What are the Differences Between a Vietnam Representative Office and a Company?
A Representative Office in Vietnam differs from a Vietnamese company in several aspects, including Business Activities, Tax Obligations, Legal Status, Financial Commitments.
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1.Business Activities:
A Representative Office is prohibited from engaging in revenue-generating activities such as selling goods, manufacturing, or providing services. In contrast, a company can conduct full-fledged commercial activities.
2.Tax Obligations:
While companies are subject to corporate income tax (CIT), value-added tax (VAT), and other local levies, Representative Offices have limited tax liabilities, primarily related to employee-related taxes and office operations.
3.Legal Status:
A Representative Office functions as an extension of its foreign parent company and does not have independent legal standing, whereas a Vietnamese company is a distinct legal entity with full rights and responsibilities under Vietnamese law.
4.Financial Commitments:
Establishing a Representative Office requires significantly lower capital and operational costs compared to setting up a company, making it a cost-effective option for foreign investors testing the Vietnamese market.
Understanding these distinctions is crucial for foreign businesses considering market entry into Vietnam. Consulting with a qualified Vietnamese lawyer can ensure compliance with local regulations and help determine the most suitable business structure.
Learn more: 13 Essential Facts You Must Know About Setting Up a Vietnam Representative Office to Test the Market
