Established Representative Office, Branch in Vietnam

A branch is a dependent unit of an enterprise, responsible for performing all or part of the enterprise’s functions, including the function of authorization for the enterprise, including the function of authorized representative. Although a branch is allowed to carry out business activities, it is only a unit under the company and has no independent legal status. The branch has its own seal and account. A branch is the only type of dependent entity that can issue a red invoice (value-added invoice) and must declare tax value-added similar to the company (even if no revenue is generated).

Conditions for establishing a company branch

Conditions for the branch’s operation status

To be able to set up a branch, the company needs to be established first. Only after the company has obtained the  Certificate of Business Registration , the procedure for setting up a branch can be carried out. Therefore, it is not possible to carry out the procedure for establishing a branch together with the procedure for establishing a company.

Conditions on branch name

  • The branch name must be written in letters of the Vietnamese alphabet, the letters F, J, Z, W, numbers and symbols. The branch name must include the company name with the phrase “Branch” in the case of a branch.
  • In addition to the name in Vietnamese, the branch of the enterprise can register the name in a foreign language and the initials.

Conditions for the head office of the branch

  • The head office of a branch is the contact point of the enterprise in the territory of Vietnam, whose address is determined including house number, niche, alley, alley, street, street or hamlet, hamlet, commune, ward. , townships, districts, districts, towns, provincial cities, provinces and centrally run cities; phone number, fax number and email (if any).
  • Enterprises have the right to set up branches in the country and abroad. An enterprise can set up one or more branches in a locality according to administrative boundaries.

Conditions for branches and branches of business

  • The branch’s line of business must be consistent with the business line of the enterprise.
  • Accordingly, company branches are only allowed to register trades for which the company has registered.

Conditions for the head of the branch

  • The head of the branch is an individual with full civil act capacity; It can be another person or a company member.
  • The head of a branch is not a person whose tax identification number is suspended on the national tax registration and enterprise registration system..

Select type of branch operation

Enterprises can choose independent or dependent branch accounting. The common point of the two types is that both types of branches have no legal entity. Both have the right to generate business activities, to issue VAT invoices independently of the company. License tax for any branch must be paid at VND 1,000,000/year. Works under authorization and assignment from the company. However, each form has specific differences regarding tax reporting:

Establishing a branch of an independent accounting company

  • Regarding tax: proactively determine taxable expenses and taxable income.
  • Chịu trách nhiệm kê khai và nộp thuế thu nhập doanh nghiệp không kể liên quan gì đến hiệu quả kinh doanh của công ty cũng như các chi nhánh khác trong cùng công ty.
  • Complete bookkeeping, financial statements, etc.
  • The accounting department or the accounting department at the independent accounting branch is an accounting unit according to the Law on Accounting.

Establishing a branch of a dependent accounting company

  • Transfer data and vouchers of revenue and expenses to the company for general accounting at the end of the year in financial statements.
  • The company combines data of other branches of the same company and its operations to account and fulfill corporate income tax obligations.
  • The figures in the books are part of the company’s books.
  • The company’s accounting unit includes the branch accounting department.

Company branch establishment profile

  • Notice of establishment of branch (signed by legal representative).
  • A written decision on the establishment of a branch: Of the owner of a single-member limited liability company. Members’ Council of a limited liability company with two or more members. General Meeting of Shareholders of a joint-stock company. Decision of a member of a partnership).
  • Minutes of the meeting on the establishment of the branch (private enterprises, one-member limited liability companies do not need this type of minutes).
  • Decision to appoint the head of the branch.
  • Authenticated personal papers of the head of the branch:
    • Individuals with Vietnamese nationality:   Identity card or passport;
    • Foreign nationals:  Temporary residence registration certificate issued by the competent authority of Vietnam,  Work permit and Passport;
  • Authorization letter for Happy Tax Company.
  • For some professions prescribed by law, a valid copy of the practice certificate of the head of the branch (or another individual belonging to the branch) will be required.

Procedures for setting up a company branch

The procedure for setting up a branch is carried out according to the following steps:

Step 1: Prepare to be eligible for branch establishment (Company established)

Accordingly, the company prepares the conditions and documents for the establishment of a branch.

Step 2: Compose the application to establish a branch

Dossier for establishment of a company branch includes:

  • Notice of establishment of branch (signed by legal representative).
  • A written decision on the establishment of a branch: Of the owner of a single-member limited liability company. Members’ Council of a limited liability company with two or more members. General Meeting of Shareholders of a joint-stock company. Decision of a member of a partnership).
  • Minutes of the meeting on the establishment of the branch (private enterprises, one-member limited liability companies do not need this type of minutes).
  • Decision to appoint the head of the branch.
  • Authenticated personal papers of the head of the branch:
    • Individuals with Vietnamese nationality:   Identity card or passport;
    • Foreign nationals:  Temporary residence registration certificate issued by the competent authority of Vietnam,  Work permit and Passport;
  • Authorization letter for Happytax Company.
  • For some professions prescribed by law, a valid copy of the practice certificate of the head of the branch (or another individual belonging to the branch) will be required.

