Expanding into Vietnam presents exciting opportunities for both domestic and foreign businesses. One of the first structural decisions companies face is whether to establish a branch or a business location. While both serve as extensions of the parent company, they differ significantly in legal authority, operational flexibility, and compliance obligations.

This guide provides a practical comparison between the two options under Vietnamese law, including a side-by-side table and legal considerations to help you select the structure best aligned with your business strategy.

What Are Branches and Business Locations in Vietnam?

Vietnamese enterprise law defines both branches and business locations as subordinate units of a parent company. However, their roles and powers are not the same:

• A branch can perform part or all of the company’s business functions. It may represent the company in legal and commercial dealings, hire employees, and operate with a degree of autonomy.
• A business location serves more limited roles, often as a warehouse or support facility. It cannot independently enter into contracts or employ staff.

Both can be used for warehousing, transaction offices, or service delivery—but choosing the right one depends on the scope and goals of your operations.

Legal and Operational Comparison Table

Key Legal Implications to Consider

• Contractual Capacity: Only branches can represent the company in contracts, giving them more operational independence.
• Employment Authority: Branches can act as the employer, allowing them to handle hiring, contracts, and salary payments. Business locations must defer to the parent company.
• Tax Obligations: Branches have their own tax codes and may be subject to separate tax filings. Business locations report under the head office.
• Accounting Flexibility: Branches may operate under an independent or dependent accounting regime. Business locations must remain dependent.

When Should You Choose a Branch?

A branch is most appropriate when your business operations in Vietnam require legal and operational independence. Branches allow you to localize management, streamline operations, and take on greater commercial responsibility without needing to establish a separate legal entity. This option is especially beneficial for businesses with growth-oriented, customer-facing, or revenue-generating units that need to operate semi-independently.

Choose a branch when your business unit requires:

• The ability to sign contracts directly with clients or vendors
• Authority to manage local employees and payroll
• Accounting separation for internal controls or tax planning
• More flexible long-term growth and legal presence

Branches are suitable for service centers, regional offices, or any operational hub that needs autonomy.

When Is a Business Location More Appropriate?

A business location is ideal for companies seeking a simplified, low-maintenance setup that does not require legal independence. It works well for logistical or administrative support units that perform internal functions and do not engage directly with clients, vendors, or employees in a contractual capacity. This structure is often used to extend operational reach while keeping tax and licensing obligations centralized at the head office.

A business location may be preferable if your goals are to:

• Minimize administrative and licensing complexity
• Operate a facility solely for logistics, warehousing, or administrative support
• Centralize all employment and contractual responsibilities at headquarters

This setup works well for small-scale, low-risk facilities that do not need their own legal identity.

Licensing and Legal Requirements for Branches and Business Locations in Vietnam

Can a Foreign Company Open a Branch in Vietnam?

Foreign enterprises can register branches in Vietnam, but they are subject to sector-specific restrictions based on Vietnam’s WTO commitments and local licensing laws. Additional documentation and financial disclosures may be required, and approvals may take longer compared to domestic firms.

Registration Process and Timeline

Both branches and business locations are registered through the Department of Planning and Investment (DPI). Key steps include:

• Submit notice of establishment of the branch, business location  
• Submit copy of the establishment decision and copy of the meeting minutes on the establishment of the branch; copy of the legal documents of the individual for the head of the branch (not required for the establishment of the business location)  
• Typical processing time: 3 business days, but foreign-related approvals may extend this

Branches also require:

• Tax code registration
• Labor registration if employing staff
• Accounting regime declaration

Key Risks of Choosing a Business Location Over a Branch

While easier to set up, business locations come with significant legal limitations:

• Cannot enter contracts independently
• Cannot hire or manage employees
• All legal risks and liabilities fall to the parent company
• Limited utility in dispute resolution or external partnerships

Can You Convert a Business Location into a Branch?

There is no direct conversion mechanism. To transition from a business location to a branch, the business location must be formally closed and a new branch must be registered.

This requires fresh paperwork, processing time, and possible disruptions to operations. Choosing the appropriate structure from the outset is more efficient and less risky.

Operating Across Provinces

Both branches and business locations can be established outside the head office’s home province. However:

• Branches are registered separately in each province and may be independently taxed and regulated
• Business locations are easier to register across provinces but are limited in functionality

For companies planning regional expansion, branches offer more legal clarity and scalability.

Conclusion

Both branches and business locations serve important roles under Vietnamese law, but they are not interchangeable. A branch provides autonomy, contractual capacity, and operational flexibility. A business location offers administrative simplicity, but with reduced functionality and legal authority.

Choosing the right structure depends on your business’s scale, complexity, and long-term goals. Working with trusted legal counsel can help you avoid regulatory issues and ensure your entity structure aligns with Vietnamese law.