Vietnam: List of 19 frequently asked questions and answers about trading permits and retail outlets of foreign-invested companies

FQA on Trading permit

With these 19 frequently asked questions and answers, BLawyers Vietnam would like to provide an overview of licenses for trading permits (also called business license or trading license) and retail outlets in Vietnam. We describe here the conditions and procedures for foreign investors to obtain a Trading Permit and Retail outlet license under the prevailing laws of Vietnam.

1. If the foreign investor establishes a retail outlet, how should the foreign investor carry out the permit procedure?

A brief overview of the procedures that foreign investors need to follow is as follows:

      1. Step 1: Before establishing a retail outlet, the foreign investors must ensure that the foreign-invested company in Vietnam of the foreign investors (“Company”) has registered the retail trade of goods.
        • If a Company has not been established: The foreign investor register the codes of industries and trades related to retail goods when establishing the Company; or
        • If a Company carries out established retail activities but has not yet added retail goods industries: The Company will need to carry out procedures for additional registration of the retail goods industry under the Company’s retail activities.
      2. Step 2: The Company carries out procedures for applying for a Trading Permit concurrently with establishing a retail outlet. If after having a Trading Permit, the Company establishes a retail outlet, the Company must add a retail outlet establishment license (“ROL”).
2. What cases require a Trading Permit?

Trading Permits will be granted to a Company:

      1. Exercising the right to the retail distribution of goods, excluding goods specified in Section 2(iii) below;
      2. Exercising the right to import and wholesale distribution of goods being lubricating oil and grease;
      3. Exercising the right to retail and distribute rice; roads; recorded items; books, newspapers, and magazines;
      4. Providing logistics services, except logistics service sub-sectors for which Vietnam has market-opening commitments in treaties to which the country is a contracting party;
      5. Leasing goods, excluding financial lease and lease of construction equipment requiring operators;
      6. Providing trade promotion services, excluding advertising services;
      7. Providing commercial intermediary services;
      8. Providing e-commerce services;
      9. Providing goods and service bidding services.
3. What are the conditions needed to obtain a Trading Permit?

3.1  For a Company in countries or territories that have acceded to treaties to which Vietnam is a contracting party and which contain market opening commitments for goods purchase and sale and related activities:

      1. Satisfy market access conditions prescribed in treaties to which Vietnam is a contracting party;
      2. Have financial plans for activities to be licensed;
      3. Owe no overdue tax debts if they have operated in Vietnam for 01 year or more.

3.2  For a Company other than those of the countries or territories having acceded to treaties to which Vietnam is a contracting party or services not yet included in the market opening commitments under treaties to which Vietnam is a contracting party:

      1. Have financial plans for the activities to be licensed;
      2. Owe no overdue tax debts if they have operated in Vietnam for 01 year or more;
      3. In addition, the following additional criteria need to be met:
        • Complying with relevant specialized laws;
        • Conforming with the level of competitiveness of domestic enterprises operating in the same area;
        • Being able to create jobs for domestic workers;
        • Being able to contribute revenues to the state budget.

3.3  For a Company which trades in goods that have not been committed to market opening in international treaties to which Vietnam is a member, including lubricating oil and grease, rice, roads, recorded items, books, newspapers and magazines:

      1. Meet the conditions specified in Section 3(b) above;
      2. For lubricating oils and grease, the right to import or wholesale may be granted to foreign-invested economic organizations that carry out one of the following activities:
        • Produce lubricating oils and grease in Vietnam;
        • Produce or distribute under a license in Vietnam machinery, equipment, and goods using lubricating oils and grease of specific types.
      3. For rice; sugar; video recordings; books, newspapers, and magazines, the right to retail may be granted to foreign-invested economic organizations that have retail outlets, supermarkets, mini marts, or convenience stores to retail these goods in such outlets.
4. What should the dossier include on the application for a Trading Permit?

