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QUESTION:
What Is Difference Between Subsidiary And FDI Company In Vietnam?
We are an logistic company from Singapore. We are planning to open company in Vietnam. Could you advise us what is difference between subsidiary and FDI company in vietnam?
Best regards,
Ale
ASL LAW’S ADVICE
Dear Mr. Alex,
Thanks for your following letter and we would like to advise you on the difference between Subsidiary And FDI Company In Vietnam as the following table:
| Subsidiary of foreign company in Vietnam | FDI company in Vietnam | |
| Legal document | – Commercial law in 2005
– Decree 07/2017/ ND-CP on representative office and branch of foreign company. |
– Investment law in 2014
– Decree no. 118/ND CP guiding investment law. |
| Authority | – Ministry of industry and trade | – Department of Planning and Investment of the provinces or management board of industrial zones where they are headquartered |
| Conditions of establishment | – Foreign company must operate at least 5 years before registering subsidiary establishment in Vietnam.
– A WTO member or participating in an international treaty which Vietnam is a member. |
– A WTO member. |
| Business line | – Business line is stipulated in WTO commitments.
– Business line is registered to operate by foreign company (Clause 4 article 8 of decree no. 07/2016 guiding representative office and subsidiary) |
– Business line is stipulated in WTO commitments.
– Application of specialized law to each business line with conditions. |
| Authorized capital | – Authorized capital is not recognized, this is allocated by foreign company to its branch in Vietnam. | – Register investment capital, authorized capital on investment registration certificate, business registration certificate. Foreign investor must contribute capital as committed. |
| Operation time | – 5 years, then extended. | – It depends on implementation time of project. It can be 5 years, 10 years, 15 years… It depends on registration time of project implementation. |
| Tax | – Tax office of the province where the office is located | – Tax office of the province where the office is located. |
| Obligation | – Foreign company shall be jointly liable for all obligations towards a Vietnamese-based branch, including fines to state budget. | – Foreign company shall not be jointly liable for the project’s obligation in Vietnam but company in Vietnam shall be directly responsible for declaration of capital contribution. . |
| Model | – Not a legal entity, but has its own seal, which is permitted to carry out business transaction based on registered business lines but not being separated from the foreign company. Foreign company shall solve all relevant issues to Vietnamese state authorities. | – A independent legal entity, having its own seal and conduct transactions which are independent of foreign company.
– Company in Vietnam shall itself solve all issues and tasks relating to Vietnamese state authorities, including proceedings. |
If you have any inquiry, please do not hesitate to contact us.
We look forward to hearing from you soon.
Best regards,
ASL LAW – VIETNAM BUSINESS LAW FIRM
