws.
These practices will help an RO remain compliant and operationally efficient.
Establishing a Representative Office in Vietnam is an excellent way for foreign companies to test the market, promote their brand, and build strategic relationships all without significant financial risk.
However, even though the process is simpler than forming a subsidiary, it still requires careful attention to documentation, compliance, and local communication. With years of experience and in-depth legal knowledge, ATA Services Vietnam helps you save time, effort, and unnecessary complications, ensuring your company is set up quickly, correctly, and fully compliant with Vietnamese law.
For companies that plan strategically, a Representative Office is not just a formality – it’s the first step toward long-term success in one of Asia’s fastest-growing economies. Contact ATA Services Vietnam today to simplify your Representative Office establishment and start your business journey with confidence
