Distinction between Branch and Representative Office
CCPL: Law on Enterprises 2014, Official Dispatch 1056/CT-TTHT in 2017, Circular 156/2013/TT-BTC, Circular 26/2015/BTC.
A branch is a dependent unit of the enterprise, responsible for performing all or part of the functions of the enterprise, including the function of a representative by authorization. The business lines of the branch must match the business lines of the enterprise.
A representative office is a dependent unit of the enterprise, tasked with representing the interests of the enterprise by authorization and protecting those interests.
According to the Law on Enterprises 2014 and related guiding documents, branches and representative offices have the following differences:
| Criteria | Branch | Representative Office |
| Function | Has business function, representative by authorization | Representative by authorization |
| Accounting form | Can choose between dependent accounting or independent accounting | Dependent accounting |
| Tax declaration | + License fee + Corporate income tax (CIT) + Value-added tax (VAT) Depending on the choice between dependent accounting or independent accounting, there are different declaration methods according to Circular 156/2013/TT-BTC. |
+ License fee: The representative office is not required to pay the license fee due to the absence of business functions. + Value-added tax: If the representative office does not directly sell goods, does not generate revenue, then the Company declares taxes centrally at its headquarters. Input invoices related to the operating expenses of the Office (bearing the name, tax code of the Office) allow the Company to declare input VAT deduction if it meets the conditions for input VAT deduction according to regulations. + Regarding personal income tax (PIT): If the Company directly signs labor contracts and pays salaries to employees working at the Office, the Company is responsible for deducting, declaring, and paying PIT centrally at the Company. If the Office directly pays salaries to employees, the Office must perform taxpayer registration, deduct, declare, and pay PIT to the tax authority directly managing the Office. |
The above is the advisory content regarding the differences between branches and representative offices.
Sincerely!
