Registering branches or representative offices is an essential step for businesses looking to expand into new markets or strengthen their presence. This process ensures compliance with local regulations and establishes a legal framework for operations.
Legal basis
- The Law on Enterprise 2020;
- Decree No. 01/2021/ND-CP on enterprise registration.
What is a branch of an enterprise?
A branch office is a direct extension of an enterprise that that allows it to operate in a new geographic region while maintaining direct control over its activities. They are commonly used for expanding market presence, providing customer support, or handling sales and distribution in foreign or regional markets.
Definition
Pursuant to Clause 1, Article 44 of the 2020 Enterprise Law,
“1. Branch of an enterprise is a dependent unit of the enterprise, having the task of performing all or several of the functions of the enterprise, including the function of authorized representation. The branch’s business lines must be the same as those of the enterprise.”
A branch is a unit under an enterprise, a branch is established for the purpose of expanding the scale and business market of the enterprise.
An enterprise may establish its branches in Vietnam and overseas. And there is no limitation on the number of branches an enterprise can establish in one locality by administrative boundary. Depending on the capacity and business needs, an enterprise can register to establish branches with an appropriate number.
Key characteristics
Names of branches
The name of branches of an enterprise must consist of the name of the enterprise accompanied by the words “Chi nhanh”, pursuant to Clause 2, Article 40 of the 2020 Enterprise Law. Thus, the structure of the branch name will include the following elements:
- The phrase “Chi nhanh”;
- Type of business;
- Business name of the enterprise.
Names of branches shall be shown at the offices of these branches and shall be printed or written in a font size smaller than that of the enterprise’s Vietnamese name on transaction papers, dossiers, documents and printed matters issued by the branch.
Business lines
According to Clause 1, Article 44 of the 2020 Enterprise Law, the branch’s business lines must be the same as those of the enterprise
Branches can register less than or equal to the number of business lines of the enterprise but must not register business lines that the enterprise has not registered.
In case an enterprise wants to establish a branch to conduct other business lines, the enterprise must carry out procedures to add additional business lines.
Tax obligations
Identification numbers of affiliated units of enterprises shall be issued to branches and representative offices of enterprises. Such identification numbers also serve as tax identification numbers of branches and representative offices.
A branch is a dependent unit of an enterprise, without legal status. When registering for branch operations, businesses can choose the form of accounting, including: Independent accounting or dependent accounting.
Simply put, independent accounting means that all financial activities (including tax obligations) arising at the branch are recorded in the accounting books at the unit, self-declared and submitted for tax finalization.
For dependent accounting, the branch must compile and compile documents to send to the enterprise for the enterprise to declare and finalize taxes.
Depending on the registration of the accounting form, the branch can declare taxes themselves or have the business declare taxes.
What is a representative office of an enterprise?
A representative office is a business entity that serves as an extension of a company in a foreign market, primarily focused on market research, promotion, and supporting business activities. Unlike branch offices, representative offices are not permitted to engage in direct profit-generating activities.
Definition
Clause 2, Article 44 of the 2020 Enterprise Law stipulates that: “Representative office of an enterprise is a dependent unit of the enterprise, having the task of representing under authorization the interests of the enterprise and protecting such interests.”
In general, representative offices are prohibited from directly engaging in profit-generating production or business activities. Their primary role is to conduct market research, promote, and support the business operations of the entity they represent. This key difference sets representative offices apart from branches.
Key characteristics
– There is no limitation on the number of representative offices that an enterprise can establish in one locality by administrative boundary.
– The representative office does not have legal person status. One of the conditions for an organization to be considered to have legal person status is to independently participate in relationships on its behalf, but all activities of the representative office depend on the business and through authorization. , therefore, representative offices do not participate in legal relations in an independent capacity, so they are not considered to have legal person status.
– Representative offices do not have business functions but only perform tasks authorized by the enterprise. Accordingly, representative offices are not allowed to directly do business, are not allowed to sign economic contracts with the representative office’s seal, but still sign contracts under the authorization of the enterprise that opened the representative office. and stamp the business’s seal.
– The organizational structure of the representative office will be decided by the enterprise and operate according to the permission of the enterprise.
– Financial obligations from representative office operations will depend on the business and be fully paid by the business.
Names of representative offices
The name of representative offices must consist of the name of the enterprise accompanied by the words ”Van phong dai dien”, pursuant to Clause 2, Article 40 of the 2020 Enterprise Law.
Names of representative offices shall be shown at the offices of these representative offices and shall be printed or written in a font size smaller than that of the enterprise’s Vietnamese name on transaction papers, dossiers, documents and printed matters issued by the representative office.
Function of representative offices
The representative office may not perform the business function of the enterprise but can still sign contracts according to the authorization of the business.
The scope of authorization is decided by the company’s at-law representative. And in any circumstances, the company has the right to cancel the authorization to the head of the branch or representative office. When a branch or representative office signs some contracts or performs some work that requires the company’s permission, the head of the branch or representative office must present a written authorization from the company.
Tax obligations
Representative offices of enterprises that produce and trade goods and services must pay license tax. On the contrary, representative offices of enterprises that do not produce or sell goods or services do not have to pay license tax.
In addition, representative offices do not have business functions, resulting in no value-added tax and corporate income tax like other types of businesses. However, representative offices that employ employees and employees may incur personal income tax in case the salary qualifies for personal income tax.
Dossiers for registration of branches and representative offices
An enterprise shall submit a dossier of registration of a branch or representative office at the business registration division of the locality where the branch or representative office is based.
The dossier must comprise:
- A notice of the establishment of branch or representative office, signed by the enterprise’s at-law representative;
- A copy of the resolution or decision and a copy of the minutes of the meeting of the Members’ Council, for a limited liability company with two or more members or a partnership, or of the Board of Directors, for a joint stock company; or the resolution or decision of the company owner, for a single-member limited liability company, on the establishment of the branch or representative office;
- A copy of the legal paper of the head of the branch or representative office.
- For individuals with Vietnamese nationality: Identity card or passport;
- For individuals with foreign nationality: Temporary residence registration certificate issued by competent Vietnam authorities, Work permit and passport.
Procedures for registration of branches and representative offices
Step 1: Prepare documents.
Prepare a dossier as mentioned above.
Step 2: Submit application
An enterprise can choose to submit the dossier directly to the Business Registration Office or online through the website of the National Business Registration Portal.
Step 3: Process the dossier
- Within 3 working days after receiving a valid dossier, the business registration division shall grant a certificate of registration of operation of a branch or representative office.
- In case the dossier is invalid, the business registration division shall notify the enterprise in writing of contents that need to be revised.
Step 4: Issue branch and representative office establishment certificate
After the application is submitted and accepted, the Business Registration Office will issue a Certificate of branch operation registration.
Note:
The establishment of overseas branches or representative offices of enterprises must comply with the laws of host countries.
Within 30 days after officially establishing an overseas branch or representative office, an enterprise shall send a notice to the business registration division of the locality where its head office is based. The notice must be enclosed with a copy of the certificate of registration of operation of the branch or representative office or paper of equivalent validity.
The business registration division shall update information on the enterprise’s branch or representative office in the national business registration database within 3 days after receiving the notice.
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