Since the 1990s, foreign entrepreneurs have been increasingly drawn to Vietnam for investment. The country's rising purchasing power and the willingness of Vietnamese consumers to spend on goods and services make it an attractive destination for business establishments. If you intend to launch a 100% foreign-owned business in a vibrant, rapidly growing economy such as Vietnam, you should explore the option of establishing a Branch Office.
According to the World Bank's 2020 report, out of 190 countries, Vietnam was ranked 70th (Source: Trading Economics, Foreign Direct Investment - Vietnam) for ease of doing business, noting significant improvements in this regard. Recent Foreign Direct Investment (FDI) data indicates a 16.3% increase in FDI from January to September 2022 compared to the same period last year, highlighting the country's investment appeal.
Expanding an existing business into a new market through full incorporation can be a complex undertaking. In this context, establishing a branch office becomes an advantageous solution. A Branch Office functions as an extension of the foreign parent company and can be established instead of a Limited Liability Company or a Joint Stock Company. In Vietnam, a branch office enjoys various privileges, including the ability to generate income, issue invoices, and employ staff.
When a company establishes a branch in another country, it must adhere to local legal compliance requirements. Similarly, foreign businesspersons conducting commercial operations in Vietnam must comply with the legal prerequisites for establishing a branch office in the country, with each foreign businessperson restricted to one branch per province or town.
Setting up a Branch Office in Vietnam offers several advantages, including the ability to issue VAT invoices independently, conduct a full spectrum of business activities such as inventory, manufacturing, and trading, and flexibility in keeping accounting and financial records either together or separate from the headquarters, and the freedom to enter into and amend contracts or agreements.
As a Branch Office is considered exactly that, a branch of the parent company, it can only be opened if there is already an existing entity in the home country. You must prove this by providing legitimate business licenses of incorporation from your home country. Therefore, the parent company bears all liabilities of the branch office in Vietnam.
The branch manager, who is in charge of the daily operations of that branch, must be assigned as the legal representative based in Vietnam. The manager is in charge of all branch operations, including hiring new employees and making sure that all divisions' output is at a high level and that all deadlines are fulfilled.
Following the submission of the application and any supporting documents, the registration of a branch typically takes 30 to 60 days. The first stage in the process is to obtain the registration certificate and the branch's seal.
Legalizing and translating all papers into Vietnamese might take up to two weeks. Refer to the next section for more information on the prerequisites.
There are considerable differences between a representative office and a branch office for business registration in Vietnam.
The advantages & disadvantages of opening a Representative Office vs Branch Office
At Ascentium Vietnam, we understand well that starting a new business in Vietnam can be a tough task when there’s a steep learning curve for foreigners to grasp the country’s laws and regulations. The specific procedure for business registration in Vietnam may seem complicated, or even confusing.
However, if you follow the guided process with the right, professional support, it is far simpler than you may think. That’s why entrepreneurs are recommended to conduct business registration in Vietnam with an experienced consultant. Ascentium Vietnam will handle the whole procedure on your behalf, and take the hassle out of your business registration in Vietnam.