Cases where representative offices are exempted from license fees according to legal regulations

Does a representative office have to pay license fees? In what cases are license fees exempted? How is the deadline for payment of license fees of representative offices regulated according to current law?

1. Who is the person obligated to pay the license fee?

Pursuant to Article 2 of Decree 139/2016/ND-CP, license fee payers are organizations and individuals engaged in production and trading of goods and services, except for cases exempted from license fees, including:

– Enterprises are established according to the provisions of law.

– The organization is established under the Cooperative Law.

– Public service units are established according to the provisions of law.

– Economic organizations of political organizations, socio-political organizations, social organizations, socio-professional organizations, people’s armed units.

– Other organizations engaged in production and business activities.

– Branches, representative offices and business locations of organizations specified in Clauses 1, 2, 3, 4 and 5 of this Article (if any).

– Individuals, groups of individuals, households engaged in production and business activities.

Thus, representative offices of organizations according to the above regulations are still obliged to pay license fees.

2. When is the deadline for paying license fees as prescribed by law?

According to the provisions of Clause 9, Article 18 of Decree 126/2020/ND-CP, the deadline for paying license fees is January 30 every year.

– The deadline for paying license fees is January 30 every year.

– For small and medium-sized enterprises converting from business households (including dependent units and business locations of the enterprise) at the end of the license fee exemption period (the fourth year from the year of establishment of the enterprise), the deadline for paying license fees is as follows:

+ In case the license fee exemption period ends during the first 6 months of the year, the deadline to pay the license fee is July 30 of the year the exemption period ends.

+ In case the license fee exemption period ends during the last 6 months of the year, the deadline to pay the license fee is January 30 of the year immediately preceding the year in which the exemption period ends.

– Business households and individual businesses that have ended their production and business activities and then resume operations, the deadline for paying license fees is as follows:

+ In case of operation in the first 6 months of the year: No later than July 30 of the year of operation.

+ In case of operation during the last 6 months of the year: No later than January 30 of the year immediately preceding the year of operation.

3. What are the cases where license fees are exempted according to the provisions of law?

According to the provisions of Article 3 of Decree 139/2016/ND-CP (supplemented by Point c, Clause 1, Article 1 of Decree 22/2020/ND-CP), 10 cases of license fee exemption include:

– Individuals, groups of individuals, households engaged in production and business activities with annual revenue of 100 million VND or less.

– Individuals, groups of individuals, and households with irregular production and business activities; There is no fixed location according to instructions from the Ministry of Finance.

– Individuals, groups of individuals, and households producing salt.

– Organizations, individuals, groups of individuals, households farming, fishing, seafood and fisheries logistics services.

– Commune cultural post office; Press agencies (print press, audio press, visual press, electronic press).

– Cooperatives and unions of cooperatives (including branches, representative offices, and business locations) operating in the agricultural sector according to the provisions of law on agricultural cooperatives

– People’s Credit Fund; branches, representative offices, business locations of cooperatives, cooperative unions and private enterprises doing business in mountainous areas. Mountainous areas are determined according to the regulations of the Committee for Ethnic Minorities.

– Exemption from license fees in the first year of establishment or production and business activities (from January 1 to December 31) for:

+ Newly established organizations (issued with new tax codes, new business codes).

+ Households, individuals, groups of individuals launching production and business activities for the first time.

+ During the license fee exemption period, organizations, households, individuals, groups of individuals establish branches, representative offices, or business locations, the branches, representative offices, and business locations are exempt from license fees during the period of organization, households, individuals, and groups of individuals are exempt from license fees.

– Small and medium-sized enterprises converting from business households (according to the provisions of Article 16 of the Law on Support for Small and Medium-sized Enterprises) are exempted from license fees for a period of 03 years from the date of being granted the first business registration certificate.

+ During the license fee exemption period, small and medium-sized enterprises that establish branches, representative offices, and business locations shall be branches, representative offices, and locations. Business locations are exempt from license fees during the time that small and medium-sized enterprises are exempt from license fees.

+ Branches, representative offices, and business locations of small and medium-sized enterprises (subject to license fee exemption according to the provisions of Article 16 of the Law on Support for Small and Medium Enterprises) established before the effective date of this Decree, the license fee exemption period of the branch, representative office, and business location is counted. from the effective date of this Decree until the end of the period when small and medium-sized enterprises are exempted from license fees.

+ Small and medium-sized enterprises converted from business households before the effective date of this Decree are exempted from license fees according to the provisions of Article 16 and Article 35 of the Law on Support for Small and Medium Enterprises.

– Public general education establishments and public preschool education establishments set up.

4. Should a representative office not do business have to pay license tax?

According to the guidance of the General Department of Taxation: Official Dispatch No. 658/TCT-CS of 2017 on license fees for representative offices issued by the General Department of Taxation: “Based on the above regulations, the Ministry of Finance has issued Official Dispatch No. 15865/BTC-CST dated November 7, 2016, Official Dispatch No. 1025/BTC-CST dated January 20, 2017 guiding on license fees, accordingly, in cases where a representative office of an enterprise has activities in producing and trading goods and services, it must pay license fees; in cases where a representative office does not operate in the production or trading of goods and services, it does not have to pay license fees according to regulations.”

However, the nature of a representative office is to perform an authorized function, not to carry out production and business activities, so it is best in your case to contact the tax authority directly for detailed instructions.