Foreign banks, auditing firms, law firms, fund management companies, and foreign economic organizations can set up their branches in Vietnam. The licensing agencies are varied, of which e.g. SBV grants licenses to foreign banks’ branches, MOF grants licenses to branches of foreign auditing firms and fund management companies’ branches, and MOIT is authorised to grant licenses to foreign businesses.
In this Section, only branches of foreign business/traders which fall within the sole power of the provincial-level DOIT are focused, with a note that the new establishments thereof shall be all conditional to the Vietnam’s WTO commitments, pursuant to which the establishment of branches of foreign service providers is unbound, except for the following sectors and sub-sectors:
- Legal services;
- Computer and related services;
- Management consultant services;
- Service related to management consulting;
- Construction and related engineering services;
- Franchising services;
- Non-life insurance services;
- Banking services;
- A number of securities services (Asset management service, Settlement and clearing services for securities, derivative products, and other securities-related instruments; Provision and transfer of financial information, and related software by suppliers of securities services; Advisory, intermediation and other auxiliary securities-relate, including investment and portfolio research and advice, advice on acquisitions and on corporate restructuring and strategy; etc.).
Nevertheless, the licensing in practice may vary from what is provided by the Vietnam’s WTO Commitments as itemized above. At this moment, no information about the abrogation of this hurdle to market is revealed by the Vietnamese Government so far.
The Commercial Law dated 14 June 2005 constitutes the legal ground for representative offices and branches of foreign businesses in Vietnam, which is further specified by the Government’s Decree No.07/2016/ND-CP, dated 25 January 2016, detailing the provisions of the Commercial Law on representative offices and branches of foreign traders in Vietnam (“Decree 07”).
To implement Decree 07, on 5 July 2016, the MOIT issued Circular No.11/2016/TT-BCT, detailing all standard forms related to the issuance of licenses to, organizations and activities of representative offices and branches of foreign enterprises in Vietnam (“Circular 11”).
Under Decree 07, normally, a Branch license shall be granted if the applicant satisfies the following conditions:
(v) Where the businesses of the branch are inconsistent with Vietnam’s Commitments or the parent company is not located in one of countries or territories being parties to treaties to which Vietnam is a signatory, the branch can be established only if they obtain a prior consent of the relevant Minister for establishment of the branch.
To establish a Branch in Vietnam, a foreign company must submit a set of application files for a license issued by the MOIT. The following documents must be submitted to the licensing authority for obtaining the License:
7.4 Licensing Timing
A Branch license will be normally granted within 7 days from the receipt of the satisfactory file. The applicant is required to pay the license fee of VND1 million for a license. The license fee would be paid upon the approval of the application file.
Within 15 days from the date of issuance of the licence, information about the Branch shall be publicly published on the licensing agency’s website.
7.5 Permitted Activities
A Branch is permissible to trade the products and carry out the trading-related activities in accordance with the provisions of the Commercial Law, concretely:
7.6 Term of License
The license of a Branch has a term of five years but not exceeding the remaining effective period of the parent company’s Certificate of Business Registration or the equivalent (for documents having expiry date). The license of a Branch may be extended upon its expiry unless it commits one of the following violations:
(iv) Other cases provided for by law.
In addition, the License may be revoked when the representative office committed any of the above-mentioned violations.
Branches of foreign businesses shall be subject to the taxes prevailing in Vietnam, which are well described in the Section 16 hereunder.