The “executive office” is the lightest form of presence of a foreign investor/contractor in Vietnam: the executive office of a foreign investor under a business cooperation contract (BCC) under the Investment Law, and the executive office of a foreign contractor performing a contract in Vietnam. It has no legal personality and conducts no independent business — yet it holds a seal, a bank account, may employ labour, and carries its own project-linked accounting and tax duties.
Must an executive office prepare financial statements?
An executive office is not an enterprise, so it does not prepare enterprise financial statements like a company or a branch; instead, the applicable regime is project/contract-based accounting and reporting: the office must keep accounting records for the revenues and expenditures of the project it administers (books and vouchers under accounting law), declare and pay the taxes connected with its Vietnamese activities (typically foreign contractor tax for contractors, withheld PIT for employees, and settlement of project taxes as allocated in the contract), and report project implementation to the investment registration/managing authority as required by its licence and project management rules. In other words: no standard financial-statement duty as a standalone accounting unit, but full record-keeping, tax declaration and project reporting duties — and on a tax inspection, every project cost passing through the office must be traceable by vouchers.
How does it differ from a branch in accounting terms?
- Scope of activities: a branch may conduct profit-making business under its licence (trading goods, supplying registered services); an executive office only administers the performance of one specific project/contract and does not itself run independent business beyond the project scope.
- Reporting duties: a branch is a full accounting unit — separate financial statements, mandatory audit, CIT finalisation as an independent taxpayer (topics FDI-LC-2054, FDI-LC-2055). An executive office reports by project: declaring taxes attached to its administering activities (contractor tax, PIT) and reporting project progress/finances to the managing authority.
- Profit centre: a branch has its own taxable business result; an executive office is not a profit centre — the project’s results belong to the BCC parties/contractor as allocated in the contract.
Can the executive office’s costs be charged to the project?
Yes — project administration costs (expert and staff salaries, office rent, equipment, services directly serving contract performance) are costs of the project/contract, booked into project performance costs under the BCC or contract mechanism, provided they carry valid vouchers and fall within the budget/spending authority of the office. For tax purposes, these costs are considered as costs of the bearing party under the contract (the BCC investor or the foreign contractor) when determining that party’s Vietnamese tax duties. The boundary to hold: the executive office must not use “project costs” to wrap business activities outside the project — costs not directly related to contract performance are separated out and may raise permitted-scope issues.
When must it become a branch or a company?
Signals to upgrade the presence form: (1) activities expand beyond administering one specific project — starting independent business, selling/serving multiple customers outside the original contract; (2) the project ends but the investor wants a long-term Vietnamese presence; (3) a need for legal personality to contract, own assets, or bid as an independent contractor/supplier. The route then is establishing a branch (keeping the foreign trader’s non-legal-person model) or an FDI subsidiary (where independent legal personality is needed — per the process in topic FDI-LC-2057), while closing the executive office after the project’s final tax settlement and reporting duties.
Frequently asked questions
Must a project executive office prepare financial statements?
It does not prepare enterprise financial statements like a company/branch, not being an enterprise or a full standalone accounting unit. Instead it keeps accounting records of project revenues/expenditures, declares related taxes (contractor tax, withheld PIT) and reports project status to the managing authority under its licence.
How does an executive office differ from a branch in accounting?
A branch is a full accounting unit: separate financial statements, mandatory audit, CIT finalisation as an independent taxpayer, and licensed profit-making business. An executive office only administers one project, reports by project, and is not an independent profit centre.
Can the executive office’s costs be charged to the project?
Yes — administration costs directly serving the project (labour, office, equipment, services) are booked into project/contract performance costs with valid vouchers and within the budget scope. Costs unrelated to the contract are separated out.
When must an executive office become a branch or a company?
When activities exceed administering one project (independent business, multiple outside customers), when the project ends but a long-term presence is needed, or when legal personality is required to contract and own assets — establish a branch or subsidiary and close the office after final settlement.
This article has been quality-reviewed by the FLAW AI Legal Council
