The setup: a Japanese company’s rep office license lists its scope as “trade promotion, market research.” The chief representative gets a request from a Vietnamese client: “please sign this purchase contract for us — Tokyo is too busy.” Sign or not? The answer sits in those two phrases on the license — and the line between them is thinner than most people think.
Two functions, one shared boundary: no direct profit
Article 30 of Decree 07/2016/ND-CP (in force as of 19 October 2026) defines rep-office functions: liaison office, market research, and promoting the represented trader’s investment and business opportunities. Article 18 of Commercial Law 36/2005/QH11 draws the red line: rep offices may not conduct direct profit-generating activities in Vietnam.
“Market research” means gathering information, surveying, and reporting back to the parent — not selling research reports for fees. “Trade promotion” means introducing, connecting, and marketing so the parent signs contracts — not signing sales contracts itself. Both functions serve one purpose: clearing the path for the parent, not running a business of the office’s own.
Permitted and prohibited
Permitted: meeting partners, introducing the parent’s products, monitoring and pushing performance of contracts already signed by the parent with Vietnamese counterparts, hiring staff and handling their PIT obligations.
Prohibited: signing goods/services contracts with Vietnamese partners, generating revenue, issuing VAT invoices, standing as importer/exporter of record, contributing investment capital.
The single exception: Article 33(7) of Decree 07/2016 lets the office chief conclude contracts when authorized in writing by the foreign trader for each transaction — blanket or verbal authorization does not count. Even then, the contract remains the parent’s, money flows to the parent, and the office keeps no revenue.
What happens when the scope is exceeded?
Operating beyond the licensed scope is an administrative violation in the commercial sector, punishable under Decree 98/2020/ND-CP (as amended by Decree 17/2022/ND-CP), and grounds for license revocation. In practice, regulators usually discover it through snap inspections or when the office “shows up” on invoices and payment documents in its own name.
Frequently asked questions
1. May a rep office sign sales contracts with Vietnamese partners?
No — unless authorized in writing by the parent for each transaction (Article 33(7) of Decree 07/2016); the contract still belongs to the parent.
2. May it sell market-research reports for fees?
No — that is direct profit generation, violating Article 18 of the Commercial Law; research reports serve the parent internally only.
3. May it monitor the parent’s contracts?
Yes — tracking and pushing performance of parent-signed contracts is part of the promotion function; but it may not amend contracts without per-transaction authorization.
4. How can the scope be expanded?
A rep office cannot “expand” into profit activity — to do business, set up a subsidiary or branch; only administrative items (address, chief) can be amended.
5. How does a rep office differ from a branch?
A branch may conduct profit activity, sign contracts, earn revenue, and must file and pay taxes; a rep office only liaises, researches, and promotes, generating no revenue.
This article has been quality-reviewed by the FLAW AI Legal Council