Updated at 04/07/2022 - 04:15 pm
Bai wrote instructions on how to set up a branch, representative office, business location of the enterprise, how to declare tax for dependent branches
1. Regulations on the establishment of a company branch #
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 an authorized representative.
A branch is a dependent unit of the head office, legally established and has its own seal and account, but is not yet completely independent in terms of assets, must perform legal relations on behalf of the head office, not on behalf of the branch itself, the branch will not have legal status.
The establishment of a branch also has certain requirements as follows:
Condition of branch name
– Branch name must be written with letters of the Vietnamese alphabet, letters F, J, Z, W, numbers and symbols.
– The name of the branch must include the business name and the phrase “Branch”. For example, Branch of ABC Company Limited or Long An Branch of ABC Company Limited, etc.
– The branch name must be written or attached at the branch office. The name of the branch is printed or written in a font smaller than the Vietnamese name of the enterprise on transaction papers, documents and publications issued by the branch.
– In addition to the name in Vietnamese, the branch of the enterprise can register the name in a foreign language and the initials. A name in a foreign language is a name translated from a Vietnamese name into one of the Latin script foreign languages. Abbreviated names are abbreviated from Vietnamese names or names in foreign languages.
– The proper name part in the branch name of an enterprise must not use the phrase “company”, “enterprise”.
Conditions of branch office
Similar to the head office of an enterprise, the branch office also has some conditions such as:
The head office of the branch has a identified address including house number, niche, alley, alley, street, street or hamlet, hamlet, commune, ward, township, district, district, town or city. belonging to a province, province or centrally run city; phone number, fax number and email (if any).
Enterprises have the right to set up branches in the country and abroad. An enterprise may set up one or more branches in one or more localities according to administrative boundaries.
- The apartment is not allowed to be used for non-residential purposes.
Conditions on branches and branches of business
The branch's line of business must be consistent with the business line of the enterprise. Therefore, when registering to establish a branch, the branch is only allowed to register the trades within the business lines that the enterprise has registered. In addition, the branch is not required to register the same as all lines of the enterprise, but can register the number of lines of business less than the number of lines of the parent company.
Conditions for the head of a branch
– The head of the branch must be an individual with full civil act capacity;
– Can be other people or corporate members;
– The head of the branch can concurrently be the legal representative of the enterprise;
– The head of the branch performs the tasks authorized by the legal entity within the authorized scope and time limit.
2. Independent and dependent accounting branches #
Enterprises can choose independent accounting or dependent accounting for their branches. The common points of these two accounting methods are:
– The human resources apparatus organized by the parent company;
- Business capital, production and business efficiency of the branch belongs to the company;
– All activities of the branch must comply with the policy, or as authorized by the company.
Independent accounting branch
Independent accounting can be understood as the branch's financial regime completely independent of the parent company. All economic transactions arising at the branch are recorded in the accounting books of the unit, self-declared and finalized tax. This branch has its own seal and tax code (13 numbers).
- The branch shall submit the enterprise income tax declaration dossier arising at the affiliated unit to the tax authority directly managing the affiliated unit.
- Actively determine taxable expenses and taxable income.
- Fully accounting books, financial statements ... for independent branches alone.
- The parent company summarizes the accounting books of the parent company.
Dependent accounting branch same province
Dependency accounting in the same province can be understood as the branch's financial regime completely dependent on the parent company.
- Branches are not required to submit CIT, VAT and PIT declaration dossiers. The parent company is responsible for making centralized declaration at the head office, including the arising part at the affiliated units.
- The figures in the books are part of the company's books.
- The branch only collects documents and sends it to the main company at the end of the month for tax declaration and finalization.
- A dependent branch in the same province can share invoices with the parent company.
Dependent accounting branch different province
Dependent accounting differs from province to province, although the branch's financial regime is completely dependent on the parent company. However, there are differences in tax declaration and accounting as follows:
- Branches are not required to submit CIT and PIT declaration dossiers. The parent company is responsible for making centralized declaration at the head office, including the arising part at the affiliated units.
- How to declare VAT for dependent branches in different provinces: Separate declaration for VAT of each branch in different provinces.
- Accounting bookkeeping and tracking of separate inventory for the branch related to the VAT part.
