Legal regulations on business locations of foreign-invested enterprises

A business location is an essential element for every enterprise, especially for foreign-invested companies operating in Vietnam. The selection and registration of a business location not only affect the operations of the enterprise but also must strictly comply with relevant legal regulations.

In this article, NPLAW provides legal consultation on business locations of foreign-invested enterprises in Vietnam.

I. Understanding business locations of Foreign-Invested Enterprises

1. What is a Business Location of a Foreign-Invested Enterprise?

Pursuant to Clause 22, Article 3 of the Law on Investment 2020, a foreign-invested economic organization (including foreign-invested enterprises) is defined as an economic organization in which a foreign investor is a member or shareholder.

Meanwhile, a business location is a dependent unit of an enterprise. According to Clause 3, Article 44 of the Law on Enterprises 2020, a business location is a place where the enterprise conducts specific business activities.

-> Therefore, a business location of a foreign-invested enterprise is the place where the foreign-invested enterprise conducts specific business operations in Vietnam.

2. Forms of establishing a business location

A foreign-invested enterprise in Vietnam can establish a business location to expand its operations without registering a branch or subsidiary. The business location can be set up in the following forms:

- Business location under the head office: The location may be situated in the same province/city or a different one compared to the company’s headquarters;

- Business location under a branch or representative office: This form applies only if the company has already established a branch or representative office in Vietnam.

II. Legal regulations on Business Locations of Foreign-Invested Enterprises

1. Conditions for establishing a business location

According to Article 40 of the Law on Enterprises 2020 and Article 20 of Decree No. 01/2021/ND-CP, the conditions for establishing a business location include:

- The name of the business location must be written using Vietnamese alphabet characters, including the letters F, J, Z, W, digits, and symbols;

- The name must contain the company name followed by the phrase “Business Location”;

- The name must be written or displayed at the premises of the business location;

- In addition to the Vietnamese name, a business location may register a foreign language name and an abbreviated name:

+ The foreign name is a Latin alphabet translation of the Vietnamese name;

+ The abbreviation can derive from either the Vietnamese name or the foreign name;

- The distinct part of the name must not include the words “company” or “enterprise”;

- For 100% state-owned enterprises converted into dependent accounting units due to restructuring, the original state enterprise name may be retained.

2. Procedures for establishing a business location

According to Article 45 of the Law on Enterprises 2020 and Article 31 of Decree 01/2021/ND-CP, the process of notifying the establishment of a business location includes:

Required Documents:

- A notice of establishment of a business location:

+ If under the company: signed by the legal representative;

+ If under a branch: signed by the head of the branch;

- A copy of the enterprise registration certificate.

Notification Procedure:

Step 1: Submitting the notification
Within 10 days from the date the decision to establish the business location is made, the enterprise must submit the notification to the Business Registration Office where the location is situated.

Step 2: Processing
Within 03 working days from the date of receiving the application:

- If the documents are valid, the Business Registration Office will update the national enterprise registration database;

- Upon request, the office may issue a Certificate of Business Location Registration;

- If the application is invalid, a written notice will be sent, specifying required modifications or additional information.

III. Frequently asked questions regarding business locations of foreign-invested enterprises

1. Is the head of a business location required to be the company’s legal representative?

Current legal documents do not specify who must serve as the head of a business location. However, to manage operations at the location, the individual must meet certain legal conditions. Not everyone is eligible to serve in this role—they must meet the following:

- Be at least 18 years old;

- Have full legal capacity and mental competence;

- Must not:

+ Be under criminal investigation, detention, or serving a criminal sentence;

+ Be undergoing administrative enforcement at rehabilitation centers or reeducation centers;

- Be prohibited by a court from holding positions or engaging in certain professions;

- Must not be a public official, civil servant, or member of the armed forces as regulated by the Law on Cadres and Civil Servants or the Law on Public Employees, except those appointed as representatives of state capital at enterprises or state-owned enterprises.

-> Therefore, the legal representative of the company may serve concurrently as the head of the business location, or any qualified individual who meets the above criteria may be appointed.

2. Tax obligations upon establishing a business location

Declaration and payment of business license fee:

- Pursuant to Clause 1, Article 11 of Decree 126/2020/ND-CP: Taxpayers with business activities in multiple provinces must submit the license fee declaration to the tax authority in the locality where the business location is situated. The business license fee applicable to a business location is VND 1,000,000 per year, as stipulated in Point c, Clause 1, Article 4 of Circular 302/2016/TT-BTC.

VAT declaration and payment:

- If the business location generates business activities and revenue, it must declare and pay VAT in accordance with Clause 1, Article 45 of the Law on Tax Administration 2019.

Corporate Income Tax (CIT):

- If the business location is a dependent accounting unit, it is not required to file separate CIT declarations. Instead, the parent company must consolidate and file taxes centrally, including income generated from the business location.

IV. Legal consulting services on business locations for foreign-invested enterprises

The above content summarizes detailed legal information provided by NPLaw to support clients regarding the establishment and operation of business locations for foreign-invested companies. Should you have any further questions or require legal support on this matter or others, please do not hesitate to contact NPLaw for direct consultation and assistance from our experienced legal team.