Can a Head of a Representative Office ("RO") of a foreign trader be suspended from leaving the country because of the RO's own tax debt? This seemingly only related question to the application of the law raises a larger question: whether foreign businesses and investors can accurately forecast the legal risks they face.
The above conclusion not only comes from the reading of Article 28 of Decree No. 252/2026/ND-CP but also from the legal nature of the RO under Vietnamese law.
It is worth noting that when asked for clarification, the tax administration agency does not give an affirmative or negative answer, but only refers to current regulations for taxpayers to compare themselves. Meanwhile, the suspension of exit is a measure that directly affects the freedom of movement of individuals and can significantly affect the operation of businesses if applied inconsistently. Therefore, the issue is no longer simply whether the Head of the RO is subject to suspension of exit or not, but whether the current legal system is clear enough to eliminate different interpretations in practice.
The Head of the RO is not subject to the suspension of exit according to current regulations
If you compare all the regulations on suspension of exit due to tax debts, it can be seen that the current law clearly identifies groups of individuals who may be subject to this measure, including business people, legal representatives or beneficial owners of enterprises, etc. cooperatives and a number of other cases are specifically regulated. Notably, there is no regulation that mentions the Head of the RO of foreign traders.
Some opinions say that the phrase "other agencies, organizations and individuals related to the implementation of the Decree" in Article 2 of Decree No. 252/2026/ND-CP[1] can be the basis for expanding the scope of application. However, this interpretation is not consistent with the legislative technique as well as the structure of the clause on the subject of application. This regulation only aims to identify agencies and organizations participating in the implementation of the decree, not to expand the group of individuals who may be restricted from the right to exit.
That interpretation is also in line with the basic principles of human rights law. A restriction on freedom of movement can only be applied on the basis of a clear provision of the law and must be interpreted in a strict way. When the document does not stipulate that the Head of the RO is the subject of application, the enforcement agency also has no basis to expand the scope of adjustment through inference.
The legal status of the RO is the basis for this conclusion
The above conclusion not only comes from the reading of Article 28 of Decree No. 252/2026/ND-CP but also from the legal nature of the RO under Vietnamese law.
According to the 2005 Commercial Law and Decree No. 07/2016/ND-CP, the RO of a foreign trader is only a dependent unit established for market research and trade promotion, does not have legal status and is not allowed to directly carry out lucrative activities in Vietnam. More importantly, the RO is not an enterprise established under the Law on Enterprises.
The legal consequence is that the Head of the RO is also not the legal representative of the enterprise in the sense used in the Law on Enterprises and the regulations on suspension of exit due to tax debts. This person exercises his rights and obligations on the basis of authorization of the foreign trader, not the legal representative of a Vietnamese legal entity. Even the concept of "beneficial owner" added in Decree No. 252/2026/ND-CP is built on the basis of the Enterprise Law and cannot be applied to ROs by default.
It can be seen that, from a legal point of view, the basis for affirming that the Head of the RO of the foreign trader is not subject to the suspension of exit due to the tax debt of the RO is relatively solid. However, in the practice of tax and immigration management, risks arise not only from the content of regulations but also from the way regulations are applied. It is the gap between legal regulations and enforcement practice that is the reason why this problem still does not have a really clear solution.
Why do risks still exist in reality?
If we only look at the current regulations, it can be concluded that the head of the RO of the foreign trader is not subject to the suspension of exit due to the tax debt of the RO. However, in reality, the story does not stop at the content of the document but also depends on how the regulations are operated in the tax and immigration management system. It is the gap between regulation and enforcement that is the source of the risk.
Firstly, the RO is still a taxpayer under the law on tax administration
Although it is not allowed to carry out profitable activities, the RO is still granted a tax identification number and must perform many tax obligations, such as deducting, declaring and paying personal income tax to employees or performing contractor tax obligations in some cases. Therefore, when the RO incurs a tax debt or fails to complete the procedures for invalidating the tax code, the tax authority is still managing a taxpayer within the meaning of the Law on Tax Administration.
In that context, the Head of the RO is usually the only person present in Vietnam to represent and work with state agencies. This easily leads to the tendency to identify the head of the RO with the subject responsible for the unit's tax obligations, although the current law has not established a legal basis for this approach.
In other words, the position of the RO in the tax law and the position of the RO head in the law on exit suspension do not completely coincide, and it is this difference that creates a gap in the application process.
Second, the regulation on "foreigners with tax debts" still lacks clear boundaries
Article 28 of Decree No. 252/2026/ND-CP stipulates that foreigners who have overdue tax obligations before leaving the country may be subject to temporary suspension of exit. In principle, this provision must be understood to apply to the tax obligations of the individual himself, such as personal income tax or other taxes that the individual is directly obliged to pay.
