A representative office in Vietnam is often seen as an extension of a parent company overseas.
Since the participation of Vietnam in the World Trade Organization (WTO) more than a decade ago, a multitude of foreigners prefer the representative office structure due to its simple setup.
This type of structure allows foreign investors to test the market without having to spend a lot of money.
Closing your company? See Cekindo’s Company Dissolution Services in Vietnam
Also, when it is time to scale up or expand your business, a representative office is relatively easy to close.
Here’s a guide to letting you know how you can close a representative office in Vietnam.
Reasons for Closing a Representative Office in Vietnam
Foreigners can reap a lot of benefits by establishing a representative office.
However, there may be times when a representative office in Vietnam is no longer useful for its parent company and investors choose to shut the representative office down.
Below are some of the possible reasons:
- It does not help the parent company to generate profits directly. As a trading, import, export, and manufacturing activities are not allowed for a representative office
- The representative office has expired as it has only a 5-year operation period
- It is not possible to transfer the ownership of the representative office
- No expansion is permitted, including branches and more offices
- A representative office can’t enter into, amend, or supplement contracts
- It only gets paid from the parent company for limited activities
- It still has to pay all VAT, PIT, and all other charges under the Law of Vietnam
How to Close a Representative Office in Vietnam
Closing a representative office in Vietnam can be done in the following procedure:
- Prepare and submit all required documents to a state agency for office dissolution. This step is the most complicated of all as you need to go through the tax inspection procedures. Therefore, you should seek professional help to know what your options are to simplify the process.
- Obtain completion certificates as proof of debt, insurance, lease, and tax payments and settlement.
- Return the original representative office license and legal stamp.
No Representative Office: Another Establishment Worthy of Consideration
A Limited Liability Company (LLC) can be a favourable option for your entity establishment after you have closed your representative office in Vietnam.
It is the most common type of legal entity in the country due to its simple corporate structure and its many other benefits.
Benefits of an LLC in Vietnam
- Protect your personal assets
- Simpler streamlined process and paperwork
- Easier expansion
- Permanent existence in the event of the death of the shareholder(s)
Requirements for Setting up an LLC in Vietnam
The requirements of starting an LLC in Vietnam differ, depending on whether you start the LLC as an individual or as a company.
Read About Requirements & Procedures for Establishing an LLC in Vietnam
Requirements for Companies
- A business certificate or an establishment certificate
- A registered business address
- Legalised financial documents
- Charter capital upward of US$25,0000
- Official and notarised copies of passport or identity card of investor(s) and legal representative(s)
Requirements for Individuals
- A registered business address
- A legal representative
- Translated and legalised bank statement
- Charter capital upward of US$25,0000
- Official and notarised copy of passport or identity card of investor and legal representative
Procedure of Establishing an LLC in Vietnam
Generally, foreigners need to go through the following steps to incorporate their LLC in Vietnam:
- Apply for an Investment Registration Certificate (IRC)
- Apply for an Enterprise Registration Certificate (ERC)
- Apply for other relevant and necessary licenses, certificates, and sub-licenses
- Submit payments and manage paperwork for other post-license requirements such as bank account opening, tax payment, capital contribution, and others.
How Cekindo can Assist in Both Dissolution and New Establishment
If you no longer wish to run your representative office in Vietnam or want to expand your business by establishing another type of legal structure, it is important to officially dissolve it with professional assistance.
Failure to do so promptly can result in problematic tax liabilities and serious penalties.
Cekindo dissolution and new establishment services can help you to deregister your representative office in Vietnam with a comprehensive step-by-step guide.
Our dissolution solution can be carried easily and effectively, fully complying with all Vietnamese regulations.
We can also assist you in setting up a new company, like an LLC.
Get assistance from Cekindo by submitting your inquiry below.
