Vietnam has emerged as a thriving destination for foreign investment, with an increasing number of multinational companies establishing their presence in the country. As part of its efforts to attract foreign capital, Vietnam has implemented a set of regulations and policies regarding trading permits and retail outlets for foreign-invested companies. These measures aim to facilitate trade activities while ensuring fair competition and protecting the interests of domestic businesses. With a dynamic and rapidly expanding market, Vietnam offers significant opportunities for foreign companies to establish and operate retail outlets, contributing to the country’s economic growth and development.
How the foreign investor carry out the permit procedure
A brief overview of the procedures that foreign investors need to follow:
Step 1: Before establishing a retail outlet, the foreign investors must ensure that the foreign-invested company in Vietnam of the foreign investors 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 retails goods when establishing the company.
+ 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.
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”).
Cases and conditions to obtain a Trading Permit
Cases require a Trading Permit
A Company will be granted Trading Permits encompassing various rights and services. These include the retail distribution of goods, excluding specific items listed in Section 2(iii), as well as the import and wholesale distribution of lubricating oil and grease. Additionally, the company will have the right to engage in the retail and distribution of rice, roads, recorded items, books, newspapers, and magazines. They can provide logistics services, excluding sub-sectors that are subject to market-opening commitments in treaties involving Vietnam. The company is also permitted to lease goods, with the exception of financial leases and leases for construction equipment requiring operators. Furthermore, they can offer trade promotion services, commercial intermediary services, e-commerce services, and goods and service bidding services.
Conditions to obtain a Trading Permit
a. 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:
i. Satisfy market access conditions prescribed in treaties to which Vietnam is a contracting party
ii. Have financial plans for activities to be licensed
iii. Owe no overdue tax debts if they have operated in Vietnam for 01 year or more.
b. 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:
i. Have financial plans for the activities to be licensed
ii. Owe no overdue tax debts if they have operated in Vietnam for 1 year or more
iii. 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.
c. 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, newspaper and magazines:
i. Meet the conditions specified in Section b above
ii. For lubricating oils and grease, the right to import ow 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 greas of specific types.
iii. For rice, sugar, video recordings, books, newspaper, and magazines, the trite to retail may be granted to foreign invested economic organizations that have retail outlest, supermarkets, mini marts, or convenience stores to retail these goods in such outlets.
Dossier and application procedure for a Trading Permit
Dossier
A dossier must include 4 main items as follow:
i. An application for a Trading Permit.
ii. A written explanation stating the satisfaction of the conditions for obtaining Trading Permits, a business plan adn a financial plan
iii. The tax authority’s document proving that the foreign invested economic organization owes no overdue tax debts
iii. 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)
Application procedure
Step 1: A dossier shall be submitted directly, or sent by post, or online to the licensing agency. Additionally, the number of dossier sets may vary depending on the case. According to the provisions of the law, there will be the corresponding number provided. Moreover, for 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.
In addition, they will thoroughly review the submitted documents to ensure accuracy and adherence to regulations.
Step 2: In 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. Moreover, they will verify if all the necessary requirements have been met before proceeding with the inspection process.
Step 3: Within 15 days after receiving a dossier, the Ministry of Industry and Trade or line ministy shall issue a written approval or the grant of a Trading Permit. In case of refusal, it shall issue a written reply stating the reason.
Cancellation of the Trading Permit
The revocation of the Trading Permits can occur in the following six cases:
+ The enterprise registration certificate is revoked.
+ The investment registration certificate for a project involving goods purchase and sale and related activities is revoked.
+ The information provided in the application for granting, re-granting, or modification of the Trading Permit is found to be false.
+ A foreign-invested economic organization has ceased goods purchase and sale as well as related activities for more than 12 months without reporting it to the licensing agency.
+ The economic organization has failed to submit periodic reports for 24 consecutive months.
+ A foreign-invested economic organization fails to send reports, documents, and explanations within 03 months after the prescribed deadlines.
Furthermore, operating after the trading permits have been revoked constitutes a violation of regulations. Moreover, the competent state management agency has the authority to impose other sanctions such as suspension of business activities or even legal proceedings. Therefore, it is crucial for the Company to comply with the regulations and cease operations promptly. Furthermore, the organization responsible for the violation will be required to return any illegal profits obtained as a result of the offense.
Conclusion
In conclusion, Vietnam’s approach to trading permits and retail outlets of foreign-invested companies has played a crucial role in fostering economic growth and attracting foreign investment. Additionally, the government of Vietnam has introduced measures to simplify customs procedures, enabling foreign companies to import and export products more efficiently. Moreover, the country has also enacted laws to protect intellectual property rights, further attracting foreign investment. Furthermore, Vietnam has invested in infrastructure development, such as modernizing ports and expanding transportation networks. Thus enhancing the ease of doing business. This has not only resulted in increased trade and investment inflows. But it also contributed to job creation and technology transfer. Moving forward, Vietnam will likely continue to refine its policies to ensure a balanced and sustainable development of its economy. While maintaining its attractiveness as a destination for foreign investors.
HMLF is always available to offer assistance in understanding the procedures with authorities.
Harley Miller Law Firm “HMLF”
Head office: 14th floor, HM Town building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone number: +84 937215585
Website: hmlf.vn Email: miller@hmlf.vn