Setting Up a Representative Office and a Branch Office in Vietnam: A Comparison

Entering Vietnam’s dynamic market through a local presence often begins with establishing a Representative Office (RO) or a Branch Office (BO). Both structures allow foreign companies to expand their footprint, but they differ significantly in permitted activities, compliance obligations, and strategic value. 

This blog explains the legal framework, setup procedures, regulatory requirements, and comparative advantages of a Representative Office and a Branch Office in Vietnam.

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Definitions and Legal Basis

Vietnam’s Law on Enterprises and Decree No. 07/2016/ND-CP govern the establishment and operation of foreign-dependent units:

• A Representative Office is a dependent entity of the parent company, authorized only to conduct non-profit activities such as market research, promotional events, and liaison tasks. It cannot generate revenue or sign commercial contracts.

• A Branch Office is a dependent unit engaging directly in permitted business functions—manufacturing, trading, or services—under the parent company’s charter. Branches share full liability with the parent and must register for tax and accounting purposes.

Eligibility Requirements

Representative Office

• The parent company must be a legally established and operating entity in its home jurisdiction for at least one year.
• The intended RO’s functions must comply with Vietnam’s WTO commitments and industry-specific regulations.
• A physical lease agreement for office premises in Vietnam is required.
• Appointment of a Chief Representative—a foreigner or Vietnamese national—who cannot concurrently lead other onshore entities.

Branch Office

• The foreign parent company must be legally registered and in operation for at least one year or meet sector-specific criteria.
• The branch’s business scope must align with the parent company’s charter and Vietnamese investment commitments.
• No minimum capital requirement, but the branch must register a unique tax code derived from the parent’s tax ID (e.g., parent code–001 for the first branch) and appoint a legal representative.

A general overview of permitted business activities under each structure is detailed below:

Feature	Representative Office	Branch Office
Profit Generation	Prohibited	Permitted within registered business lines
Contract Signing	Not authorized	Authorized
Invoice Issuance	Not required	Required
Tax Registration	Employer tax only	Full corporate tax obligations
Business Licence Tax	Exempt	Payable
Employee Hiring	Can recruit support staff	Can recruit for full business operations
Scope Flexibility	Restricted to promotion and liaison	Broad, as per parent company’s charter

Application Procedures

Representative Office

Document Preparation: Gather and legalize the following documents:

• Application Form (Form MĐ-1) signed and sealed by the parent company.
• Parent company’s legalized Business Registration Certificate or Incorporation Certificate.
• Letter of Appointment for Chief Representative and their notarized ID/passport copy.
• Lease agreement for office premises.
• Parent company’s charter and latest audited financial statements, translated and notarized.

Submission: File the complete dossier with the Department of Industry and Trade (DOIT) of the host province or the Management Board of Industrial Zones if located therein.

Review and Approval:

• Within 03 working days, authorities will request any missing information.
• Upon completeness, they issue the Representative Office License within 07 working days.

Post-License Compliance:

• Register the office seal with local police.
• Obtain a tax identification number for employer obligations and business license tax.
• Open VND (and optionally foreign currency) bank accounts.

Timeline: Approximately 6–8 weeks, accounting for document legalization and procedural follow-ups.

Branch Office

Document Assembly: Prepare the following:

• Application for branch establishment.
• Parent company’s legal documents (certificates, charters, financial statements).
• Appointment letter of the branch’s legal representative and their ID.
• Proof of office premises.

Submission: Apply at the Business Registration Office under the provincial Department of Planning and Investment (DPI).

Approval: The DPI issues a Branch Registration Certificate within 03 working days of a valid dossier.

Tax and Accounting:

• Register the branch’s tax code (parent code + suffix).
• Comply with corporate income tax (20%), VAT, and social insurance obligations.

Timeline: 4–6 weeks on average, with no registration fees for domestic branches

Read Related:

• Investment Registration Certificate (IRC) in Vietnam: Complete Insights for Investors
• Obtaining an Enterprise Registration Certificate (ERC) for Company Setup in Vietnam

Compliance and Reporting

Representative Office

A significant advantage of setting up a Representative Office in Vietnam is the relatively low setup cost, with no requirement for charter capital. This makes Representative Office a cost-effective choice for foreign companies seeking an initial market presence without significant financial commitment. Additionally, a Representative Office benefits from simplified tax obligations since they are not permitted to generate profits; therefore, they are exempt from Corporate Income Tax (CIT) and Value-Added Tax (VAT) obligations. This status reduces both the compliance burden and operating expenses. Representative Offices are ideal for conducting market research, business promotion, networking, and brand-building activities in Vietnam.

However, Representative Office comes with important limitations. They cannot engage in direct commercial sales or generate revenue in Vietnam. As a result, ROs are prohibited from issuing invoices or entering into contracts independently on behalf of their parent company. Their operational scope is restricted strictly to liaison, promotional, and market research activities. Due to these restrictions, ROs cannot perform import/export activities or provide commercial services, which may limit their utility for fully operational business functions.

To maintain compliance with reporting standards under Representative Office structure, follow these steps:

• File annual reports on liaison activities.
• Submit employer tax declarations and social insurance contributions.
• Renew license every 5 years via application to DOIT.

Read More:

• Corporate Income Tax in Vietnam: Rates, Incentives, Deductions, and Filing Requirements
• Vietnam VAT Registration and Refunds: A Step-by-Step Guide for Expats

Branch Office

Branch Offices in Vietnam enjoy several advantages over Representative Office. Foremost, branches have full commercial operation rights, allowing them to engage directly in the parent company’s business activities within the registered scope. They can sign contracts, issue invoices, and generate revenues and profits locally. Branches are permitted to expand business lines as allowed under the parent company’s charter, providing flexibility to pursue various commercial opportunities. In addition, from a tax perspective, branches are responsible for their own corporate income tax and business license tax registrations, thus functioning similarly to subsidiaries but without separate legal personality.

Yet, Branch Offices carry more complexity in both setup and ongoing compliance. They are subject to all corporate tax regulations, including CIT, VAT, and other relevant taxes. Accounting and financial reporting systems must be established and maintained separately from the parent company, with regular tax declarations and audits as required by Vietnamese law. Branches also pay annual business license taxes and face stricter regulatory scrutiny, which increases operational overhead and costs relative to ROs.

Here are the steps to guarantee upholding compliance with Branch Offices:

• Prepare and audit financial statements if thresholds are met.
• File quarterly and annual tax returns (CIT, VAT, PIT).
• Renew registration upon changes in charter or principal details.

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