A dossier must include 4 main items as follows:

      1. An application for a Trading Permit.
      2. A written explanation stating the satisfaction of the conditions for obtaining Trading Permit, a business plan and a financial plan;
      3. The tax authority’s document proving that the foreign-invested economic organization owes no overdue tax debts; and
      4. Copies of the enterprise registration certificate; and the investment registration certificate of the project to carry out goods purchase and sale and related activities (if any).
5. What is the application procedure for a Trading Permit?

The Company needs to do the following:

      1. Step 1: A dossier shall be submitted directly or sent by post or online to the licensing agency. The number of dossiers set, depending on the case, according to the provisions of law, there will be the corresponding number.
      2. Step 2: Within 03 working days after receiving a dossier, the licensing agency shall examine it and may request modification and supplementation of the dossier if it is incomplete or invalid.
      3. Step 3: Within 10 working days after receiving a complete and valid dossier, the licensing agency shall inspect the applicant’s satisfaction with relevant conditions according to this Decree.
      4. Step 4: Within 15 days after receiving a dossier, the Ministry of Industry and Trade or line ministry shall, in pursuance to the law, issue a written approval of the grant of a Trading Permit; in case of refusal, it shall issue a written reply stating the reason.
6. What content is included on a Trading Permit?

The content is specified in the Trading Permit, including:

      1. Name and code, address of head office, and at-law representative of the enterprise;
      2. Owners, capital contributors, and founding shareholders;
      3. Goods to be distributed;
      4. Goods purchase and sale-related activities;
      5. Other content.

When one of the above contents is changed, the Company needs to complete the Trading Permit adjustment procedure.

7. What is a retail outlet?

A retail outlet is a place where retail activities are carried out. The retail outlet includes the first retail outlet and other retail outlets called a retail outlet in addition to the first retail outlet.

Retail outlet in addition to a retail outlet means a retail outlet established in Vietnam by a Company or a foreign-invested economic organization that already has a retail outlet in Vietnam or established under the same name or brand with at least one retail outlet by a foreign-invested economic organization in Vietnam.

8. What are the conditions for the establishment of retail outlets?
      1. To establish the first retail outlet, the Company must:
        • Have a financial plan for the establishment of a retail outlet;
        • Owe no overdue tax debts for a foreign-invested economic organization established in Vietnam for 01 year or more;
        • Have a location for the to-be-established retail outlet that conforms with the relevant master plan of the relevant geographical market.
      2. To establish a retail outlet in addition to the first one, the Company must:
        • If an economic needs test is not required: A company must meet the conditions in Section 8(i) mentioned above;
        • In cases in which an economic need test is required:
          • Satisfy the conditions in Section 8(i) mentioned above;
          • Scope of the relevant geographical market to be affected by the operation of the to-be-established retail outlet;
          • List the retail outlets currently operating in the relevant geographical market;
          • Impacts of the retail outlet on market stability and business activities of other retail outlets and traditional markets in the relevant geographical market;
          • Impacts of the retail outlet on traffic density, environmental sanitation, and fire prevention and fighting in the relevant geographical market;
          • Possible contributions of the retail outlet to the socioeconomic development of the relevant geographical market.
9. When is an economic needs test required? (“ENT”)

Currently, the economic needs test (ENT) procedure is the procedure by which investors in the distribution sector (wholesale and retail all products manufactured in Vietnam or lawfully importing into Vietnam) must meet for their needs of establishing retail outlets (besides the first outlet).

The competent authority will apply ENT when the Company registers to establish a retail outlet in addition to the first one, except for the following cases:

      1. The property has an area of less than 500 m2;
      2. Established in a commercial center; or
      3. Not belonging to a type of convenience store or mini supermarket.
10. What does the dossier include when applying for a ROL?

