Restrictions on branches of foreign traders in Vietnam

A branch of a foreign trader in Vietnam is a dependent unit of the foreign trader and is entitled to exercise rights and perform obligations as prescribed by law. In Vietnam, foreign traders are allowed to set up branches to conduct business in accordance with the law on commerce.

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However, these regulations force foreign traders to comply with certain procedures and conditions in order to be approved by the licensing authority. Therefore, if foreign traders do not meet these requirements, they are not allowed to establish branches in Vietnam.

Branches of foreign traders in Vietnam.

Foreign trader means a trader established and registered for business in accordance with foreign laws or recognized by foreign laws.

A branch of a foreign trader in Vietnam is a dependent unit of the foreign trader, established and conducting commercial activities in Vietnam in accordance with the provisions of Vietnamese law or an international treaty to which the Socialist Republic of Vietnam is a member. Vietnamism is a member. Vietnameseism is a member.

Foreign traders are allowed to set up branches and offices in Vietnam. Branches of foreign traders must be established in accordance with law. Foreign traders are responsible before Vietnamese law for all activities of their branches in Vietnam. Branches of foreign traders are entitled to other rights and perform other obligations as prescribed by law.

Legal restrictions on setting up a branch in Vietnam

According to the provisions of Decree 07/2016 / ND-CP dated January 25, 2016, foreign traders are not allowed to establish branches in Vietnam if they do not satisfy the following conditions:

1. Foreign traders must be established and operate under the laws of a country or territory. This country or territory must be a party to international treaties to which Vietnam is a signatory;
2. Foreign traders have operated for at least 05 years from the date of establishment or registration;
3. The business registration certificate or equivalent document is valid for at least 01 year from the date of application for establishment;
4. The operation contents of the Branch are consistent with Vietnam’s commitment to open the market in international treaties to which Vietnam is a signatory; and
5. The branch’s field of operation must be suitable to the foreign trader’s line of business.

In addition, the Licensing Authority has the right to refuse to grant a Branch Establishment License (“License”) to a foreign trader if:

1. The foreign trader registers to establish a new branch within 2 years from the date of the previous license being revoked;
2. Foreign traders are restricted from establishing branches for reasons of national defense, security, social order, safety, social ethics and public health;
3. The dossiers submitted by foreign traders at the licensing agency do not meet the requirements on dossiers as prescribed by Vietnamese law. Non-compliance may arise from the notarization or consular legalization of documents from abroad; or
4. Foreign traders fail to submit additional information or explain additional information at the request of competent authorities.

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Rights of branches of foreign traders in Vietnam

Branches of foreign traders have the following rights:

• Lease the head office, hire and purchase the necessary means and supplies for the branch’s operations.
• Recruiting Vietnamese and foreign employees to work at the Branch in accordance with Vietnamese law.
• To enter into contracts in Vietnam in accordance with the operation contents specified in the branch establishment license and in accordance with this Law.
• Open an account in Vietnam dong or in a foreign currency at a bank licensed to operate in Vietnam.
• Remittance of profits abroad in accordance with Vietnamese law.
• Having a seal bearing the branch’s name in accordance with Vietnamese law.
• Carrying out goods purchase and sale activities and other commercial activities under the establishment license, in accordance with the provisions of Vietnamese law and international treaties to which the Socialist Republic of Vietnam is a signatory.
• Other rights as provided for by law

The purpose of opening a branch is to make a profit within the industry or business line in which the enterprise has registered its business, compared with a representative office – the purpose is to learn the market and carry out a number of activities. business action. Trade promotion activities – Trader branches have more benefits. These rights will help foreign traders’ branches operate more profitably.

Obligations of branches of foreign traders in Vietnam

In addition to rights, branches of foreign traders must perform obligations as prescribed by law.

Those obligations are:

• Comply with the accounting regime as prescribed by Vietnamese law; In case it is necessary to apply another commonly used accounting system, it must be approved by the Ministry of Finance of the Socialist Republic of Vietnam.
• Report on the operation of the branch in accordance with the law of Vietnam.
• Other obligations as prescribed by law

Legal restrictions for the head of a branch of a foreign trader in Vietnam

Decree 07/2016 / ND-CP also stipulates that the head of a branch cannot concurrently hold the following positions:

1. Head of representative office of other foreign traders;
2. Head of Representative Office of the same foreign trader; or
3. The legal representative of an economic organization established in accordance with the laws of Vietnam.

Legal restrictions on procedures for establishing a branch in Vietnam

Note, each foreign trader is only allowed to establish a maximum of one branch within a province or centrally run city.

When receiving enough documents from foreign traders, the licensing agency will have official results on the establishment of the branch. This process can take place within 07 working days as required by law. In case a special approval of the Minister is required before allowing the establishment of a branch, the time can be up to 13 working days.

In conclusion, foreign traders who want to expand their business activities in Vietnam need to strictly comply with the provisions of Vietnamese law when establishing branches. Accordingly, they should carefully consider the legal restrictions outlined above.

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Because a foreign trader’s branch operates for profit-making purposes, the foreign trader’s branch needs to comply with the accounting regime in accordance with Vietnamese law, and report on the branch’s operation in accordance with the provisions of law.