- Dependent branches in different provinces use invoices issued separately from the parent company.
Procedures for dissolution of foreign-invested enterprises are the same as those of Vietnamese enterprises in the process of invalidation of business registration certificates.
Particularly, the procedures for dissolution of foreign-invested enterprises may arise two other contents as follows:
- Procedures for terminating an Investment Registration Certificate for a foreign-invested enterprise with an Investment Registration Certificate (ERC)
- Procedures for transferring the remaining investment capital back home through the bank where the investment account is opened / Capital Account.
In case you need this document, please contact Expertis for support.
3. Should you establish a subsidiary or branch for your business? #
What is a subsidiary?
It can be understood simply that a subsidiary is a company in which the parent company owns more than 50% of the charter capital or the total number of ordinary shares of the company; Or having a parent company that has the right, directly or indirectly, to decide on the appointment of a majority or all of the members of the Board of Directors, the Director or the General Director of that company; Or there is a parent company that has the right to decide on the amendment and supplementation of the charter of that company.
What is a corporate branch?
A branch is a dependent unit of an enterprise, responsible for performing all or part of the enterprise's functions, including the function of an authorized representative.
Features of Branches and Subsidiaries
Enterprise branch: When registering to establish a branch, the branch will be granted a branch operation registration certificate and branch code based on the enterprise code. The branch will not have its own capital, but the branch's operating capital will rely on the capital of the main company. The main company is responsible for all obligations arising in the branch.
Subsidiary: When established, the subsidiary will be issued with an Enterprise Registration Certificate similar to a normal company and has its own enterprise code. The charter capital of the subsidiary is clearly stated in the Charter and recorded in the Certificate of Business Registration. The parent company is only responsible for the obligations arising in the subsidiary to the extent of its capital contribution.
Should I set up a Subsidiary or a Branch?
Basically, all subsidiaries or branches are capable of performing production and business functions such as entering into contracts for purchase and sale of goods with partners and customers; carry out production activities, etc. In addition, regardless of the form of establishment, the branch or subsidiary company is also responsible for the implementation of the arising tax obligations.
Therefore, whether to establish a subsidiary or a branch will depend on the purpose of each subject.
When should a branch be established?
When you want to expand the size of the company
+ When the company goes into stability and development to a certain extent, it is very necessary to open a branch. Opening a branch is expanding the business's operating market in a locality or another country, thereby reaching more of its customers.
+ Promote the development direction of the company, bringing the scale of the company to a new level.
Introduce company brand everywhere
When establishing many branches, businesses can easily promote their brand on a large scale. When a business has many branches, of course, it will be known by more people. This is one of the reasons that the more a company wants to grow, the more branches it should establish.
Increase business productivity
When businesses want to increase the productivity of the company effectively, they should establish more branches. Operational productivity from branches will help to add to the revenue of the business.
Therefore, if the enterprise wishes to achieve the above 03 reasons, it should establish a branch for the enterprise.
When should a subsidiary be established?
– When the subject wants to make profitable investments in new industries without affecting the parent company.
– Helping multi-industry companies can break down industries to make it easier to manage and operate, and independent of each other. Specializing in a certain area will help the subsidiary to grow strongly and make the process more efficient.
– Reducing risks for the parent company, helping to reduce the workload for the parent company.
– The subsidiary receives a large amount of investment capital from the parent company, so it is easier to invest in designs and machines.
Especially when conducting a large project that requires many different companies to specialize in one area.
The objective of tax liability processing is to have the tax authority confirmed that it does not owe tax. To be confirmed not to owe tax, the enterprise applies the instructions below.
Which cases do not need tax finalization upon dissolution
1. To pay enterprise income tax according to the percentage of turnover
Enterprises and organizations that are liable to pay enterprise income tax at the rate of% on sales of goods and services in accordance with the law on corporate income tax shall dissolve or terminate their operations.
2. The business does not generate revenue, has not used invoices
An enterprise dissolves or terminates its operation, but from the time it is granted the business registration certificate or the enterprise registration certificate to the time of dissolution or shutdown, the enterprise has not generated any revenue. use invoice.
