Vietnam joined RCEP after a wave of investment into the distribution sector and export, trading companies in Vietnam maps at AC. After the agreement is signed, electronics, retail, agriculture and fisheries will be very attractive for foreign retailers. For a foreign company that is interested in expanding the business in a new country or region, Vietnam is a promising destination with many business opportunities. This article will provide the guideline to establish company in Vietnam as a trading company.

While Covid-19 disrupted the global supply chain, the trend of protection is emerging, the RCEP was signed to mark an important milestone in the economic integration of the negotiating countries. With the participation of 15 members, it will create a market of 2.2 billion people, equivalent to 26,200 billion USD, creating the largest free trade area in the world. Thanks to the commitment to open markets for goods, services and investments, rules of origin in the RCEP geographic area and trade facilitation measures, this FTA will provide opportunities to develop chains, new supply.

The Agreement also establishes stable and long-term export markets for ASEAN countries in the context of recent supply chain instability. The implementation of the RCEP also creates a binding legal framework in the region on trade policy, investment, intellectual property, e-commerce ... and creates a fair playing field in the region.

So, it can be said that setting up a trading company in Vietnam at this timing, especially after the lock-down is a worthy option.

What's a Trading Company?

Trading companies or dealers (formerly known as wholesalers) are businesses that deal with different types of products sold to consumers, for business or for government purposes. Merchants buy a wide range of products, maintain stock or a store, and deliver products to customers.

In order to setting up a company in Vietnam or specifically a trading company in Vietnam investors should comprehensively understand the formality and function of the legal entity to be formed according to Vietnam Law. The consultancy and guidance of skilled and qualified lawyers from top consulting firms in Vietnam throughout the process shall mostly be needed.

A trading company:

Engaging in import and export activities as well as domestic distribution.
Allowing a business to retain more control over their operations and manage supply chain issues quicker.
While there are no minimum capital requirements, you need to review and maintain compliance with regulations for their business activities.

If you wish to engage in import and export activities as well as domestic distribution (i.e., retail, wholesale, and franchising trade activities) in Vietnam, the most common method chosen is to establish a trading company.

Generally, a trading company is inexpensive to establish and can be a great assistance to your enterprise by combining both sourcing and quality control activities, thus providing quicker reactions compared to remotely based.

First of all, you need to decide what type of business in Vietnam will be. Currently, there are different types of businesses in Vietnam, including:

Joint stock company (JSC)
One member limited liability company (LLC)
Limited liability companies with two or more members (LLCs)
Private company
Partnerships for establishment registration with state agencies.

Then we will go next to the procedures and compliance step.

What do you need to establish a trading company?

How to Establish a Trading Company in Vietnam

#1 Investment license

The first step of registering any foreign business in Vietnam is to obtain an investment license from the Department of Planning and Investment. The investment registration certificate is the primary license necessary for conducting any business in Vietnam.

It usually takes up to one month to acquire it.

#2 Business registration certificate

This step requires an enterprise registration certificate. In general, the Department of Planning and Investment will issue the business registration certificate in one week.

Also, take note that after you have received the certificate, you have 90 days to make the initial capital contribution.

Company registration documents:

Trade company charter document.
List of shareholders, members of the same company.
An application form for an enterprise registration certificate.
Documents proving the status of individuals and legal entities such as: ID card, citizen identification card, passport, business registration certificate ...

#3 Trading license

The third step of registering a trading company in Vietnam is to get a trading license. This process includes:

Sending an application to the Department of International Trade (DIT). The DIT will then give an approval or invite additional documents, if necessary.

After a response from the DIT, they're going to prepare a politician Letter and submit it to the Ministry of Industry and Trade (MIT).
The MIT will then either confirm your request for the trading license or invite additional documents. If the appliance is approved, the DIT will issue the trading license within one week.

If the application is rejected, then, you need to provide supplementary documents and the DIT will then prepare a new official letter for the MIT.

What are the relevant procedures?

After successfully registering the procedures for the establishment of a trading company at the Department of Planning and Investment, the Company Owner is required to:

Tax:

Companies will need to declare, report and pay taxes such as value added tax, corporate income tax and license tax.

