1. What is a representative office?

2. Characteristics of representative offices

  • – A representative office has no legal status because it is a dependent unit of the business.

One of the conditions for an organization to be considered a legal person is the capability to independently enter into a legal relationship (such as a contract) on its behalf, but all activities of a representative office depend on the enterprise and the authorization by such enterprise. Therefore, a representative office DOES NOT participate in legal relationships as an independent entity, so it is not considered a legal entity.

  • – Representative offices DO NOT have business functions but perform only tasks authorized by the enterprise.

A representative office DOES NOT directly conduct business activities, or sign economic contracts with the seal of the representative office, but can sign contracts under the authorization of the enterprise that established the representative office and closed its corporate stamp.

  • – Due to being a dependent unit with no business function, a representative office does not incur independent tax obligations.
  • – Representative offices continue to retain their name, operation registration certificate, and seal to serve the internal activities of the representative office.

– Financial obligations from the operation of the representative office shall all be managed and fully paid for by the enterprise.

– The organizational structure of the representative office is decided by the enterprise and operated according to the permission of the enterprise.

3. Functions of representative offices

Representative offices have the following functions:

Being an intermediary office responsible for transactions and communication with businesses

Conduct research activities, provide information, and support businesses in accessing new markets and partners.

Being available to conduct market reviews, detect infringements and unfair competitive behavior of rival enterprises which adversely affect the business of the enterprise, and represent the enterprise to file a grievance about the violations - the aforementioned potential offenses

Researching the market, promoting business investment opportunities of the enterprise that they represent - excluding the service industry where the establishment of a representative office in that field is stipulated in specialized legal documents.

4. Advantages and disadvantages of establishing a representative office

Advantages:

Primarily, the advantage of a representative office is that there are no procedures related to tax reporting and no license taxes to be paid.

Representative offices may be established within the same province or city or outside of the province or city in which the Enterprise is located.

Enterprises may establish representative offices in other countries.

Disadvantages:

Unable to conduct business at the representative office.

Requiring clarification of tax obligations with the Tax Department where the former location was located when the representative office's head office is moved to another district.

We are ready and available to assist in completing the requirements for establishing a representative office as expeditiously and efficiently as possible. All questions and concerns regarding the process, procedures, or paperwork to prepare before starting a representative office, are promptly resolved via our Hotline +84-916-545-618 or by email hung.le@cnccounsel.com and thanh.tran@cnccounsel.com.

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