Mazars Vietnam Tax and Legal Updates - March 2016 - Alert 3

We are pleased to present you our Vietnam Legal and Tax Update for March 2016. In this edition, we highlight the new regulations on representative offices and branches of foreign business entities in Vietnam.

A new Decree No. 07/2016/ND-CP detailing the Commercial Law on representative offices (“RO”) and branches of foreign business entities in Vietnam (“Decree 07”) shall take effect from 10 March 2016 and replace the current Decree No. 72/2006/ND-CP on the same matter (“Decree 72”).  In this edition, we would like to highlight some notable changes of Decree 07 in comparison with Decree 72 which may be relevant/noteworthy for your operation.

Authority for issuing Establishment Licences for RO 

Except the case where specialized laws stipulate otherwise, while the Minitry of Industry and Trade is still the licensing authority for branches of foreign business entities as mentioned in Decree72, for RO of such entities, the licensing authorities, in addition to the Departments of Industry and Trade as previously provided, also include Management Boards of industrial parks, export processing zones, economic zones, high-tech parks in case where the RO’s head offices are located in such parks/zones.  

Conditions for issuing Establishment Licenses

In addition to current provisions, a number of new conditions are added in Decree 07.

Procedures for issuing Establishment Licenses

Time-limit for issuance of the licenses is shortened from 15 days to 7 working days from the date of fully receiving the valid dossiers (except for the case where opinions of relevant specialized ministries are required). 

Amendment, re-issuance and extension of Establishment Licenses

Time-limite for amending, re-issuing as well as extending the licenses is 5 working days from the date of fully receiving the valid application dossier (except for the case where opinions of relevant specialized ministries are required). In Decree 72, this time-limit is 10 days for issuance of the amended licenses and 15 days for issuance of the extened licenses.

Revocation of Establishment Licenses

The Establishment Licenses shall be revocated if the RO/branches do not operate for 1 years and do not conduct any transaction with the licensing authorities.

Heads of the RO/branches

A new provision is added in Decree 07 stating that the head of a RO/branch must authorize another person to conduct his/her rights and obligations if leaving Vietnam. In case the Head of the RO/branch is not present in Vietnam more than 30 days without authorization to another person, the foreign business entity must appoint another person to be the Head of such RO/branch.