Announcement of company information:

The commercial enterprise will be on the national portal and post company information and publicly and transparently the company registration.

Digital signature registration.

Engrave the company round seal
Issue the invoice
Open a bank account for transactions
Contribute capital to the company on time (if not fully paid).

If you are wishing to set up a trading company and to quickly go into business activities in time, please contact us via Viettonkin Consulting. Here, we are assisting you as well as many other foreign businesses in the process of globalizing and unlocking the potential to expand your enterprises.

The Representative Office (RO) has no function of profit generating, but functions such as researching, approaching market expansion, promoting brands, products, contacting customers … So, it can be fairly essential to get one. Thus, how is the procedure and compliance how to establish representative office in Vietnam as well as dissolution? The following article of Viettonkin Consulting will share useful information about the RO establishment and termination procedures and related issues. Let us find out with us for useful information for doing business in Vietnam.

Procedures and Compliances how to establish representative office in Vietnam

Compliance for representative offices (ROs)

Setting up a Representative office (ROs) is one of the simplest and fastest ways to establish a legal entity in Vietnam. Their report requirements are also more simple compared to FOCs.

READ MORE: Legal Service to find out more about how we can help tackling your problems and protecting your rights

Because ROs are forbidden from directly conducting profit-generating activities and are limited to market research, developing trade contacts, and gathering information on regulations and laws, their compliance requirements are also more simple than FOCs.

Procedure requirements check - list (2021 update)

Tax and accounting procedures

Mandatory:

PIT finalization
PIT finalization for individuals with multiple sources of income or have direct income from abroad

Tasks to note:

Complete cash book and petty card with appropriate invoices and vouchers for tax inspection
Re-audit the tax return - payment and tax receipts
Cross-check the balance - tax status with the tax agency

Annual activity Report

Prepare and submit the Report on the operation of the office during the year to the Department of Industry and Trade

Procedures for wage labor

Mandatory:

Signing a labor contract, an employment contract appendix for the new salary and income for the year for each employee in the country.
Provide appointment letter, confirmation letter of annual income for foreign workers.
Registering and adjusting the salary scale system, labor regulations, labor agreements ... to update regulations and welfare policies.
Complete information about the employee management book with content that needs updating such as days off, overtime hours, discipline, salary increases, …

Tasks to note:

Performing income verification procedures, issuing PIT withholding vouchers for seasonal employees, employees earning direct income from abroad.
Determine a list of personnel subject to PIT self-finalization with the tax office.

Procedures and Compliances for Dissolution

In order to carry out the procedures for dissolution of a representative office in accordance with the promulgated law, the enterprise needs to fully perform the following steps:

Step 1: Deactivate tax identification numbers with tax authorities.

Step 2: Procedures to return seal, confirm not to use seal (in case there is no seal).

Step 3: Prepare documents on dissolution of representative office.

Step 4: Submit the application

Step 5: Get results

Procedures for Tax Identification Number (TIN) deactivation

In order to be able to validate the Tax Identification Number of the representative office, you need to submit the application to the administrative tax office. Types of papers and documents include:

Official letter on TIN deactivation.
The decision to close the representative office of the board of members (LLC) / the board of directors (shares) / owner / business owner (private).
Meeting minutes of the Board of Directors / Board of Members on the dissolution of the Representative Office.
Power of attorney for the company's filers.

Instructions to return the seal, confirm not to use the seal of the representative office

According to the Enterprise Law 2014, effective on July 1, 2015. In case representative offices have been established before this time, when completing the procedures to close the representative office, it is necessary to submit a dossier to return the seal or confirm the seal is not used with the police. We would like to advise a set of documents for customers as follows:

Official letter confirming no use / return seal.
Decision to dissolve Representative Office.
Meeting minutes of the Board of Directors / Board of Directors on the closure of Representative Office
Power of attorney, a referral for the company submitter.
Original seal registration certificate, seal in case you pay the seal.

Profile dissolution representative office

After completing the procedures for the code and the seal, the next job that the enterprise needs to do is to prepare papers and documents in the dossier set to close the representative office.

