Upcoming year-end: Required actions by The Representative Office of a Foreign Trader in Vietnam

As the end of the year is coming close, it is time for businesses to race with business operations and the preparation for the compliance reports.

The Representative Office of Foreign Traders (“RO”), in particular, will need to plan how they will complete full and timely compliance reports to avoid statutory fines for late submission of the required reports, including:

1. Annual report for 2023 operation activities which should be submitted to the Licensing Authority (i.e. the provincial Department of Industry and Trade) by 30 January 2024

  • Before January 30 every year, the RO is responsible for sending reports, according to the form of the Ministry of Industry and Trade, on its activities in the previous year to the licensing agency.
  • Besides, the RO is obliged to report and provide documents or explain the issues related to their operations at the request of a competent state authority.

Failure to submit the annual report or such a late submission would result in a penalty of up to 40 million VND,  and negatively impact on the renewal process of the RO’s license and other procedures in the future.

Simultaneously, additional reports must be submitted as prescribed. Furthermore, the presentation and content of the operation report are related to the basis for comparison with the labor declaration, returns, and finalization of personal income tax of each individual employee, as well as the head of the office.

Accordingly, if signs of a violation are detected, the competent agencies can conduct an interagency inspection, including the coordination of tax and labor agencies as well as the Department of Industry and Trade, to conduct fieldwork directly.

2. Annual finalization for 2023 personal income tax which should be submitted to the Tax Authority by 31 March 2024

Being a dependent unit of a foreign company to conduct several limited commercial promotion supporting activities permitted by Vietnam laws, a Vietnam-based representative office without carrying out any revenue generating activities seems to be quite simple to manage, save cost and simplify the compliance procedures during operation, i.e. no Value Added Tax (VAT), no Corporate Income Tax (CIT), no requirement to maintain the stipulated accounting books, no independent audit required by laws, etc.

However, Vietnam tax authority still conducts tax audits on the representative office to inspect its tax compliance in Vietnam, especially for unusual administrative activities such as closing an office, extending an operation license, requesting a tax refund or even according to the tax authorities’ audit plans.

The RO, therefore, should well prepare for the Personal Income Tax (“PIT”) audit not only at the time of receiving the tax authority’s notification on the tax audit but also during the operation to minimize any unexpected tax risks and additional tax exposures upon tax audit.

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We have been assisting many RO clients in dealing the above issues. Please do not hesitate to contact us to have further discussion, Our contact information is as follows:

Unit 602A, Tower A, Handi Resco Office Building, 521 Kim Ma Street, Ba Dinh District, Hanoi

Tel: + 84 24 3974 4181

Email: service@s4b.com.vn