3. Revenue has been generated, invoices have been used but the following conditions are satisfied:
An enterprise that is liable to pay corporate income tax according to declaration shall dissolve or terminate its operation if the following conditions are satisfied:
- Have an average annual turnover (from the year that has not been finalized or tax inspection or examination to the time the enterprise dissolves or terminates its operation) not exceeding VND 1 billion / year.
- From the year the enterprise has not received the tax finalization, tax inspection or examination to the time of dissolution or shutdown, the enterprise shall not be sanctioned for tax evasion law violations.
- The amount of corporate income tax paid from the year that has not been finalized, tax inspection or examination to the time of dissolution or shutdown is higher than the corporate income tax amount, if calculated as a percentage of the sale turnover. goods and services.
Provisions on the percentage of sales
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For the cases specified at Points 1, 2, 3 above, within 05 (five) working days from the date of receipt of the dossier submitted by the taxpayer (including the decision to dissolve or terminate its operation; documents proving that the taxpayer falls into the above cases and has fully paid payable tax amounts, if any), the tax office shall confirm that the enterprise has fulfilled its tax liability.
Cases subject to tax finalization upon dissolution
In case the enterprise dissolves or terminates its operation which does not fall into the above-mentioned cases, based on actual needs, the tax agency directly managing the taxpayer will conduct tax finalization according to the plan set by the agency. tariff issued.
In order for an enterprise to plan its dissolution tax finalization plan, an enterprise needs to complete and submit the following procedures:
- A written certification of fulfillment of tax obligations with import-export activities by the General Department of Customs if your business has import-export activities. Or a written commitment to have no tax debts and other payables to the state budget related to import-export activities to the date of signing the confirmation of tax debt of the General Department of Customs and take responsibility for this commitment.
- Property liquidation record (if any).
- Notify the result of invoice cancellation and report on the use of the invoice as of the time of submitting the dissolution dossier.
- Finalization of Corporate Income Tax (CIT) and Personal Income Tax (PIT) up to the time of submission of the dissolution dossier.
- Submit Value Added Tax (VAT) declaration by the time of submission of application for dissolution of the enterprise.
- Financial statements are prepared up to the time of settlement. For FDI enterprises, the corresponding audit report must be submitted.
Time limit for processing dissolution dossiers at tax agencies
After all types of documents listed above have been fully submitted, the deadline for tax finalization for dissolution of the company is the forty-five (45) day from the date of submission of the complete application. During this time, enterprises need to carefully prepare, complete accounting books and appoint accountability personnel to work with tax authorities' representatives.
The objective of the settlement of social insurance obligations is to be certified by the social insurance agency that they do not owe social insurance. To be certified not to owe social insurance, the enterprise shall follow the instructions below.
In addition to fulfilling obligations to people and employees, enterprises are also responsible for certifying the completion of financial obligations to the social insurance management agency as follows:
1. Closing the employee's insurance book as follows:
According to the provisions of Article 47 of the Labor Code as follows: “Article 47. Responsibilities of the employer when terminating the labor contract: Within 07 working days from the date of contract termination labor, the two parties are responsible for paying in full all amounts related to the interests of each party; In special cases, it can be extended but not more than 30 days.
The employer is responsible for completing the procedure for confirming and returning the social insurance book and other documents that the employer has withheld from the employee. ”
2. Please confirm that you do not owe compulsory insurance:
- Comparation of compulsory social insurance to the time of dissolution.
- Please confirm no debt of social insurance.
The goal of handling import and export tax obligations is to be certified by the customs office that they do not owe import and export tax obligations. To be certified not to owe import-export tax obligations, enterprises shall follow the instructions below.
1. Principles of confirmation of obligations
Import and export goods subject to tax must pay tax before customs clearance or goods release. Except for cases where taxpayers are entitled to the priority regime prescribed by the Customs Law.
Therefore, most import and export taxes have been paid in full, except for cases where there are problems that need to be checked: Export processing; Tax adjustment due to detection before the time of dissolution.
2. Confirmation procedures
A dossier to certify no customs tax debt for dissolution comprises:
- Letter of confirmation that you do not owe customs duties.
- Minutes of meeting, decision on dissolution of the company.