 The dossier includes 5 main items as follows:

      1. An application for an ROL.
      2. A written explanation stating:
        • The location for establishing the retail outlet: address of the outlet; description of the overall area, relevant areas, used for establishing the outlet; and the applicant’s satisfaction with the condition for the location of the retail outlet under the relevant planning in the geographical market area; enclosed with documents about the location;
        • The business plan at the retail outlet: presenting the business and market development plan; labor demand; and assessment of the business plan’s socio-economic impacts and efficiency;
        • The financial plan for establishing the retail outlet: reporting on business results based on the audited financial statement of the latest year, for a foreign-invested economic organization established in Vietnam for 01 year or more; and explaining funds, funding sources, and fundraising plans, enclosed with financial documents.
      3. A tax authority’s documents that prove that the applicant owes no overdue tax debts.
      4. Copies of the enterprise registration certificate, investment registration certificate of the project to establish the retail outlet (if any), and Trading Permit.
      5. A written explanation about the ENT criteria, in case an ENT is required.
11. What is the procedure for applying for an ROL (not subject to ENT procedures)?

To apply for an ROL (not subject to ENT procedures), the Company needs to carry out the following procedures:

      1. Step 1: Send 02 sets of dossiers, directly or sent by post or online, to the licensing agency.
      2. Step 2: Within 3 working days after receiving a dossier, the licensing agency shall examine it and may request modification and supplementation of the dossier if it is incomplete and invalid.
      3. Step 3: Within 10 working days after receiving a complete and valid dossier, the licensing agency shall inspect the applicant’s satisfaction with the conditions as prescribed:
        • If the applicant is dissatisfied with the prescribed conditions, the licensing agency shall issue a written reply stating the reason;
        • If the applicant is satisfied with the prescribed conditions, the licensing agency shall send the dossier, enclosed with a written request for an opinion, to MIT as prescribed.
      4. Step 4: Within 07 working days after receiving a dossier, MIT shall issue written approval of the grant of the ROL; in case of disapproval, it shall issue a written reply stating the reason.
      5. Step 5: Within 03 working days after receiving written approval from the Ministry of Industry and Trade, the licensing agency shall grant an ROL. If the Ministry of Industry and Trade disapproves the license grant, the licensing agency shall issue a written reply stating the reason.
12. What is the procedure for applying for an ROL (in cases requiring the carrying out of ENT procedures)?

To apply for a ROL (when ENT procedures are required), the Company needs to carry out the following procedures:

      1. Steps 1: Company follows Steps 1 & 2 of the procedure for obtaining an ROL (ENT is not required).
      2. Step 2: Within 05 working days after receiving a complete and valid dossier, the licensing agency shall inspect the applicant’s satisfaction with the conditions as prescribed:
        • If the applicant is dissatisfied with the prescribed conditions, the licensing agency shall issue a written reply stating the reason;
        • If the applicant is satisfied with the prescribed conditions, the licensing agency shall propose the formation of an ENT council.
      3. Step 3: Within 07 working days after receiving a request for forming an ENT council, the provincial-level People’s Committee concerned shall form such a council.
      4. Step 4: Within 30 days after being formed, the ENT council shall evaluate the ENT criteria for its chairperson to issue a written conclusion.
      5. Step 5: Within 03 working days after receiving a written conclusion from the ENT council’s chairperson:
        • If such conclusion proposes refusal to grant a license, the licensing agency shall issue a written reply stating the reason;
        • If such a conclusion proposes the granting of a license, the licensing agency shall send the dossier, enclosed with a written request for an opinion, to the Ministry of Industry and Trade.
      6. Step 6: Within 10 working days after receiving a dossier, the Ministry of Industry and Trade shall issue written approval for the granting of a license for establishing a retail outlet; in case of disapproval, it shall issue a written reply stating the reason.
      7. Step 7: Within 03 working days after receiving the Ministry of Industry and Trade’s written approval, the licensing agency shall grant a license for establishing a retail outlet. If the Ministry of Industry and Trade disapproves the license, the licensing agency shall issue a written reply stating the reason.
13. How long is the validity of the ROL?
      1. The validity period of the ROL must equal the remaining validity period of the investment registration certificate of the project to establish a retail outlet. If no investment registration certificate is available, the validity period of the ROL must equal the period stated in the document on the location for establishing a retail outlet;
      2. The validity period of the re-granted ROL must equal the remaining validity period of the old license;
      3. The validity period of an extended ROL must comply with regulations.
14. What are the components of the dossier for an extension of the ROL?

