If a branch of a foreign law firm in Vietnam does not register a tax code, will its establishment license be revoked?

If a branch of a foreign law firm in Vietnam does not register a tax code, will its Establishment License be revoked?

In case of revocation of the branch’s Establishment License, it is stipulated in Clause 1, Article 40 of the Decree. 123/2013/ND-CP (amended by Clause 9, Article 1 Decree 137/2018/ND-CP) as follows:

Revocation of Establishment License of branches and foreign law firms

1. The establishment license of a branch or foreign law firm is revoked in one of the following cases:

a) Self-termination of operations in Vietnam;

b) Penalties for administrative violations in the form of deprivation of the right to use the Establishment License in accordance with the law on handling of administrative violations;

c) Failure to register a tax code within the term 01 year from the date of issuance of the Establishment License;

d) Not operating continuously at the registered headquarters for a period of 06 months, except in cases of temporary suspension of operations as prescribed by law;

dd) Not registering for operation after 60 days, from the date of issuance of the Establishment License;

e) Not operating again or There is no report on continued suspension of operations for more than 06 months from the date of expiration of the temporary suspension of operations as prescribed by law;

g) Foreign law-practicing organizations establish branches, foreign law firms in Vietnam no longer operate abroad;

Thus, according to regulations, if a branch of a foreign law firm in Vietnam does not register a tax code within 01 year from the date of issuance of the Establishment License, the License may be revoked.

Who has the authority to decide to revoke the Establishment License of a foreign law firm’s branch in Vietnam?

The authority to decide to revoke the Establishment License of a foreign law firm’s branch is specified in Clause 2, Article 40 of Decree 123/2013/ND-CP (Clause 1 of this Article is amended by Clause 9, Article 1 Decree 137/2018/ND-CP) as follows:

Revocation of Establishment License of branches and foreign law firms

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g) Foreign law-practicing organizations that establish branches or foreign law firms in Vietnam no longer operate abroad;

h) Branch Heads and Directors of foreign law firms are no longer qualified to practice according to the provisions of Article 74 of the Law on Lawyers; the License to practice law in Vietnam is not renewed or the practice period stated in the License expires but the extension procedure is not carried out;

i) No longer meets the conditions prescribed in Article 68 of the Law on Lawyers.

2. The Ministry of Justice decided to revoke the Establishment License of branches and foreign law firms.

3. The Department of Justice decides to revoke the operation registration certificate of branches and foreign law firms and monitor and supervise branches and foreign law firms in implementing the procedures specified in Clause 2 and Clause 3, Article 39 of this Decree.

Thus, according to regulations, the Ministry of Justice is the competent agency to decide to revoke the Establishment License of a foreign law firm branch in Vietnam.

If a branch of a foreign law firm has its establishment license revoked, must it terminate its operations?

Termination of branch operations is specified in Clause 1, Article 39 of Decree 123/2013/ND-CP as follows:

Termination of operations of branches and foreign law firms outside

1. Branches and foreign law firms terminate their operations when their Establishment License is revoked according to the provisions of Article 40 of this Decree.

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3. In case of termination of operation due to revocation of the Establishment License as prescribed in Points b, c, d and dd, Clause 1, Article 40 of this Decree, no later than 60 days from the date of the decision to revoke the Establishment License, the branch or foreign law firm must fully pay the outstanding tax and pay other debts; Complete procedures for terminating labor contracts signed with lawyers and other employees; Complete the legal service contract signed with the client, unless otherwise agreed.

Foreign branches and law firms must report in writing to the Ministry of Justice, Department of Justice and local tax authorities where they are headquartered on the completion of the above procedures; Return the Establishment License to the Ministry of Justice, the Operation Registration Certificate to the Department of Justice and return the seal to the agency competent to issue and register the use of the seal.

Thus, according to regulations, in case a branch of a foreign law firm in Vietnam has its establishment license revoked, its operations will also be terminated.

Note: In case a branch of a foreign law firm terminates its operations due to the revocation of its Establishment License for failure to register a tax code, no later than 60 days from the date of the decision to revoke the Establishment License, the foreign law firm branch must:

– Pay all outstanding taxes and pay other debts;

– Complete procedures for terminating labor contracts signed with lawyers and other employees;

– Complete the legal service contract signed with the client, unless otherwise agreed.