03 important matters when establishing and operating representative offices of foreign businesses in Vietnam

Corporate & Tax Advisory Legal Articles

08/09/2026

Establishing a commercial presence in Vietnam through a Representative Office (“RO”) continues to be a suitable option for foreign businesses during the market exploration and business relationship establishment phases. With its primary function being a liaison office, market research center, and trade promotion center, the RO is not permitted to engage in profit-making activities, but it plays a fundamental role in the long-term expansion strategy of foreign businesses in the Vietnamese market. The current legal framework governing the operation of ROs in Vietnam is mainly regulated by Commercial Law 2005 and Decree 07/2025/ND-CP amending Decree 07/2016/ND-CP, along with international commitments to which Vietnam is a signatory. Through this article, PLF aims to provide readers with three important issues to consider when establishing and operating a RO for foreign businesses in Vietnam.

1. Conditions for establishing a representative office

The procedure for reviewing and granting licenses to establish representative offices is linked to the process of assessing the legal status and operational capacity of foreign businesses, as well as meeting several other conditions, specifically:

Foreign traders must be legally established and registered in the relevant country or territory and have been operating for at least one year. If the foreign trader’s operating license is time-limited, the remaining validity period of the license must be sufficient to ensure the stability of the representative office’s presence in Vietnam.
Among the criteria for consideration, the business activities of foreign traders play a crucial role. Although representative offices do not directly conduct business to seek profits in Vietnam, the business activities of foreign traders remain subject to compliance with Vietnam’s international commitments. This assessment is not only based on the registered business activities of the foreign trader but also considers the nature of the foreign trader’s business activities (where the revenue comes from). For business activities that Vietnam has not yet opened to foreign investors or are subject to conditional access, the application for establishing a representative office may require consultation with specialized management authorities, leading to a more rigorous assessment process. Accurately reviewing the business activities of foreign traders from the outset helps to limit additional requirements, shorten licensing time, and orient the scope of operations to be consistent with the legal framework.
The location of the representative office must comply with Vietnamese law regarding security, order, occupational safety and hygiene, and other conditions as prescribed by law. Some noteworthy points: the foreign business must have the legal right to use the location through a lease contract; the location must conform to urban planning, ensure security and occupational safety, and not be located in residential areas or apartment buildings used solely for residential purposes, etc.
The head of the representative office shall not concurrently hold management positions at branches or other economic organizations, in order to ensure independence in representative activities.

2. License duration and license renewal matters

The license to establish a representative office has a maximum term of 5 years; however, it must not exceed the remaining validity period of the foreign trader’s operating license. Vietnamese law allows foreign traders to extend the registration period for their representative offices in Vietnam through a license renewal mechanism – which can be renewed multiple times, each time for no more than 5 years, provided the foreign trader continues to meet the necessary criteria (as analyzed in section 1 above).

In practice, processing applications for renewal of representative office licenses shows that the competent authority not only checks the completeness of the application but also considers the level of compliance throughout the previous operating period of the representative office, specifically the submission of operational reports; the legal status of the parent company and the continuity of operation of the representative office can all be factors in the evaluation.

The preparation of documents and procedures for renewing the Representative Office Establishment License must be completed at least 30 days before the license expires. Delays not only disrupt the Representative Office’s operations but can also lead to adverse legal consequences for the foreign business entity, including administrative penalties or forced termination of the Representative Office’s operations.

3. Compliance obligations during the operation of Representative Office

The operations of a representative office are bound by several relatively strict legal limitations and obligations stipulated in Vietnamese law, reflecting the unique nature of a commercial presence without business functions. Specifically, these include:

Representative offices of foreign traders are limited in scope of operation. As mentioned above, representative offices of foreign traders are not allowed to directly conduct transactions to generate revenue, issue invoices, or operate as independent business entities. In some cases, contract signing can only be done on the basis of legal authorization from the foreign trader.
The obligation to submit periodic reports is mandatory, requiring the representative office to send an annual activity report to the licensing authority. The report should accurately reflect the operational situation, personnel, and issues arising during operation.
In the labor sector, the use of personnel by the Representative Office, especially foreign employees, must comply with regulations on work permits, labor contracts, and related obligations. At the same time, the Representative Office must still fulfill its tax obligations on the income of its employees, even if no revenue is generated.
In addition, administrative obligations such as seal registration, notification of changes in business activities, and readiness for inspections and audits from state agencies are inseparable elements in the operation of a representative office of a foreign trader.

Establishing and operating a representative office in Vietnam involves more than just initial procedures; it also requires continuous compliance with the relevant legal system. Foreign investors and businesses need to proactively research legal regulations before establishment and regularly update and review them throughout the operation to minimize legal risks. Thorough preparation and strict compliance will be crucial for the stable operation of the representative office, ensuring compliance with regulations and achieving long-term business goals in Vietnam.