A branch has no separate legal personality, so “converting a branch into a company” in substance means closing one legal presence and opening another — with its own asset and tax-code puzzles. This article goes straight to the legal basis in force on 20 October 2026 for converting a foreign trader’s branch into a company, cross-checked against filing practice, and flags the points to settle before signing anything.
1. The current legal framework
under the Enterprise Law 59/2020/QH14, reorganisation comprises division (Article 198), separation (Article 199), consolidation (Article 200), merger (Article 201) and conversion (Articles 202-205) — the foundation of converting a foreign trader’s branch into a company. Unlike a domestic company, converting a foreign trader’s branch into a company at an FDI company always raises the Investment Registration Certificate question: capital, investors and project organisation form are all contents recorded on that certificate. The labour consequences of converting a foreign trader’s branch into a company are locked in Article 44 of the Labour Code 2019, while money splits into two distinct regimes: severance (Article 46) and job loss (Article 47). converting a foreign trader’s branch into a company is subject to the current tax-administration framework: the Law on Tax Administration 108/2025/QH15 (replacing Law 38/2019/QH14); when converting a foreign trader’s branch into a company reorganises, tax-code procedure follows Circular 90/2026/TT-BTC, which replaced Circular 86/2024/TT-BTC from 1 July 2026.
2. Analysis on the facts
A two-ended sequence: form the company, terminate the branch. The investor forms a new LLC or JSC through the ordinary investment and enterprise registration sequence, while running the branch-termination procedure under Decree 07/2016/ND-CP. The two tracks run in parallel, but the new company must be ready to receive the business before the branch closes, because once the branch licence ends, the branch’s trading activity stops entirely.
The branch’s tax code and finalisation. A branch holds its own tax code (a dependent-unit code) and on termination must complete tax finalisation, close out invoices and close the tax code with its managing tax authority before the licensing body confirms termination. The new company receives an entirely separate enterprise and tax code — there is no mechanism to move a tax code from branch to company, and the branch’s unoffset losses do not automatically follow into the new company.
Where the branch’s assets go. Assets on the branch’s books belong to the foreign trader (the branch is not an independent owner): moving them into the new company is done by capital contribution in kind or by asset sale, with valuation and customs records for imported goods and equipment. Labour contracts are handled as an ordinary employer change: termination with the branch and new contracts with the company, with seniority recognised by agreement.
3. Implementation sequence
In practice, registration authorities process converting a foreign trader’s branch into a company under the consistent sequence below:
- converting a foreign trader’s branch into a company opens with a reorganisation resolution or decision adopted by the owner, the Members’ Council or the General Meeting of Shareholders.
- Under Article 44 of the Labour Code 45/2019/QH14, converting a foreign trader’s branch into a company must come with a labour-use plan and the employee-notification step in the proper sequence.
- converting a foreign trader’s branch into a company is completed at the enterprise stage by filing the registration dossier with the Business Registration Office where the head office is located.
- If converting a foreign trader’s branch into a company changes capital, investors or the project’s organisational form, the IRC must be amended accordingly.
- converting a foreign trader’s branch into a company triggers an obligation to update the tax code, invoices, the ICA bank account and the sub-licences tied to the legal entity.
4. Risks and practical notes
Another risk in converting a foreign trader’s branch into a company is underestimating local practice: the same form can be processed differently across provinces. The part of converting a foreign trader’s branch into a company most often sent back is the explanation of financial capacity and the source of funds — not the administrative forms. Preparing source-of-funds evidence early keeps converting a foreign trader’s branch into a company from drifting beyond the planned timeline.
5. Conclusion for the investor
In short, let market-access conditions and control objectives drive converting a foreign trader’s branch into a company, rather than habits imported from another market. Do not skip the short legal screening before filing in converting a foreign trader’s branch into a company — it is usually far cheaper than one project amendment after operations have begun.
Frequently Asked Questions
How is a foreign trader’s branch converted into an LLC or JSC?
Through two parallel procedures: forming the new company via investment and enterprise registration, while terminating the branch under Decree 07/2016/ND-CP. The new company must be ready to receive the business before the branch closes so trading is not interrupted.
Must the branch’s tax code be closed?
Yes. The branch must finalise tax, close out invoices and close its dependent-unit tax code with its managing tax authority; in practice this is a condition for completing the termination. The new company uses its own enterprise and tax codes and does not inherit the branch’s code.
How do the branch’s assets move to the new company?
Branch assets belong to the foreign trader, so they enter the new company by contribution in kind or by an asset purchase agreement, with valuation and customs files for imported equipment. The branch’s unoffset losses do not automatically transfer to the new company.
This article has been quality-reviewed by the FLAW AI Legal Council
