I.
The statement is incorrect.
- According to Clause 4, Article 16 of the 2005 Commercial Law, a foreign-
invested enterprise is considered a Vietnamese trader if it is established by
foreign traders in Vietnam according to Vietnamese law or international treaties
to which the Socialist Republic of Vietnam is a party. Therefore, the owner of the
enterprise does not have to be of Vietnamese nationality. So, the above
statement is wrong because it wrongly asserts that the owner must have
Vietnamese nationality.
II.
Criteria Vietnamese Traders Foreign Traders Bussiness Subjects with
foreign factors
Nationality Individuals holding Individuals holding Can be either Vietnamese
Vietnamese foreign nationality or or foreign traders but
nationality or organizations involve foreign factors
organizations established under (such as capital,
established under foreign law. (Clause 1, management, or
Vietnamese law. article 16, cooperation).
(Clause 1, article 6, Commercial law
Commercial law 2005) 2005)
Scope of Operation Primarily operate in Operate abroad but Operate in Vietnam but
Vietnam. may expand to involve foreign factors such
Vietnam through as foreign investment,
branches, partnerships, or joint
representative offices, ventures.
or investments.
(Clause 2; 3 ,article
16, Commercial law
2005)
Applicable Law Governed by Governed by foreign Subject to both Vietnamese
Vietnamese law. law (of the place of and foreign laws,
establishment); depending on specific
however, if operating circumstances.
in Vietnam, also
subject to Vietnamese
law.
Organizational Sole proprietorships, Foreign companies, Foreign-invested
Forms private enterprises, branches, enterprises, joint ventures,
limited liability representative offices business cooperation
companies (LLCs), in Vietnam. (Clause 2; contracts (BCCs),
joint-stock companies, 3, article 16, subsidiaries of foreign
etc. Commercial law companies, etc.
2005)
III. Procedures for John's business to legally operate as an independent
branch in Vietnam:
Conditions for Establishing a Branch:
Mr. John's enterprise must meet the following conditions as per Article 8 of Decree
No. 07/2016/ND-CP:
1. Legal Establishment and Registration:
- The enterprise must be established and registered according to the laws of the
country or territory that is a member of an international treaty to which Vietnam is a
member or recognized by the laws of these countries or territories.
- The enterprise must have been operating for at least 5 years from the date of
establishment/registration.
- If the Business Registration Certificate (or equivalent document) specifies a
term, it must have at least 1 year remaining from the application date.
- The branch's activities must align with Vietnam's market-opening commitments
in international treaties and the business lines of the foreign trader.
- If the branch's activities do not align with Vietnam's commitments or the foreign
enterprise is not from a country or territory participating in an international treaty to
which Vietnam is a member, approval from the Minister of the specialized
management ministry is required.
Dossier for Establishing a Branch:
According to Article 12 of Decree No. 07/2016, the dossier includes:
1. Application form for the Branch Establishment License, signed by the authorized
representative.
2. Copy of the Business Registration Certificate (or equivalent document), translated
into Vietnamese and authenticated.
3. Document appointing the branch head, translated and authenticated.
4. Audited financial statements or equivalent documents proving the business's
existence and operation, translated and authenticated.
5. Copy of the branch's operational charter, translated and authenticated.
6. Copies of identification documents for the branch head.
7. Documents regarding the branch's proposed location.
8. Power of attorney, if applicable.
Procedures for Establishing a Branch:
As per Article 13 of Decree No. 07/2016:
1. Submit the dossier to the Ministry of Industry and Trade directly, by post, or
online (if applicable).
2. The Ministry checks the dossier within 3 working days and requests additional
documents if needed.
3. The Ministry issues or denies the Branch Establishment License within 7 working
days of receiving a valid dossier.
4. If branch activities do not align with commitments, the Ministry consults the
specialized management ministry, which responds within 5 working days. The
Ministry then issues or denies the license within 5 working days of receiving the
response.
Note:
1. Non-Grant Situations:
- License is not granted if conditions are unmet, dossier is invalid and not
supplemented, a previous license was revoked within 2 years, or establishment is
restricted for national defense, security, social order, ethics, or health
reasons.
2. Post-Establishment Requirements:
- Create a legal entity seal.
- Purchase a digital signature and electronic invoices.
- Declare taxes, submit quarterly and annual financial reports.
- Fulfill reporting obligations to the Ministry of Industry and Trade by sending an
activity report before January 30 each year.
3. License Validity:
- The license is valid for up to 5 years but does not exceed the remaining term of
the Business Registration Certificate. It can be reissued with the same validity.
4. Branch Head Regulations:
- The head is responsible to the foreign trader for branch activities and must
authorize another person if leaving Vietnam. Appointment of a new head is required
if the current head cannot continue their duties due to various reasons. The head of
the branch cannot concurrently hold positions such as the head of another foreign
trader's representative office, head of the current foreign trader's representative
office, or legal representative of an economic organization established in Vietnam.
