Similar to the current regulations, foreign trade promotion organizations (except for foreign traders) must establish representative offices if they wish to carry out trade promotion activities in Vietnam.
Requirements for establishment of representative offices in Vietnam of foreign trade promotion organizations are basically similar to the earlier requirements. However, under this Decree, they must also register personnel with a licensing authority. Under the earlier regulations, they are only required to register heads of the representative offices (Article 24).
In addition, this Decree also supplements cases in which the application for establishment of representative offices in Vietnam is rejected. Accordingly, the application for establishment of a representative office in Vietnam of any foreign trade promotion organizations that are on the United Nations Security Council sanctions list shall be rejected (Article 26).
Cases in which the representative office establishment license is revoked is also specified in Article 33, such as: The representative office fails to officially come into operation within 06 months or has shut down its operation for 06 consecutive months without notifying the licensing authority or violates Vietnam’s labor laws so seriously that it faces criminal charges.
This Decree takes effect from the date of signing and replaces Decree No. 100/2011/ND-CP dated October 28th, 2011.
However, in the case a foreign representative office pays flat expenses of gasoline according to a monthly fixed level in order to serve individuals' traveling rather than serving their business trips, these flat expenses of gasoline shall not be exempt from PIT.
Accordingly, in the case a foreign representative office which is only in charge of communication, market research, promotion of business and investment opportunities in Vietnam rather than performing any manufacture, business activities in Vietnam, it must not pay value added tax, enterprise income tax, licensing fee in Vietnam. However, the representative office must carry out the tax registration for obtaining withholding TIN as prescribed in Clause 1 Article 24 of Circular No. 111/2013/TT-BTC and Clause 3c Article 5 of Circular No. 95/2016/TT-BTC in order to withhold, pay personal income tax on behalf of its employees and to withhold, pay withholding tax on behalf of foreign contractors, foreign sub-contractors (if any).
Official Letter No. 876/BTC-TCT - Regarding tax obligation of a foreign representative office ( 19-Jan-2017) According to this Official letter, in the case a foreign representative office is solely confined to the business promotion rather than business operation; it is a dependent accounting unit and receives finances from its parent company outside Vietnam for its operation, this Representative office shall only carry out the declaration, payment of PIT for individuals working at the office. It is exempt from VAT, EIT, etc. and shall not make cost accounting of and declare input invoices.
Accordingly, fees for new issuance of license is VND 3,000,000 /license and fee for re -issuance, modification or renewal of license is VND 1,500,000/license. The foreign trade promotion organizations or foreign traders must pay the fees in Vietnamese Dong (VND).
This Circular takes effect from January 1st, 2017. To replace Circular No. 133/2012/TT-BTC dated August 13th, 2012 and Circular No. 187/2012/TT-BTC dated November 7th, 2012.
Thus, a representative office does not have its own legal status; it is not allowed to perform an investment project in Vietnam
With regard to goods brought into bonded warehouses, in the case the goods owner does not directly carry out customs procedure and perform permissible services in the bonded warehouse for the goods brought into therein, he/she may authorize a customs broker to carry out according to Article 83 of Decree No. 08/2015/ND-CP.
Accordingly, in the case a representative office of a foreign company which is a non-business organization liquidates machinery, office equipment to its partners in Vietnam, it must not declare and pay VAT; tax office shall not provide unbounded invoices for this case.