A dossier set will include 4 main components as follows:

      1. A written request for an extension of the ROL.
      2. A written explanation stating the content mentioned in Item (ii) of Question 10 above;
      3. The tax office’s documents that prove that the applicant owes no overdue tax debts.
      4. Copies of the enterprise registration certificate, investment registration certificate of the project to establish the retail outlet (if any), and Trading Permit.
15. Procedure for extending the ROL

To apply for an extension of the ROL, the Company needs to carry out the following procedures:

      1. Step 1: Send a dossier at least 30 days before the ROL expires.
      2. Step 2: Within 05 working days after receiving a dossier, the licensing agency shall examine it and may request modification and supplementation of the dossier if it is incomplete and invalid.
      3. Step 3: If the dossier is complete and valid, the licensing agency shall extend the ROL; in case of refusal, it shall issue a written reply stating the reason.
16. Does the Company need to report its retail activities to a competent agency?

Yes, it does. In particular:

      1. Before 31 January every year, the Company shall make reports on goods purchase and sale and related activities.
      2. The Company is obliged to report, provide documents on or explain issues concerning goods purchase and sale and related activities and operation of retail outlets at the request of competent state management agencies.
17. Can the Trading Permit, or ROL, be revoked?

The Trading Permit shall be revoked in the 6 following cases:

      1. The enterprise registration certificate is revoked;
      2. The investment registration certificate of the project involving goods purchase and sale and related activities is revoked;
      3. The information declared in the dossier for granting, re-granting, or modification of a Trading Permit is false;
      4. The foreign-invested economic organization has ceased goods purchase and sale and related activities for more than 12 months without reporting thereon to the licensing agency;
      5. The foreign-invested economic organization has not made periodic reports for 24 consecutive months;
      6. The foreign-invested economic organization fails to send reports, documents, and explanations 03 months after the prescribed deadlines.

There are 07 cases of ROL being revoked, including:

      1. The investment registration certificate or paper of equivalent legal validity of the project to establish the retail outlet or the Trading Permit is revoked;
      2. The information declared in the dossier for granting, re-granting, modification, or extension of the license for establishing a retail outlet is false;
      3. Twelve months after the date of the granting of the license, the foreign-invested economic organization receives no investment registration certificate as required without reporting thereon to the licensing agency;
      4. Twenty-four months after the date of the granting of the license, the foreign-invested economic organization receives no investment registration certificate as required;
      5. The foreign-invested economic organization has ceased retail activities at the retail outlet for more than 12 months without reporting thereon to the licensing agency;
      6. The foreign-invested economic organization has not made periodic reports for 24 consecutive months;
      7. The foreign-invested economic organization fails to send reports, documents, and explanations after 3 months from the prescribed deadlines.
18. What if the Company operates outside the scope of the content stated in the Trading Permit or the ROL?

For this violation, the Company will be fined up to VND40,000,000 (~USD1,700) for acts of operating outside the scope of the content stated in ROL. This fine applies to the organization.

In addition, the violating organization will also be deprived of the right to use the Trading Permit, the ROL, a valid license from 01 month to 03 months or will be suspended from operation from 01 month to 03 months for violations and forced to pay back illegal profits obtained by committing an act of violation.

19. What if the Company continues to operate after its Trading Permit is revoked?

The Company will be fined up to VND50,000,000 (USD2,100) for continuing to operate after having been revoked by a competent state management agency. This fine is the penalty applied to the organization.

In addition, the offending organization is forced to return illegal profits obtained  by committing the violation.

The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at consult@blawyersvn.com. We would love to hear from you.

Date: 24 July 2023

Writers: Tinh Nguyen and Minh Truong

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