Table of Contents/Mục lục
A representative office or branch shall be shut down if (according to Article 35 Decree 07/2016/ND-CP)
- It is requested by its head office;
- The foreign trader ceases to operate according to laws of the country or territory in which such foreign trader is established or registered.
- The License for Establishment of the representative office is expired but its head office does not apply for an extension of the license.
- The licensing agency refuses to grant an extension of the expired License for Establishment of the representative office.
- The License for Establishment of the branch or representative office is revoked as prescribed in Article 44 this Decree.
- The foreign trader or its representative office no longer satisfies one of the requirements stipulated in Articles 7 the Decree 07/2016/NĐ-CP.
Article 44. The License for Establishment of representative offices or branches shall be revoked if such representative offices or branches :
- Fail to come into operation for 01 year and fail to enter into transactions with licensing agencies.
- Fail to submit reports on the operation of the representative office for 02 consecutive years.
- Fail to submit reports stipulated in clause 2, Article 32 the Decree 07/2016/NĐ-CP to the licensing agency within 06 months from the deadline of submission or at the written request of the licensing agency.
- Be governed by provisions of laws.
Article 7. Requirements for grant of Licenses for Establishment of representative offices
- The foreign trader is incorporated and registers for doing business in accordance with provisions of laws of countries or territories being parties to treaties to which Vietnam is a signatory or is recognized by the aforesaid countries or territories;
- The foreign trader has come into operation for at least 01 year from the date of establishment or registration;
- The Certificate of Business Registration or the equivalent document is valid for at least 01 more year from the date of submission of the application;
- The scope of operation of the representative office is consistent with that in Vietnam’s Commitments to treaties to which Vietnam is a signatory;
- Where the scope of operation of the representative office is inconsistent with Vietnam’s Commitments or the foreign trader is not located in the country or territory being party to treaties to which Vietnam is a signatory, the representative office can be established only if relevant Ministers, Heads of ministerial agencies (hereinafter referred to as “relevant Ministers”) have given approval for establishment of the representative office.
The procedure of the foreign representative offices’ dissolution in Vietnam
Step 1: Submit the dissolution dossier of the foreign representative office at the licensing authority.
Required Documents:
- A notification of shutdown of the representative office or branch using the form issued by the Ministry of Industry and Trade and signed by a competent representative of the foreign trader, excluding cases specified in clause 5, Article 35 Decree 07/2016/ND-CP
- Copies of written refusals of grant of extension of the license or establishment of the representative office or branch (for those specified in clause 4, Article 35 Decree 07/2016/ND-CP) or a copy of the decision on revocation of the license for establishment of the representative office or branch released by the licensing agency (for those specified in clause 5, Article 35 Decree 07/2016/ND-CP);
- Lists of creditors and the number of debts, including outstanding taxes and social insurance premiums;
- Lists of employees and their current benefits;
- The original License for Establishment of the branch or representative office.
Step 2: Complete tax obligations before terminating operations of the Representative Office: Finalization of PIT for the head of representative office and all employees.
– Pay tax debts or other obligations to tax authorities and social insurance for employees, liquidate labor contracts, liquidate office lease contracts …
Step 3: After receiving the decision to terminate the operation of the representative office, granted by a competent agency. Foreign traders proceed to return the seals to the seal-issuing agencies.
*** The notice for termination of the representative office operations of foreign traders.
In addition to carrying out procedures for terminating operations as prescribed at law, foreign traders must publicly post about the termination of operations at the headquarters of the representative offices and perform the obligations according to the legal regulations when the Representative Office terminates its operation.
Foreign traders whose representative offices have terminated their operations are responsible for performing contracts, paying debts, including tax debts, and settling all lawful benefits for laborers who have worked for that representative office.
The foreign trader and the head of the representative office terminating their operations are jointly responsible for the truthfulness and accuracy of the dossier of termination of the operation of the representative office or branch.
In case the Representative Office terminates its operation in a province/city under central authority or a geographical area under the management of a Management Board to relocate its head office to another province, city directly under the Central Government or a geographical area under the management of another Management Board, the representative office shutdown file only includes the Notice of Termination of the Office operation and a list of employees and their respective current benefits.
The application is only considered valid when the office completes all relevant tax declaration and payment obligations, and the tax department issued a certificate of tax obligation completion. This is really the most difficult and risky step because most representative offices rarely collect sufficient invoices and receipts for the expenses made, and do not prepare the income statement… leads to the inability to prove and accountable with the tax inspector. Which means that in fact there are many correct amounts which are the costs of the office but cannot prove and be considered is the income subject to PIT. Based on tax administration and anti-money laundering regulations, tax authorities may issue decisions to collect arrears and penalties for inexplicable amounts, with years of cumulative data, leading to a large amount of taxes and penalties before you can receive a certificate of tax obligations.
Note: The content of the advice and legal provisions referenced in this post are effect at the time of consulting and may no longer be effective at the time readers accesses this article. Should you need any detail information and supports, please reach Law Plus at email address info@lawplus.vn or phone number +84 2862 779399.
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Related:
- Procedures for establishing a representative office for foreign investors in Vietnam
- Doing business in Vietnam
- Investing into Vietnam
