How to set up a branch office of a foreign company in Vietnam?

In the process of international integration today, businesses are trending towards development in the territory of a single country or region and many countries. The establishment of a branch office of a foreign company in a different country needs to comply with the provisions of local law. In Vietnam, foreign traders need to be eligible under the provisions of Vietnamese law to perform business activities.

Who are the foreign traders?

Under the provisions of Article 16 of the 2005 Commercial Law:

“Foreign traders mean traders established and making their business registrations according to the provisions of foreign laws or recognized by foreign laws.”

Branch office of foreign traders in Vietnam?

Under the provisions of Clause 7, Article 3 of the 2005 Commercial Law: “Vietnam-based branch of a foreign trader means a dependent unit of the foreign trader, which is established and conducts commercial activities in Vietnam under the provisions of Vietnamese law or treaties to which the Socialist Republic of Vietnam is a contracting party.”

How to set up a branch office of a foreign company in Vietnam?

Requirements for grant of Licenses for the establishment of branch offices

Under the provisions of Article 8 of Decree 07/2016/ND-CP detailing the Commercial Law regarding Representative offices and Branches of foreign traders in Vietnam:

“Foreign businesses shall be granted Licenses for Establishment of branches if they satisfy the following requirements:

1. The foreign trader is incorporated and registers for doing business following provisions of laws of countries or territories being parties to treaties to which Vietnam is a signatory or is recognized by the countries described above or territories;

2. The foreign trader has come into operation for at least 05 years from the date of establishment or registration;

3. The Certificate of Business registration or equivalent document is valid for at least 01 more year from the date of submission of the application;

4. The scope of operation of the branch is conformable with Vietnam’s Commitments to market access stipulated in treaties to which Vietnam is a signatory shall be consistent with lines of business of the foreign trader;

5. Where the businesses of the branches are inconsistent with Vietnam’s Commitments or the foreign trader is not located in one of the countries or territories being parties to treaties to which Vietnam is a signatory, the branches can be established only if they obtain the prior consent of the relevant Minister for the establishment of the units”.

A business line of the company must be suitable and allowed to establish a branch presence in Vietnam. Traders should note conditions 2 and 3 to consider if the business can meet the conditions set branch office or not.

Applications for Licenses for the establishment of branch offices

Under the provisions of Article 12 of Decree 07/2016/ND-CP detailing the Commercial Law regarding Representative offices and Branches of foreign traders in Vietnam:

“1. An application for the license for establishment of the branch of a foreign trader shall include:

a) An application form for a license for establishment of the branch and signed by a competent representative of the foreign trader;

b) Copies of the Certificate of Business Registration or equivalent documents of the foreign trader;

c) A letter of appointment of the head of the branch;

d) Copies of audited financial statements or certificates of the fulfillment of tax liabilities or financial obligations of the last fiscal year or equivalent documents as proof of existence and operation of the foreign trader issued or certified by competent authorities where such foreign trader is established;

đ) Copies of the branch charter;

e) Copies of the passport or ID card (for Vietnamese) or copies of the passport (for foreigners) of the head of the branch;

g) Documents on the expected location of the branch

2. Documents specified in points b, c, d, and dd, Article 1 hereof (for the head of the branch being foreigners) shall be translated into Vietnamese and certified accurately following the laws of Vietnam. Documents specified in point b, clause 1 of this Article shall be approved or legalized by overseas diplomatic missions or Consulates of Vietnam following directions of Vietnam”.

Procedures for Licenses for the establishment of a branch of a Foreign Company

Under the provisions of Article 13 of Decree 07/2016/ND-CP detailing the Commercial Law regarding Representative offices and Branches of foreign traders in Vietnam:

“1. The foreign trader shall submit their application to the licensing agency where the branches are expected to be located directly or by post or online (where applicable).

2. The licensing agency shall examine such an application and request the applicant complete their application within 03 working days from the date of receipt of the application (if the application is incomplete). The request for supplementation to the application shall be made only once during the processing of such an application.

3. The licensing agency shall send the applicant a written notification of whether the license or establishment of the branch is granted or not within 07 working days from the date of receipt of the valid application”.

4. For those specified in clause 5, Article 8 hereof and the establishment of branches that technical legislative documents have not prescribed, the licensing agency shall submit a written request for directions to the relevant Ministry within 03 working days from the date of receipt of the valid application. Within 03 working days from the date of receipt of the request for directions from the licensing agency, the relevant Ministry shall submit the licensing agency a written notification of whether or not they approve the application for the License for the Establishment of the branch. Within 05 working days from the date of receipt of the notification from the relevant Ministry, the licensing agency shall send the applicant a written notice of whether the License for Establishment of the representative office is granted. In case of rejection, the licensing agency shall send the applicant a written message to specify reasons for rejections”.

The Power to grant Licenses for the establishment of branch office

Foreign traders prepared the entire record and submitted it to the Department of Industry and Trade of the province where the intended headquarters was.

The Department of Industry and Trade of the province shall have the power to grant the License for the Establishment of branches in case the establishment of such units has not been prescribed by technical legislative documents.

The Duration to grant Licenses for the establishment of branch office

07 working days from the date of receipt of the valid application.