- Copy of business registration, establishment decision of the unit (authenticated)
Within 5 working days, the General Department of Customs will have a written reply on whether the unit owes or does not owe customs tax.
Upon receipt of the General Department of Customs' written confirmation of no tax debt, the enterprise shall submit this document to the tax administration agency before terminating the tax identification number.
The Enterprise Law provides for the organizers of asset liquidation and the order of debt payment. Accordingly, the owner of a private enterprise, the Members' Council or company owner, the Board of Directors shall directly organize the liquidation of the enterprise's assets, unless the company's charter provides for the establishment of a liquidation organization. private.
The enterprise's debts are paid in the following order:
- Debts of salary, severance allowance, social insurance in accordance with the law and other benefits of employees according to the collective labor agreement and signed labor contract.
- Tax debt.
- Other liabilities.
- After all debts and expenses have been paid, the remaining assets will be divided among private business owners, members, shareholders or company owners in proportion to their ownership of contributed capital or shares. .
According to the Enterprise Law, the time limit for contract liquidation must not exceed 06 months from the date of approval of the dissolution decision. This time is only suitable for businesses with small scale, no complicated transaction relationships, high liquidity assets. For businesses with a large scale or many assets, which need a long time to liquidate and repay, this time may not be enough to settle all contracts and pay debts. Therefore, enterprises need to review and plan appropriate liquidation.
4. Guidance on procedures for setting up a company branch #
Company branch establishment profile
Profile of establishment of a branch of a private company
- Notice of establishment of a branch signed by the legal representative of the enterprise;
- Copy of legal papers of the individual for the head of the branch.
Profile of branch establishment of one member limited liability company
- Notice of establishment of a branch signed by the legal representative of the enterprise;
- A copy of the resolution or decision of the company owner for a single-member limited liability company on the establishment of a branch;
- Copy of legal papers of the individual for the head of the branch.
Profile of establishment of a branch of a limited liability company with two or more members
- Notice of establishment of a branch signed by the legal representative of the enterprise;
- A copy of the resolution, decision and a copy of the meeting minutes of the Members' Council, for limited liability companies with two or more members, on the establishment of a branch;
- Copy of legal papers of the individual for the head of the branch.
Profile of establishment of a joint stock company branch
- Notice of establishment of a branch signed by the legal representative of the enterprise;
- A copy of the resolution, decision and a copy of the meeting minutes of the Board of Directors, for a joint-stock company on the establishment of a branch;
- Copy of legal papers of the individual for the head of the branch.
Profile of establishment of a branch of a partnership company
- Notice of establishment of a branch by the legal representative of the enterprise;
- A copy of the resolution, decision and a copy of the meeting minutes of the Members' Council for a partnership on the establishment of a branch;
- Copy of legal papers of the individual for the head of the branch.
Procedures for setting up a business branch
The procedure for setting up a business whether it is the same Province/City or Different Provinces/Cities compared with the head office, is done through the following basic steps:
- Step 1: Prepare all documents and records in accordance with the law for each type of business of the main company.
- Step 2: Submit your application in person or online to the Business Registration Authority of the Department of Planning and Investment.
- Step 3: Within 03 working days, the business will receive the results from the Business Registration Authority. If the application is valid, the branch operation registration certificate will be received. If the dossier is not valid, a Notice of request for modification and supplementation of the dossier will be received.
The only difference in the procedure for establishing a branch in the same Province/City and different Province/City is that, the application for operation registration for the Branch will be submitted at the Business Registration Office in the Province/City. where the Branch is located but not at the address of the Main Company.
A few notes when setting up a branch in another province
- Firstly: Select the dependent or independent accounting form suitable to the branch's operational needs when carrying out the operation registration procedures for the branch;
- Second: Regarding business lines, the branch's business lines must be true to the business lines of the enterprise. Currently, according to Decision 27/2018/QD-TTg on Vietnam's industry system, which has taken effect, businesses established before this Decision takes effect must code and update their registered business lines. business regulations under new decisions for branches;
- Third: For companies with food service industry, it is assumed to be independent accounting. Because food and beverage-related industries are registered in any District, that District is managed by that District, so even if the company establishes a branch in the same province or another province, it still has to register for an independent form of accounting.