However, in reality, most of the Heads of ROs are foreigners and at the same time employees who receive salaries through the RO itself. In the process of tax administration, the boundary between the tax obligation of the individual and the obligation to deduct, declare and pay on behalf of the RO is not always transparently expressed in the management data. Although this does not mean that the Head of the RO is automatically subject to a suspension of exit, it is this lack of clarity that increases the risk of different interpretations between enforcement agencies.
More notably, for foreigners, current regulations allow tax authorities to immediately transfer information to immigration authorities when there are statutory grounds, instead of applying the notification deadline as for some other groups of subjects. Therefore, if an error occurs in the process of identifying the subject, consequences may arise right at the time of exit procedures.
Third, the lack of clarity in the authorities' guidance increases the risk
What is of concern is not that the law stipulates it incompletely, but that so far there is no official guidance to eliminate different interpretations in practice.
When asked to give a direct answer on whether the Head of the RO is subject to suspension of exit or not, the tax administration agency does not give an affirmative or negative view, but only refers to current regulations for taxpayers to compare themselves. From the perspective of state management, this answer can be understood as not making a conclusion for a specific case. However, from a business perspective, that silence means that legal risk has not been eliminated.
In the context that the suspension of exit is carried out through the mechanism of electronic data exchange between the tax authority and the immigration authority, businesses and individuals often only know that they are subject to suspension when they are present at the border gate. At that time, the damage to work schedules, costs, reputation and business activities is almost irreparable immediately.
For multinational corporations, this is no longer a purely tax issue but a governance risk. An unclear regulation can reduce the predictability of the investment environment, especially for businesses with regional management personnel who frequently travel between countries.
Businesses should proactively manage risks
While waiting for the competent authority to clarify the regulations, foreign traders with ROs in Vietnam should actively control legal risks instead of relying only on the interpretation of the document.
First of all, the RO needs to regularly review the implementation of tax obligations, especially personal income taxes that must be deducted, declared and paid on behalf of employees.
In addition, when terminating its operation or changing its location, the RO needs to complete all tax finalization procedures and invalidate the tax identification number to avoid incurring tax debts or obligations pending on the management system.
For foreign RO Heads, before important business trips, enterprises should also actively check the status of the RO's tax obligations as well as the tax obligations of individuals in order to limit unexpected risks.
This is not an acknowledgment that the Head of the RO is subject to suspension of exit, but a necessary risk management measure in the context that there are still gaps in the application of legal regulations.
On the other hand, if the lawmaker really wishes to expand the responsibility of the head of the RO for the tax obligations of the unit, such change should be directly reflected in the legal document.
Proposal to complete regulations
From a policy perspective, the problem is not that the law lacks a mechanism to ensure tax obligations, but that the scope of application of that mechanism needs to be more clearly defined to avoid different interpretations in practice.
First of all, the Ministry of Finance needs to provide official guidance or answers on the application of Article 28 of Decree No. 252/2026/ND-CP to ROs of foreign traders. This document should clearly affirm that the Head of the RO is not subject to the suspension of exit due to the RO's tax debt, and at the same time clarify that the regulation on "foreigners with tax debts" only applies to the tax obligations of the individual himself. A unified understanding will help eliminate uncertainty in the implementation process and limit the risk of administrative decisions that are not in line with the spirit of the regulation.
On the other hand, if the lawmaker really wishes to expand the responsibility of the head of the RO for the tax obligations of the unit, such change should be directly reflected in the legal document. The restriction of an individual's right to freedom of movement can only be established on the basis of a clear provision on the subjects of application, conditions, procedures and mechanisms for the protection of the rights of the person to be applied, rather than being formed through interpretation or gaps in the enforcement process.
At the same time, the management agency should also continue to improve the mechanism for looking up and warning the status of exit suspension so that taxpayers, especially foreigners working in Vietnam, can actively check and handle outstanding obligations before unintended consequences arise. An effective management mechanism not only ensures the correct collection and full collection of tax obligations, but also helps taxpayers to be able to forecast and comply with the law proactively.
Conclusion
Comparing the current regulations, there is a fairly solid legal basis to believe that the head of the RO of the foreign trader is not subject to the suspension of exit due to the tax debt of the RO. However, as long as the scope of application of these regulations is not clearly guided by the competent authority, the risk of different interpretations in practice is still difficult to completely eliminate.
From a broader perspective, the problem is not only the handling of a specific case, but also the requirement to ensure transparency and predictability of the law. For foreign investors, a reliable regulatory environment is not only measured by adequate regulation, but also by being able to know in advance, clearly and consistently, when their rights and interests may be restricted. That is also the reason why the early clarification of the scope of application of the exit suspension measure not only contributes to ensuring the correctness of tax law enforcement, but also strengthens the confidence of the business community in the investment and business environment in Vietnam.
Lawyer Nguyen Van Phuc
HM&P Law Firm
[1] Decree 252/2026/ND-CP dated 30/06/2026 of the Government detailing a number of articles and measures to organize and guide the implementation of the Law on Tax Administration 2025.