RO's profile that will include the following categories:

Notice of dissolution of RO (Download the form in Appendix II - Circular 20/2019 / TT-BKHDT HERE).
Decision of the Owner / Board of Directors / Business Owner / Board of Members on the closure of Representative Office. Or revocation decision of the competent state agency.
Minutes of the meeting of the Board of Directors / Shareholders' Council (if any).
Original certificate of representative office operation registration (can use a notarized copy).
Seal (if any) or Certificate of unused seal of the police agency.
Notice of tax termination.
Request for supplementing and updating operation registration information for representative offices issued with investment certificates (Download the form in Appendix II-19 of Circular No. 20/2019 / TT-BKHDT HERE).
Power of attorney / company referral for the applicant (FORM)
List of number of employees or their benefits in RO (if any).
List of debt amounts (including tax debt and social insurance debt) the business has not paid, a list of creditors (if any).

Submitting for closing representative office

When conducting the dissolution of a representative office, the enterprise needs to send a notice to the Business Registration Office where the representative office is located.

Next, businesses can apply through the following 2 ways:

Go directly to the business registration office where the representative office is located.
Submit online via website: https://dangkykinhdoanh.gov.vn/

Get results

From the time the registration office receives a valid application, it will take about 05 working days including: Examining the application => changing the status in the Database from registration of Representative Office to termination => out Notice of termination of Representative Office operation (if the application is valid).

In the event that the Registration Office checks the file and finds that there are errors or omissions, it will issue a Notice of amendment and supplementation of the file to the enterprise.

Notably

- Responsibilities for the employees: when wishing to dissolve representative offices, domestic or foreign traders need to give advance notice, fulfill the obligation to pay wages, terminate rental contracts, labor contracts ...

- With tax authorities: need to fulfill all tax-related obligations and procedures.

- If the RO has been suspended for more than 1 year but the business owner does not notify the Business Registration Office or the tax authority, then the certificate of operation registration will be revoked. To avoid the situation of being revoked, enterprises need to do temporary business suspension procedures for the representative office if they intend to suspend the business.

- In case the RO location is not in the territory of Vietnam, the enterprise should dissolve in accordance with the regulations of that country. Then, within 30 days, to notify dissolution of the representative office to the Business Registration Office where the head office is located.

Setting up a Representative Office (RO) is one of the first steps in founding your company in this newly emerged Southeast Asian market. How to set - up a Representative Office in Vietnam, especially in this Covid - 19 situation? This article will provide a cutting - edge starter-pack on how you’re going to set - up your company’s Representative Office.

READ MORE: Viettonkin Trade & Procurement Consulting service to help you set up your Representative Office in Vietnam

What is a Representative Office permitted to do and NOT to do ?

A Representative Office is enabled to engage in the following activities to help promoting its parent company:

Conducting market researches;
Playing as a contact point for its parent company;
Promoting the activities of its head office through meetings and other activities, that leads to business at later stages

Representative offices may not conduct any other profitable business. A RO does not have the right to sign a separate contract on its own. The parent company bears all financial obligations arising from the operations of the Representative Office, so the accounting of the RO is dependent on the enterprise.

Thus, in case of wanting to establish more dependent units only with the function of assisting the business to access customers and partners not performing business functions, you may consider establishing representative offices to avoid having to fulfill complicated tax obligations. In addition, for the service industries not directly implemented at the address of representative offices such as tourism, construction, consulting, etc., the form of setting up one in other provinces is a wise option.

In general, a Representative Office is allowed to perform almost all activities the parent company does except direct trading and profits generating, all types of contracts must be signed by the parent company or the Representative Office. It doesn’t have the authority to sign sale and purchase contracts, all invoices and trading documents must be returned to the head office.

What you need to set up a Representative Office ? (Latest update 2020)

READ MORE: IP laws and protection in Vietnam to find more about Vietnamese law !

