A Vietnam Branch Office (BO) is an out‑of‑country extension of a foreign enterprise that may conduct profit‑generating business in Vietnam under the parent’s name. Unlike a Representative Office, a BO can sell, invoice, and sign contracts—yet it is not a separate legal entity, so the parent remains entirely liable for its debts and obligations. Here we look at the core advantages, limits, licensing path, and ongoing duties for establishing a BO in Vietnam.
Vietnam Branch Office (BO)
Vietnam’s Commercial Law 2005 and Decree 07/2016/ND‑CP allow qualified foreign traders to open BOs for renewable five‑year terms. Key rules include:
- Permitted activities – sell goods or services consistent with the parent’s business lines; sign and execute contracts; import/export under the parent’s name; issue VAT invoices; and remit profits abroad.
- Prohibitions – activities outside the parent’s registered scope; sectors that require a separate Vietnamese legal entity (e.g., banking, insurance, telecom).
- Eligibility – parent must have operated at least five continuous years in its home jurisdiction.
- Liability – parent company bears full responsibility for branch debts, taxes, and liabilities.
- Taxation – subject to the same Corporate Income Tax (CIT), VAT, and other indirect taxes as local firms; BO profits are deemed profits of the parent.
Vietnam’s expanding consumer market and FTA network make a BO attractive for companies ready to trade but not yet willing to incorporate a standalone subsidiary.
A Comparison of Legal Investment Vehicles
| Vehicle | Core Features | Typical Use Case |
| Branch Office (BO) | Profit‑making; contracts & invoices; parent liable | Foreign companies ready to trade under parent name |
| Representative Office (RO) | No revenue; liaison only; simplest compliance | Market research, supply‑chain oversight |
| Wholly Foreign‑Owned LLC | Separate legal entity; limited liability | Manufacturing or services needing autonomy |
| Joint Stock Company (JSC) | ≥ 3 shareholders; can list shares | Capital‑intensive or regulated sectors |
Branch Office in Vietnam
Why choose a BO?- Direct trading without local equity – sell goods/services immediately without transferring ownership to a Vietnamese entity.
- Simplified profit repatriation – profits flow directly to the parent after tax.
- Brand continuity – contracts and invoices bear the parent’s name, reinforcing global brand identity.
Other Modes of Entry into Vietnam
- Company Limited (LLC) – offers limited liability and local legal‑person status, suitable for long‑term manufacturing or service provision.
- Joint Stock Company (JSC) – fits businesses planning public capital raises or subject to ownership‑spread rules.
- Representative Office (RO) – lowest‑risk option for pre‑commercial exploration.
Important Considerations for BO Establishment
| Item | Key Points |
| Parent Eligibility | Minimum five years of lawful operation; clean compliance record. |
| Licence Authority | Ministry of Industry & Trade (MOIT); some sectors require additional ministry clearance. |
| Licence Tenure | Up to five years; renewable. |
| Chief of Branch | Must reside in Vietnam; authorized to bind the parent. |
| Office Address | Physical premises required and publicly registered. |
| Accounting Regime | Must adopt Vietnamese Accounting Standards (VAS) or register an IFRS conversion; annual audit mandatory. |
Setting Up a Vietnam Branch Office
Preparation & Dossier- Legalized parent charter, incorporation certificate, audited financials for the latest fiscal year.
- Application, power of attorney, and draft branch charter.
- Submit dossier to MOIT; statutory review – seven working days; practical processing often three to six weeks.
- Receive Licence for Establishment of Branch
- Obtain tax code; register for VAT and CIT.
- Carve branch seal and notify MOIT.
- Open VND and foreign‑currency accounts.
- Register employees for personal income tax (PIT) and social insurance.
Compliance Requirements After Establishment
- Annual Activities Report – submit to MOIT by 30 January each year.
- Tax Filings – monthly or quarterly VAT returns; quarterly PIT; annual CIT return plus audited financial statements within 90 days of year‑end.
- Licence Renewal – apply 30–45 days before expiry.
- Accounting & Audit – maintain VAS books; appoint licensed auditors; file audited accounts with tax office and MOIT.
- Labour Compliance – contracts, work permits, social‑insurance obligations for both local and expatriate staff.
Advantages and Disadvantages of a Branch Office
Advantages- Immediate revenue‑earning capability without local share capital.
- Parent brand continuity and direct contract control.
- Profits can be repatriated without dividend procedures.
- Full parent liability for branch obligations.
- Sectoral restrictions; some industries disallow branches.
- Higher compliance than an RO: VAT, CIT, accounting, and audit.
- Lack of separate legal‑person status may hinder local credit or partnerships.
