Search
Table of Contents
Establishing a branch of foreign traders is a common practice to expand business activities and enhance presence in the rapid development of the Vietnamese market. This allows foreign traders to access local markets and customers, thereby increasing business opportunities and expanding their business networks. According to Vietnamese law, foreign traders must comply with the regulations regarding the registration and operation of branches in Vietnam prior to commencing their business.
Below is a comprehensive guide on how to establish a branch of foreign traders in Vietnam:
What Are Branches Of Foreign Traders In Vietnam?
A foreign trader is understood to be an enterprise established and operated under the laws of a foreign country (a country other than Vietnam) and engaged in business and commercial activities. Commercial activities are activities aimed at generating profit, including the purchase and sale of goods, provision of services, investment, trade promotion, and other profit-oriented activities.
A branch of foreign traders in Vietnam is a dependent unit of foreign traders established and operated commercially in Vietnam in accordance with Vietnamese law or international treaties to which the Socialist Republic of Vietnam is a party. A branch is not a legal entity but a dependent unit of foreign traders, so the scope of the branch’s activities will be limited.
Specifically, a branch of foreign traders has the following rights:
- Rent headquarters, lease, or purchase necessary means and equipment for the operation of the branch.
- Recruit Vietnamese and foreign employees to work at the branch following Vietnamese law
- Enter contracts in Vietnam in accordance with the content specified in the branch's establishment license and Vietnamese law
- Open accounts in Vietnamese Dong and foreign currencies at banks authorized to operate in Vietnam
- Transfer profits abroad per Vietnamese law
- Have a seal bearing the branch's name in accordance with Vietnamese law
- Engage in the purchase and sale of goods and other commercial activities consistent with the branch's establishment license and the relevant international treaties to which Vietnam is a party
- Exercise other rights as prescribed by law
Conditions For Granting A License To Establish A Branch Of Foreign Traders
Foreign traders will be granted a license to establish a branch upon meeting the following conditions:
- Foreign traders are established and registered under the law of the country or territory that is a member of an international treaty to which Vietnam is a party or recognized by the law of these countries or territories.
- Foreign traders have been in operation for a minimum of five years from the date of establishment or registration
- If the business registration certificate or equivalent document of the foreign traders specifies an operational duration, this duration must be at least one year from the date of filing
- The scope of activities of the Branch must be consistent with Vietnam's market access commitments under international treaties to which Vietnam is a member
- Instances in which the scope of activities of the Branch is not consistent with Vietnam's commitments, or if the foreign trader is from a country or territory that is not a party to an international treaty to which Vietnam is a member, the establishment of the Branch must be approved by the Minister or the Head of the relevant specialized management agency
Steps To Apply For A License To Establish A Branch Of Foreign Traders
The business activities of a branch will be based on Vietnam’s commitments to market access under the WTO, relevant international treaties, and Vietnamese law. Therefore, the complexity of the steps to apply for a license to establish a branch will be similar to that of establishing a foreign-invested enterprise.
Foreign traders wishing to apply for a license to establish a branch need to follow these steps:
Step 1: Preparation of Application Documents
Foreign traders must prepare the following documents to apply for a license:
- Application form for a branch establishment license;
- A copy of the foreign traders’ business registration certificate or an equivalent document;
- Documentation on the appointment of the head of the branch by the foreign traders;
- A copy of audited financial statements or a document confirming the tax or financial obligations fulfilled in the most recent financial year, or an equivalent document issued by a competent authority of the country where the foreign trader is established, proving the existence and operation of the foreign Traders in the previous financial year;
- A copy of the branch's operational charter;
- A copy of the passport, identity card, citizen identification card (if Vietnamese), or a copy of the passport (if a foreigner) of the branch head;
- Documents related to the proposed branch office location, including:
- A copy of the memorandum of understanding or lease agreement for the location or documents proving the right to use the location for the branch office;
- A copy of documents on the proposed branch office location, meeting Vietnamese legal regulations on security, order, and labor safety.
Note:
- The copy of the business registration certificate or equivalent document of the foreign traders must be certified or legalized by the diplomatic representative office or consulate of Vietnam abroad, translated into Vietnamese, and authenticated in accordance with Vietnamese law.
- Items 3, 4, 5, and 6 (should the branch head's passport being a foreign document) must be translated into Vietnamese and authenticated as prescribed by Vietnamese law.
Step 2: Application Submission
After preparation all the documents in Step 1 has been completed, the application is submitted to the Ministry of Industry and Trade via:
- Direct submission; or
- Postal service; or
- Online submission (if eligible)
Step 3: Application Processing
Within three (3) business days from the date of receipt of the application, the Ministry of Industry and Trade will review and request supplementation if the application is incomplete or invalid. The request for additional documents may only be made once during the entire processing period.
Within seven (7) business days from the date of receipt of a complete and valid application, the Ministry of Industry and Trade will grant or refuse to grant the license for branch establishment to the foreign trader. A refusal, the will be followed up by a letter, from the Ministry, clarifying the reasons.
Note:
If the branch’s activities do not align with Vietnam’s commitments or the foreign traders are from a country or territory not party to an international treaty that Vietnam is a member of, the Ministry of Industry and Trade will send a document seeking opinions from the relevant sectoral management ministry within three (3) business days from the date of receiving a valid application.
Within five (5) days from the date of receipt of the Ministry of Industry and Trade’s letter, the sectoral management ministry will issue a written response on whether or not the branch establishment license will be granted.
Within five (5) business days from the date of receipt of the written opinion from the sectoral management ministry, the Ministry of Industry and Trade will grant or refuse to grant the branch establishment license to the foreign Traders. If not granted, a written explanation will be provided.
Thus, if the branch establishment falls into the above circumstances, the duration for granting a branch establishment license for foreign traders will be longer than in “normal” situations.
Duration Of The Branch Establishment License For Foreign Traders
The branch establishment license for foreign traders is valid for five (5) years, but the validity period shall not exceed the remaining term of the foreign traders’ business registration certificate or equivalent document if such a document specifies a term.
For example: if foreign trader A has a business registration certificate with a remaining term of four (4) years, the branch establishment license for trader A will be issued with a maximum term of four (4) years, not five (5) years as per the regulation.
Foreign traders may extend the branch’s operational term in Vietnam multiple times, with each extension being equal to the term of the previously issued license.
Vietnam’s Legal Requirements For Branch Operations
In addition to meeting the conditions for a branch establishment license, the branch must also comply with certain requirements during its operation:
- Scope of Operations: The branch's business activities must align with the activities of the foreign traders.
- Annual Reporting: The branch must submit a report of its activities of the previous year to the Ministry of Industry and Trade before January 30th each year
- Compliance with Vietnamese Laws: The branch must comply with local labor laws, tax obligations, and other legal requirements
- Restrictions for the Branch Head: The branch head is not allowed to concurrently hold the following positions:
- Head of the representative office of other foreign traders;
- Head of the representative office of the same foreign traders;
- Legal representative of an economic organization established under Vietnamese law.
- Each foreign trader is allowed to establish a maximum of one branch within the scope of a province or centrally run city in Vietnam.
These are the steps for establishing a branch of foreign traders in Vietnam. For further advice or specific support regarding setting up a branch in Vietnam, please contact us using the information below for a prompt response.
Leave A Comment