Legal foundations:

• Law on Enterprises 2020;
• Law on Commerce 2005;
• Decree 07/2016/ND-CP detailed regulations on the establishment of Representative Offices or Branches of foreign traders in Vietnam under Law on Commerce.

1. Overview of Branch

1. Operation of Branch

Clause 1 Article 44 of Law on Enterprises 2020 provides that “A branch of an enterprise is its dependent unit which has some or all functions of the enterprise, including functions of authorized representative. The business lines of branch must match those of the enterprise”.

Clause 7 Article 3 of Law on Commerce 2005 provides that “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”.

Therefore, Branches of foreign companies in Vietnam are permitted to engage in the following activities:

• To rent offices, rent and purchase equipment and facilities necessary for their operations;
• To recruit Vietnamese and expatriate employees to work;
• To enter into contracts in Vietnam in compliance with their operation contents specified in their establishment licenses;
• To open Vietnam dong accounts and foreign-currency accounts at banks licensed to operate in Vietnam;
• To transfer profits overseas;
• To conduct activities of goods purchase and sale and other commercial activities in compliance with their establishment licenses.

Note: Branch is a dependent unit of an enterprise, so there is no legal status.

2. Obligations of foreign trader with its branches
   • Foreign traders must be responsible before Vietnamese law for all operations of its branches in Vietnam;
   • The head of branches shall be responsible for his/her action and the operation of the branch to his/her head office within the scope of power of attorney.
   • The head of branches shall be responsible for his/her action outside the scope of power of attorney.
   • Every foreign trader closing branches shall fulfill obligations to contracts and debt settlement including outstanding taxes and legal benefits of employees working for such branches in compliance with provisions of laws.

2. Requirements for granting of Branch Establishment License 

Firstly, the foreign trader shall be granted Branch Establishment License if they satisfy the following requirements:

• The foreign trader is incorporated and registers for doing business in accordance with provisions of laws of countries or territories being parties to treaties to which Vietnam is a signatory or is recognized by the aforesaid countries or territories such as USA, UK, Australia, China, Korea, Japan...;
• The foreign trader has come into operation for at least 05 years from the date of establishment or registration;
• 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 and is consistent with lines of business of the foreign trader such as WTO, TPP and EVFTA; In case it is inconsistent, the branch can be established only if they obtain the prior consent of the relevant Minister for the establishment of the branch.

Secondly, the branch’s head of a foreign trader must satisfy the following conditions:

• If the person appointed as Branch Director is a foreigner, in some case, he/she must apply for a work permit before working in Vietnam.
• The head of a branch shall not concurrently hold the following titles:

• The head of a representative office of other foreign traders;
• The head of a representative office of the same foreign trader;
• The legal representative of a business organization incorporated under Vietnamese law.

3. Applications for Branch Establishment License 

1. An application form for a Branch Establishment License signed by a competent representative of the foreign trader;
2. Copies of the Business Registration Certificate or equivalent documents of the foreign trader;
3. A decision of the foreign trader on appointment of the head of the branch;
4. Copies of audited financial statements of the last fiscal year of foreign trader;
5. Copies of the branch charter;
6. Copies of the passport or ID card (for Vietnamese) or copies of the passport (for foreigners) of the head of the branch;
7. Documents on the expected location of the branch including:
   • Copies of memorandum of understanding (MOU) or leasing agreements;
   • Copies of documents on the expected location of the branch.

Note: Documents specified from section 2 to section 5 shall be translated into Vietnamese and certified true in accordance with Vietnamese law. Documents specified in section 2 shall be certified or legalized by overseas diplomatic missions or Consulates of Vietnam in accordance with Vietnamese law.

4. Orders and procedures for grant of Licenses for Branch Establishment License

Step 1: Submit the application

The foreign trader shall submit their application and dossiers to the licensing agency where the representative office is expected to be located directly (The Department of Industry and Trade of the province) or by post or online (where applicable).

Step 2: Receive and examine the application

Within 03 working days from the receiving date of the application, the licensing agency shall examine such application and request the applicant to complete their application if it is incomplete. The request for supplementation shall be made only once during the processing of such application.

Step 3: Grant of Branch Establishment License

Within 07 working days from the receiving date of the valid application, the licensing agency shall send the applicant a written notification of whether the Branch Establishment License is granted or not. In case of rejection, the licensing agency shall send the applicant a written notice in which reasons for rejection shall be specified.

5. Time limit on Branch Establishment License

The Branch Establishment License shall be valid for 05 years and can be extended for another 05 years.

The above is the advice of Phong & Partners on “Requirements, orders and procedures for setting up a branch of a foreign company in Vietnam”. If you need specific support on the procedure for setting up a branch in Vietnam, please contact Phong & Partners through the information below to be consulted by a team of professional lawyers.

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