Legal regulations on branches of foreign traders in Vietnam

Article overview

Branches of foreign traders in Vietnam operate under clear legal regulations, to ensure compliance with international commitments and legitimate interests of both parties. Establishing a branch is one of the important ways for foreign traders to participate in commercial activities in Vietnam, with specific rights and obligations.

Regulations on branches of foreign traders in Vietnam
Regulations on branches of foreign traders in Vietnam

Regulations on commercial activities of foreign traders in Vietnam

According to Article 16 of the Law on Commercial 2005, regulations on foreign traders operating in Vietnam are as follows:

  • Foreign traders are established and registered for business according to foreign laws.
  • Foreign traders have the right to open representative offices, branches, or establish enterprises with investment capital in Vietnam.
  • Representative offices and branches of foreign traders in Vietnam have rights and obligations according to Vietnamese law.
  • Foreign traders are responsible for all operations of representative offices and branches in Vietnam.
  • Foreign-invested enterprises established in Vietnam by foreign traders are considered Vietnamese traders.

What is a branch of a foreign trader?

According to the provisions of Clause 7, Article 3 of the Law on Commercial 2005, a branch of a foreign trader in Vietnam is a dependent unit, established to carry out commercial activities in accordance with the provisions of Vietnamese law.

Branches do not have independent legal status and can only carry out activities within the licensed scope.

The establishment of a branch must comply with the conditions and procedures prescribed by Vietnamese law.

Rights and obligations of branches
Rights and obligations of branches

Rights and obligations of foreign trader branches

Branch Rights

According to the provisions of Article 19 of the Law on Commercial 2005, branches of foreign traders have the following rights:

  • Rent headquarters, purchase vehicles and equipment necessary for operations.
  • Recruiting Vietnamese or foreign workers to work at the branch in accordance with Vietnamese law.
  • Enter into contracts in Vietnam in accordance with the operational content stated in the branch establishment license.
  • Open an account in Vietnamese Dong or foreign currency at a legal bank in Vietnam.
  • Transfer profits abroad according to Vietnamese law.
  • Use the seal bearing the branch’s name according to the provisions of law.
  • Carry out goods purchase and sale activities and other commercial activities according to licenses and international treaties to which Vietnam is a member.
  • Exercise other rights according to Vietnamese law.

Obligations of the Branch

According to the provisions of Article 20 of the Law on Commercial 2005, branches of foreign traders must perform the following obligations:

  • Comply with the accounting regime according to Vietnamese law; if other accounting regimes are applied, approval from the Ministry of Finance of Vietnam is required.
  • Report on branch operations in accordance with Vietnamese law.
  • Perform other obligations as prescribed by law.

Regulations on heads of branches of foreign traders

According to Article 33 of Decree 07/2016/ND-CP, regulations on heads of branches of foreign traders are as follows:

  • The head of a branch of a foreign trader in Vietnam is responsible for managing the branch’s activities and must be responsible to the foreign trader for the branch’s activities.
  • The head must also ensure the implementation of the branch’s rights and obligations, as well as compliance with legal regulations in Vietnam.
  • In case the head is unable to perform his duties, the foreign trader must appoint a replacement or authorize another person.
  • The change of branch head must be promptly notified in accordance with Vietnamese law.
Consulting on establishing branches for foreign traders
Consulting on establishing branches for foreign traders

Consulting on regulations on branches of foreign traders in Vietnam

At Long Phan, we specifically support and advise on regulations on branches of foreign traders to ensure the best interests of customers. Our services include:

  • Consulting on regulations on branches of foreign traders in Vietnam.
  • Consulting on the rights and obligations that branches of foreign traders must perform when operating in Vietnam.
  • Consulting on regulations related to branch heads.
  • Consulting on regulations and processes for transferring profits from Vietnam to foreign countries.
  • Consulting and supporting the implementation of branch operation registration procedures.
  • Consulting on procedures for changing, converting, and terminating branch operations.

Foreign traders need to clearly understand the rights, obligations as well as administrative procedures that need to be carried out when establishing and operating a branch in Vietnam. To support this process, professional consulting services can help foreign traders fully grasp the requirements and conditions prescribed by Vietnamese law. If you need more information or support, please contact us via the hotline 0906735386 for detailed advice.