Pre - license checklist for setting up a Representative Office

Application for establishment of representative offices of foreign companies in Vietnam;
The legalization of the consular and the public certificate of business registration or the equivalent valuable papers of foreign traders where the foreign trader' s establishment is established;
Written appointment of the parent company;
The notarized translation of the financial statement or the written certification of the fulfillment of the tax liability or financial liability in the latest fiscal year or the equivalent valuable paper issued by the competent agency or organization in the locality where the foreign trader is established or certified or proved;
A notarized copy of the ID card (for Vietnamese) or a copy of the passport (for foreigners) of the Chief representative;
Documents on the expected location, including:

Certified copying office contract;
The certificate of the land use right certificate of the lessor (if the enterprise is hired by the enterprise to provide additional business registration certificates);
In addition, the location of the representative office of the foreign company must conform to the provisions of Vietnamese law on security conditions, order and hygiene and other conditions as prescribed by law.

Note: the entire application dossier for shall be signed and stamped by the parent company. If the parent company in foreign countries has no marks, the whole dossier must be consular legalized.

Post – licenses check-list for establish representative office in Vietnam

Once submitting your application for license, you can start arranging staffs, taxes, annual reports. Apart from those, other basic operations of a representative office, including:

Foreign currency account and VND accounts with foreign currency origin at banks licensed to operate in Vietnam. Only use this account for RO activities;
Annually written report on its activities during the year to the Department of Industry and Trade;
Set up a cash fund to record all revenues and expenditures during the operation of the RO;
Apply for a work permit for the foreign worker at the RO (if any);
Signing labor contracts with the representative and the employees of the RO;
Annually certifying the salary and income for the chief representative and the operations of the representative office;
Pay personal income tax, representative's insurance and representative office employees (if any).
- Note, when submitting all tax returns and tax receipts from state agencies. Plus, annual income tax finalization for the representative and the employees of the representative office;
Other duties in accordance with the current law;

What’s next ?

The Business Registration Office shall issue the RO operation registration certificate to your company. It usually takes 03 working days since receipt of a valid application.
Within 30 days after being granted the RO operation registration certificate, you should publish your RO operation registration information on the National Business Registration Portal.

How long does it take to establish representative office in Vietnam?

It can take from six to eight weeks in total, including getting a main license, operating license and stamp. We recommend hiring a professional service to deal with the laws and procedures.

Thanks to the absence of in-country revenue and associated licensing requirements, the setup process does not entail as many bureaucratic procedures as others.

A Representative Office license is valid for five years but can be extended for another five years.

To sum up, above are the very first guidelines to establish representative office in Vietnam. Once you get the basic principles of the Vietnamese RO establishing process, it can be much more simple. Our Viettonkin legal specialists are always ready to support you with any procedure, license and certification. If you come across any obstacle, feel free to contact us below. Viettonkin will always be ready to give you a helping hand !

A Limited Liability Company (LLC) according Enterprise Law Vietnam can be set up with only one shareholder who can be of any nationality other than Vietnam. Normally, setting up LLC is believed to be simpler compared to large corporations thanks to smaller scale (up to 50 members), so that investors usually consider this as a worthy choice. Therefore, in this following article we will provide you with a checklist to establish a LLC according Enterprise Law Vietnam in this article.

Overview of Limited Liability Company in Vietnam

Is one of the four types of enterprises in which domestic and foreign investors are allowed to do business in Vietnam under Vietnam's Enterprise Law.
Can be totally or partially foreign-invested.
Is simpler to set up as compared to a large corporation in Vietnam.
Is a legal entity formed from the capital contribution of each member to the company. The number of members must not be over 50.
Especially, an LLC member's liability for the company's financial obligations will depend on his/ her share of the equity, not their personal property.
Investors must do their due diligence to work out the acceptable market entry option suitable to their appropriate business lines and specific requirements.

So, a Limited Liability Company in Vietnam is formed based on the capital contributions of its members. Capital contribution refers to the entire assets contributed to constituting the charter capital of the corporate .

Therefore, a Limited Liability Company’s shareholder can take part in the whole growth of the corporation while their liability and financial obligations are restricted to the quantity of investment they contributed to the company’s charter. (Related article: Limited Liability)

Similarly, just in case of a one-member or single-member indebtedness company, this structure has just one member who is additionally the corporate owner. For this reason, this person must be responsible for all relevant debts and obligations of the corporate to the extent of his/her capital contribution to the corporate .

READ MORE: The Global Company Registration to find out how Viettonkin can help globalize your business.

How to set up a Limited Liability Company?

