Question:
I am a representative of a foreign enterprise planning to establish a branch in Vietnam to carry out activities such as consulting, marketing, agency services, trust asset management, foreign economic activities, organizing conferences, interacting with the public and state authorities in the field of nuclear power plant construction, and international cooperation. According to Vietnamese law, are there any restrictions or prohibitions on establishing such a branch? What business form is suitable for the activities I intend to conduct?
Answer:
Based on the client’s planned activities, there are eight main categories: consulting, marketing, agency services, trust asset management, foreign economic activities, organizing conferences, interacting with the public and state authorities, and international cooperation in the nuclear power sector.
Under the Enterprise Law 2020, a Representative Office is a non-profit entity permitted only to conduct supportive activities such as consulting, market research, and trade promotion. Therefore, if the client’s activities are limited to consulting, marketing, agency services, organizing conferences, public interaction, and international cooperation without generating service contracts, establishing a Representative Office is suitable.
However, activities such as trust asset management and foreign economic activities involve service contracts and revenue generation. In this case, the client must establish a foreign-invested company under the Investment Law 2020, as a Representative Office is not allowed to engage in direct profit-making activities.
Furthermore, pursuant to Decree No. 01/2021/ND-CP guiding the Investment Law and Enterprise Law, foreign enterprises establishing branches or subsidiaries in Vietnam must comply with specific conditions and procedures and are only permitted to operate in industries that are not prohibited or restricted for investment and business.
In conclusion, the choice between establishing a branch or a company depends on the scope and nature of the client’s activities in Vietnam. If the activities are primarily supportive and non-revenue-generating, a Representative Office is appropriate. Conversely, if the activities involve profit-making and service contracts, establishing a foreign-invested company is required..
Consulting reference: Foreign investment services