Step 3: Submit application for establishment of company branch and fee for information disclosure

The company submits the application for establishment of a branch and information disclosure fee  at the Department of Business Registration – Department of Planning and Investment where the branch office is located.

Step 4: The Business Registration Authority issues the Certificate and publishes it

  • Within 03 (three) working days from the date of receipt of complete and valid dossiers, the business registration authority shall issue the branch operation registration certificate and disclose branch information.
  • In case of refusal, there must be a written notice clearly stating the reason.

Step 5: Engrave the branch mark

  • After receiving the branch’s operation registration certificate, the branch shall engrave its seal.
  • When engraving the branch’s seal, the district address information should be removed, only the provincial address information should be recorded so that when there is a change in the branch office, there is no need to re-engraving the new seal.

Step 6: The following procedures to establish a company branch

Submit the license tax return and pay the branch license tax

  • Branch license tax is 1,000,000 VND/year
  • If the branch is established before July 1 every year, the license tax shall be fully paid: 1,000,000 VND/year. If the branch is established after July 1 every year, then pay ½ of the license tax for the first year of establishment: VND 500,000/year.
  • The branch shall declare and pay the license tax within 30 days from the date of issuance of the branch operation registration certificate.

Make a sign and hang the company sign at the head office

The branch must hang the company’s branch sign at the branch office with the following contents: Name of the governing body (the agency issuing the Certificate of Operation Registration, ie the Department of Planning and Investment), name of the branch, head office address, phone number or email (if any).

Buy an electronic digital signature to make electronic tax payment

  • Branches must purchase electronic digital signatures to pay taxes electronically.
  • After the branch receives the Certificate of Operation, the company’s staff must send the branch operation registration information to the tax authority, submit the initial tax return if the branch is located in a province or city directly under the central government. other. In addition, on a quarterly basis, the branch must also declare Value Added Tax on the branch’s revenues and expenditures.
  • The legal representative of the enterprise shall be responsible for registering a change in the contents of the branch operation registration certificate within 10 days from the date of the change.

Advantages and disadvantages of setting up a branch

  • The advantage of establishing a branch is that the branch can operate as a parent company, has the right to register its own seal, and sign economic contracts on behalf of the parent company. A branch can also declare and pay taxes separately as an independent unit if it is registered as an independent accounting branch. Such independent operation makes it convenient for customers to just go to the nearest branch to transact instead of going directly to the company’s head office. Due to the increasing development needs of businesses, establishing a branch is an indispensable need of businesses.
  • However, when a company establishes a branch, it will have an independent procedure of tax declaration for the branch. For an independent accounting branch, the branch needs to prepare financial statements for its operations at the end of the year. Currently, there is a form of business location that can generate business activities without making quarterly and annual tax declarations. Therefore, if the company intends to establish an independent accounting branch, it may choose to establish a business location instead.

Taxes the branch company needs to pay

Excise

  • Independent accounting branch: Declare and pay license tax at the branch management agency.
  • Dependent accounting branch:
    • In case the branch is located in the same province as the head office, the license tax declaration must be submitted at the tax office at the head office.
    • In case the branch is located in  different province  from the head office, the declaration and license tax levy must be submitted at the branch.

Note:

According to the provisions of Decree 22/2020/ND-CP amending and supplementing a number of articles of Decree 139/2016/ND-CP, when establishing a company branch in the same year as the “company establishment” in 2022, the expenses will be branches are also exempt from license tax in 2022.

V.a.t tax

Declare and pay VAT at the branch, if one of the following conditions is satisfied:

  • Independent accounting branch,
  • Branch different province from head office:

Declare and pay VAT at the head office, if one of the following conditions is met:

  • Dependent accounting branch,
  • No revenue generated,
  • Same province as head office.

In case the branch has a seal, a bank deposit account, directly sells goods and services, fully declares input and output value-added tax, and needs to declare and pay separate tax, it must register to pay tax. separate taxes and use separate invoices.

Corporate income tax

  • If the branch does independent accounting, the branch shall submit the enterprise income tax declaration dossier arising at the affiliated unit to the tax management agency directly at the branch.
  • If the branch does dependent accounting, the branch is not required to submit a corporate income tax return, and the head office submits a tax return for the entire income at the branch.