In 2021, Enterprise Law Vietnam has a lot of preferential investment policies in various economic sectors in Vietnam for foreign investors.

Accordingly, Enterprise Law Vietnam, when conducting investment to establish a company in Vietnam, foreign investors need to learn and grasp the provisions of the current law to ensure the most optimal conditions when investing and doing business in Vietnam.

With the desire to best support legal procedures, tax for foreign investors to set up foreign invested companies in Vietnam, Viettonkin Consultant provide the process details to establish a foreign-invested LLC as follows:

Corporate structure

Member’s council: This is often the body with the very best position for creating decisions of the corporate. It is mandatory that the Member’s council must hold a minimum of one meeting per annum .
The chairman of the Member’s council: An LLC has the duty to select a member to become the council’s chairperson who can be the director or general direct of the company. Note that the applicable tenure of the chairperson is within a period of 5 years.
Director/Director General: Main responsibilities of director/director general is to manage daily business operations of the indebtedness company, also as hold the liability for his/her exercise of rights to the Members’ Council.
Supervisory Board: If your multi-member LLC in Vietnam is a state enterprise or a subsidiary of a state enterprise in Vietnam, then you must establish a Supervisory Board as stipulated by Article 54, Law on Enterprise 2020. Other circumstances on whether this Board should be formed or not is at the discretion of the LLC itself.

Registration Process

In general, you are required to go through the following procedures to set up your Limited Liability Company:

Investment Registration Certificate (IRC) application

IRC application check-list:

Investment project number.
Name and address of the investor.
Name of the investment project.
Objective and scale of the investment project.
Location of the investment project; area of land used.
Investment capital of the project (including investor's contributed capital and raised capital), capital contribution and mobilization schedule.
Duration of the project.
Investment project execution schedule: capital construction progress and work put into operation (if any); The progress of implementing the main objectives and main items of the project, if the project is implemented in phases, must specify the objectives, duration and contents of each stage.
Investment incentives and supports and bases and conditions for application (if any).
Regulations for investors implementing projects.
Conditions for investors to implement the project (if any).

Business sectors that need sub-licenses are travel (international/domestic business license), printing (printing operation license) and security (certificate of social security), among others.

Enterprise Registration Certificate (ERC) application

ERC application check-list:

An application for enterprise registration;
Enterprise's regulations;
List of company members, for limited liability companies with 2 or more members;
ID card or passport of a limited liability company member;
Certificate of Business Registration / Business Registration Certificate for members who are organizations and accompanied by personal identification papers, the authorization decision of the authorized representative organization's.
Capital contribution decisions.
List of authorized representatives (for members who are organizations);
An investment registration certificate for the investor has been issued.
Other documents in special cases;

After a business is legally registered, an ERC is going to be issued by a business registration agency. An ERC may be a document, often softcopy or hardcopy, that contains information on enterprise registration.

Documents and payments submission for post license requirements

Opening a checking account , paying for business taxes, contributing to charter capital, ordering e-invoice, providing e-signature and company stamp, etc.

What’s next?

Arring staff, tax, and annual reporting . You need to register hired employees with the social insurance department.

Foreign employees also will get to have the specified work permits to figure in Vietnam. This may take longer as Vietnam’s borders remain closed, however, this is still possible and we Viettonkin can assist you in acquiring the needed documents and entry permits.

You have to pay the business license tax. They are also subject to corporate tax (CIT), VAT (VAT), and private tax (PIT). Depending on the line the corporate could also be eligible for CIT reductions within the first years of operation.

Limited liability companies are required to undertake tax audits that checks all revenues and expenses during the tax term to determine payable taxes.

How long does it take?

The whole registration process can take 2 - 3 months in total. However, the time may slightly vary depending on the business activities or sectors and completeness of documents. We recommend finding support from a consulting agency to assist you in the whole process.

To sum up, setting up a foreign-owned limited liability company in Vietnam requires some procedure a bit more complicated than a company with local capital and takes some time to prepare. However, everything will become easier if you understand the whole process of establishing a new business in this promising country. Viettonkin hopes that this information will assist you in any cases. Do not hesitate to contact us if there are any difficulties, Viettonkin is here to help!