Procedures for closing foreign representative offices in Vietnam

Representative offices of foreign traders perform the functions of liaison offices, market research, promotion, and promotion of business investment opportunities of foreign traders in Vietnam. Representative offices have obligations under the provisions of the Commercial Law of Vietnam.

After a period of operation, the foreign company wants to terminate the process of the representative office in Vietnam for some reason. At that time, the foreign trader is responsible for carrying out the procedures for closing or dissolving the representative office under Vietnamese law.

The following article of AZLAW will provide detailed information from the implementation process to the documents that need to prepare when carrying out this procedure.

Cases and conditions for representative office closure

To be able to carry out the procedures for closing a foreign representative office in Vietnam, the representative office must be in 1 of 6 cases and satisfy the following conditions:

6 cases of foreign representative offices closing

A foreign representative office shall terminate its operation only in the following cases:

• Case 1: At the request of a foreign trader, the office can actively carry out the closing procedures before the license expires.
• Case 2: When the parent company terminates its operation under the country’s laws or territory where the parent company established or registered its business.
• Case 3: The operation period on the license has expired, but the foreign trader does not carry out the procedures for applying for an extension.
• Case 4: The operation period under the License for Establishment of a Representative Office has expired, but the License-Issuing Authority disapproves extending the operation.
• Case 5: Foreign traders have their representative office establishment licenses revoked under a decision of a competent state agency.
• Case 6: Foreign traders, representative offices no longer satisfy one of the following conditions:

• • Foreign traders are not allowed to establish or register their business under the laws of the countries and territories participating in international treaties in which Vietnam is a signatory or recognized by this country and territory law;
  • Foreign traders have not been established and operated for at least 01 years from the date of establishment or business registration;
  • In case the business registration certificate or equivalent legal document of the foreign trader has regulations on the operation term, which is still at least 01 year from the date of application;
  • The operation contents of the Representative Office are no longer consistent with Vietnam’s commitments in international treaties to which Vietnam is a signatory.

Conditions for dissolution of a foreign representative office in Vietnam

A foreign representative office may terminate its operation (dissolution) only when all of the following conditions are satisfied:

• The foreign trader ensures that he has fully paid the representative’s office’s debts and other property obligations, including employees’ wages, tax debts, social insurance debts, and debts of business partners.
• Representative offices are not part of the dispute settlement process at Commercial Arbitration or Court.

Procedures for closing foreign representative offices in Vietnam

Step 1: Carry out procedures for TIN deactivation at the tax authority directly managing

It is the most complicated step due to the tax inspection and finalization procedures. The tax management officers will review all remittance transactions from the head office of the representative office, all expenses paid to ensure that all activities comply with tax regulations and Laws anti-money laundering.

Dossier for Tax code deactivation includes:

• Tax code termination declaration (Form 24/DK-TCT Circular 105/2020/TT-BTC)
• Written termination of representative office operations for the reasons above
• The decision to dissolve the representative office
• Certified copy of representative office operation registration certificate
• Original tax code registration certificate (if any)

Step 2: Return the seal to the police office of the provincial or city police

Based on the decision to terminate the operation of the representative office, it must do the canceling the circular seal at the provincial/city police office. Documents include:

• The official letter requesting the return of the seal of the representative office to the police agency, clearly stating the reasons for the need to return the seal;
• A certified copy of the granted License for Establishment of a Representative Office; 
• The police agency issued the original registration of the old seal sample to the representative office.
• The letter of introduction to return the seal is enclosed with the person’s papers to carry out the stamp return procedure.

Note:

• The licensing agency shall check and request additional documents if the application is incomplete or invalid. The request for other documents is made at most once during the processing of the application.
• This procedure does not apply to foreign traders in industrial parks, high-tech zones, export processing zones, or economic zones.

Step 3: Carry out the dissolution of the representative office at the Department of Industry and Trade.

• Foreign traders shall carry out procedures to submit dossiers for operation termination of representative offices directly or by post or online to the operation licensing agency. Documents required in the application include:
• A notice of the trader’s termination of operation of a representative office shall be signed by a competent representative of the foreign trader unless the trader’s License to establish a representative office is revoked.
• A valid certified copy of the document of the agency that has granted the License not to renew the representative office establishment license or a copy of the decision on revocation of the representative office establishment license(prescribed in Clause 5, Article 35 of Decree 07/2016/ND-CP);
• List of creditors and unpaid debts, including tax debts and social insurance contributions;
• List of employees and their respective current benefits;
• The original License for the establishment of a representative office; 

Within 03 working days from receipt of the trader’s dossier, the licensing agency will inspect and request the trader to supplement if the dossier is incomplete or invalid. The issuance of additional requests shall be processed at most once while processing a trader’s dossier.

Within 05 working days from the date of receipt of complete and valid dossiers of foreign traders, the representative office licensing agency will be responsible for publishing the notification of foreign traders on its website notice of termination of operation of the representative office.

Responsibilities of representative office upon termination of operation

• To publicly post up notices of termination of process at the head office of the Representative Office and perform other obligations as prescribed by law upon the termination of the operation.
• Foreign traders whose representative offices have ceased to operate will be responsible for performing contracts, paying debts including tax debts, and fully settling legal rights for employees working at the representative office, following the law.

Regulations on penalties for failure to carry out procedures to close foreign representative offices

According to Decree 98/2020/ND-CP, which stipulates the level of administrative sanctions when the Representative Office fails to terminate the provisions as follows properly:

• A fine ranging from VND 5,000,000 to VND 10,000,000: Representative offices doesn’t make public listings cease to operate
• A fine ranging from VND 10,000,000 to VND 20,000,000: Representative offices operate beyond the prescribed time limit without notifying competent state management agencies.
• A fine ranging from VND 30,000,000 to VND 50,000,000: Representative offices are still operating when:

• Foreign traders have closed their operations.
• The License has expired but has not been renewed or has been revoked by the state.

Notes on the dissolution of a representative office

• Foreign traders and the head of a representative office, when carrying out the operation termination procedures, must jointly take responsibility for the truthfulness and accuracy of the representative office termination documents.
• In case when the tax agency checks and compares, if the documents and data provided do not match the actual data, there are arising amounts that are not declared. Representative offices are subject to penalties as prescribed by law, and terminating operations will also take longer.
• The dossier accomplishes when the representative office fulfills all its obligations on declaration and payment of related taxes and receives a certificate from the tax authority. 

If you need to consult, use the dissolution service of a foreign representative office, don’t hesitate to contact AZLAW for specific advice.

AZLAW CONSULTING COMPANY LIMITED

Address: K28, Alley 68 Trung Kinh, Yen Hoa Ward, Cau Giay District, Hanoi City

Mobile: 0987.748.111 – 024.22151888

Email: info@azlaw.com.vn Website: https://azlaw.com.vn