What should a foreign-invested enterprise (FDI) consider when establishing a company branch?
If you are a manager of an FDI enterprise looking to expand your market in Vietnam, you may be facing challenges with the branch establishment process and need professional consultation and support.
In the following article, KMC provides detailed guidance on the conditions and procedures for establishing a company branch for FDI enterprises and helps you choose a reliable service provider offering comprehensive support throughout the entire branch establishment process.
What is a company branch?
A branch is a dependent unit of an enterprise that performs all or part of the enterprise’s functions, including acting as a representative under authorization. The branch may choose to adopt either independent tax accounting or dependent tax accounting with the head office — this is a key factor that affects the branch’s tax obligations, which will be analyzed in detail in the following section.
Conditions for Establishing a Branch of a Foreign Company in Vietnam
According to Article 8 of Decree No. 07/2016/ND-CP, foreign enterprises shall be granted a Branch Establishment License when meeting the following conditions:
- The foreign trader is established and registered for business under the laws of a country or territory that is a party to an international treaty to which Vietnam is a member, or is recognized by the laws of such country or territory.
- The foreign trader has been in operation for at least five (05) years from the date of establishment or registration.
In addition, under the provisions of Article 45 of the Law on Enterprises 2020, enterprises have the right to establish branch offices and representative offices both inside and outside Vietnam. The main conditions include:
- The business lines of the branch must be consistent with the registered business lines of the enterprise.
- The branch must have a lawful head office with a specific address including house number, street name (alley, lane) or commune, ward, town, district, provincial city, province, or centrally-run city.
- The branch name must follow the rule: [Enterprise Name] + “Branch” + [Province/City where the branch is located] (for example: KMC Branch Da Nang).
Guidelines for Establishing a Foreign Company’s Branch Office in Vietnam
Application Dossier for Establishing a Branch Office
According to Article 12 of Decree No. 07/2016/ND-CP, the dossier for establishing a foreign company’s branch office in Vietnam includes:
- Application form for the Branch Establishment License using the template of the Ministry of Industry and Trade, signed by the authorized representative of the foreign trader.
- Copy of the Business Registration Certificate/equivalent document of the foreign trader.
- Document from the foreign trader appointing the head of the branch.
- Copy of audited financial statements/document confirming the fulfillment of tax or financial obligations in the most recent fiscal year/equivalent document issued or confirmed by a competent authority or organization in the country where the foreign trader is established, proving the existence and operation of the foreign trader in the most recent fiscal year.
- Copy of the branch charter of operation.
- Copy of the passport or ID card/citizen ID card (if Vietnamese) or passport (if foreigner) of the head of the branch.
Note: The above documents must be translated into Vietnamese and certified in accordance with Vietnamese law, and legalized by consular authorities as required.
- Documents on the proposed location of the branch headquarters:
- Copy of memorandum of understanding/lease agreement for the location/copy of documents proving the foreign trader’s right to use the location as branch headquarters;
- Copy of documents relating to the proposed location of the branch headquarters.
- Power of attorney if the foreign enterprise authorizes another person to carry out the procedures.
Procedures for Establishing a Foreign Company’s Branch Office in Vietnam
The order and procedures for establishing a foreign company’s branch office are guided in Article 13 of Decree No. 07/2016/ND-CP as follows:
- The foreign trader submits the dossier directly, by post, or online (if eligible) to the licensing authority.
- Within three (03) working days from the date of receipt, the licensing authority examines and requests supplementation if the dossier is incomplete or invalid. Such request shall only be made once during the process.
Basically, the process of establishing a foreign company’s branch office in Vietnam includes the following steps:
Step 1: Submit the application
The foreign trader submits the dossier directly/by post/online (if eligible) to the Ministry of Industry and Trade.
Step 2: Examination of the dossier
Within three (03) working days from receipt of the dossier, the Ministry of Industry and Trade examines and requests supplementation if the dossier is incomplete or invalid.
Step 3: Evaluation and decision
Within seven (07) working days from receipt of a complete and valid dossier, the Ministry of Industry and Trade issues the license or refuses to grant the Branch Establishment License to the foreign trader. In case of refusal, a written notification stating the reasons must be provided.
Note:
If the branch’s intended activities are inconsistent with Vietnam’s commitments, or the foreign trader is not from a country/territory that is a member of an international treaty to which Vietnam is a party, the Ministry of Industry and Trade shall, within three (03) working days from receipt of a complete dossier, request opinions from the specialized management ministry.
Within five (05) working days from receipt of such request, the specialized management ministry shall provide written opinions on whether to approve the branch establishment.
Within five (05) working days from receipt of the specialized ministry’s opinion, the Ministry of Industry and Trade shall grant or refuse to grant the Branch Establishment License. In case of refusal, a written notification stating the reasons must be provided.
Tasks to Be Performed After Establishing a Branch Office
After receiving the Branch Establishment License, in order to ensure lawful operation, the enterprise must promptly carry out the following tasks:
- Submit the initial tax registration with the tax authority managing the branch.
- Register the method of VAT calculation and select the accounting regime.
- Make the branch’s seal and notify the seal specimen as prescribed.
- Register the branch’s bank account (if necessary).
- Display the signboard at the branch headquarters.
- Complete the procedures for conditional business registration (if required by the business sector).
Notes When Establishing a Foreign Company’s Branch Office in Vietnam
FDI enterprises wishing to establish a branch office in Vietnam should take note of the following cases:
Cases in Which a Branch Establishment License Will Not Be Granted
The Ministry of Industry and Trade shall not issue a Branch Establishment License to a foreign trader in the following circumstances:
- The foreign trader fails to meet the conditions for branch establishment.
- The application dossier is invalid and not supplemented upon request of the Ministry of Industry and Trade.
- The foreign trader applies for a Branch Establishment License within two (02) years from the date of revocation of a previous license.
- The establishment of a branch is restricted by law for reasons of national defense, national security, social order and safety, social ethics, or public health.
Validity Period of a Foreign Trader’s Branch Establishment License in Vietnam
- The Branch Establishment License of a foreign trader in Vietnam has a maximum validity period of five (05) years but must not exceed the remaining validity period of the Business Registration Certificate or equivalent document if such document specifies a time limit.
- The Branch Establishment License may be renewed for a period equal to the previously granted term.
KMC – Professional Partner for FDI Enterprises in Establishing Branch Offices
It can be seen that establishing a branch office in Vietnam, particularly for foreign enterprises or FDI enterprises, is not a simple process. Lack of experience and insufficient understanding of current regulations often makes the registration of a branch office complicated and difficult.
Therefore, to receive comprehensive support and complete the branch establishment registration quickly while optimizing time, cost, and effort, please contact KMC immediately.
KMC has many years of experience consulting and supporting FDI enterprises, especially Japanese FDI enterprises, in establishing companies, establishing branch offices, and fulfilling all corporate tax and accounting obligations accurately and in compliance with the law.
Our services cover the entire process from A to Z:
- In-depth legal consultation
- Drafting and preparing a complete branch establishment dossier
- Submitting dossiers and working with competent authorities on behalf of the enterprise
- Post-establishment support for the branch office: setting up the accounting system, tax advisory, and HR support…
With more than 15 years of credibility and experience, KMC has been supporting hundreds and thousands of enterprises, especially FDI enterprises, to shorten processing time, optimize costs, and ensure that branch office registration applications are approved as quickly as possible.
So why wait any longer? Call our hotline today: 081 489 4789 and let KMC experts provide you with immediate professional support.
