RETAIL BUSINESS IN VIETNAM FOR FOREIGN INVESTORS

Nowadays, there are many FDI enterprises (foreign-invested enterprises) established and operating activities in the Vietnamese market, especially the retail business line.

Retail stores are considered one of the popular forms of investment by foreign investors when entering the Vietnamese market. In order for foreign investors to conduct retail business in Vietnam, in addition to the Enterprise Registration Certificate and the Investment Registration Certificate, enterprises must also comply with the law on the sale purchase and sale of goods and activities directly related to goods purchase and sale. In this article, Pham Consult will learn about this issue with you.

RETAIL ACTIVITIES IN VIETNAM

Within the framework of Vietnamese law, there are basically no restrictions for foreign investors to conduct trading in goods (except for cases where business goods are specified in the list of business bans or restrictions, or specific commercial licenses are required).

Before carrying out retail business, FDI enterprises must register appropriate retail business lines. Then, conducting retail business can be done through the following methods:

• Through the company’s website, e-commerce platforms. In other words, through online forms and not setting up retail facilities. For this method, FDI enterprises only need to apply for a business licensefor retail sales without establishing retail establishments.
• In addition, businesses can also carry out retail activities by setting up retail facilities. At this time, FDI economic organizations need to apply for business licenses for retail activities and licenses for setting up retail establishmentsfor each retail business location.

RETAIL BUSINESS LICENSE

1. Conditions for license issuance (Article 9 of Decree 09/2018/ND-CP).

–       Satisfy market access conditions as prescribed by treaties to which Vietnam is a contracting party.

–       There is no overdue tax if the organization has been established in Vietnam for more than 01 year in Vietnam.

2. Dossier (Article 12 of Decree 09/2018/ND-CP).

–       Application for a business license (Form No. 01 in the Appendix to Decree);

–       Documents proving that there is no longer any overdue tax owed by the tax authority;

–       Notarized investment registration certificate (if any);

–       Notarized enterprise registration certificate;

–       The explanation reads:

• Conditions for granting corresponding business licenses (as below);
• Business plan: Contents and methods of business operation; presentation of a business plan and market development; labor demand; assessment of the significance and socio-economic efficiency of the business plan;
• Financial plan: Report business results on the basis of the most recent audited financial statements if the enterprise has been established in Vietnam for at least 01 year. Explanation of capital, capital sources, mobilization plans together with financial documents;
• Business situation: goods purchase and sale activities and activities directly related to goods purchase and sale; the financial situation of foreign-invested economic organizations up to the time of application for a business license.
• Documents proving financial capacity in carrying out business activities: bank letter, or bank statement (plans for raising funds in the future may be attached to bank documents).

3. Competence to grant licenses: Department of Industry and Trade.

In special cases, the Department of Industry and Trade will apply for approval from the Ministry of Industry and Trade before issuing licenses (retail sale of rice, sugar, record items, books, newspapers, magazines distributed by the company at retail stores in the form of supermarkets, mini supermarkets or convenience stores).

Enterprises applying for a business license need to prepare complete dossiers and submit them in person, by post or online to the Department of Industry and Trade. Detailed procedures are detailed in Article 13 of Decree 09/2018/ND-CP;

LICENSE TO ESTABLISH A RETAIL STORES/OUTLETS

1. Conditions for granting a retail store establishment license (Article 22, 23 of Decree 09/2018/ND-CP).
2. For the first retail store and subsequent stores with an area of less than 500m², located in a shopping center and not classified as a convenience store or mini supermarket, the company must meet the following requirements:

–         Have a financial plan for setting up a retail store;

–         No overdue tax if it has been established in Vietnam for at least 1 year;

–         The location where the retail store is set up in accordance with the relevant planning in the relevant geographical market.

1. For other retail stores, the following additional conditions must be met:

–         The size of the relevant geographic market is influenced by the intended retail store;

–         The number of existing retail outlets in the relevant geographic market;

–         The impact of the retail store on the stability of the market and the operation of other retail stores and traditional markets in the relevant geographic market;

–         The impact of retail stores on traffic density, environmental sanitation and fire safety in relevant geographic markets;

–         The potential contribution of the retail store to the socio-economic development of the relevant geographical market.

2. Dossier (Article 27, of Decree 09/2018/ND-CP).

–         Application for a permit to establish a retail establishment (Form No. 04 in the Appendix to Decree);

–         The explanation reads:

• Location of the retail establishment: Address of retail establishment; a description of the common, relevant area and the area used to establish the retail establishment; explain the satisfaction of eligibility; documents on the location of the accompanying retail establishment;
• Business plan at the retail establishment: Presentation of business plan and market development; demand for labor; assessment of impacts and socio-economic efficiency of business plans;
• Financial plan for setting up retail establishments: Report on business results on the basis of audited financial statements of the most recent year in case it has been established in Vietnam for 01 year or more; explanation of capital, capital sources and capital mobilization plans; accompanied by financial documents.

–         Documents of the tax authorities proving that there are no longer overdue tax debts;

–         copy of enterprise registration certificate;

–         Certificate of investment registration of the retail establishment project (if any);

–         Copy business license;

–         An explanation of the ENT criteria in case the ENT must be performed.

3. Competence to grant licenses: Department of Industry and Trade and Ministry of Industry and Trade

Enterprises applying for a business license need to prepare complete dossiers and submit them in person, by post or online to the Department of Industry and Trade. Detailed procedures are detailed in Article 28, 29 Decree 09/2018/ND-CP;

Before issuing a license, the Department of Industry and Trade will check the company’s ability to meet the conditions and consult the Ministry of Industry and Trade. (Point c, Clause 3, Article 8 of Decree 09 – Form No. 09 attached to the Appendix).

LEGAL BASIS:

Enterprise Law 2020 takes effect from 01/01/2021

The Investment Law 2020 takes effect from 01/01/2021

Decree 09/2018/ND-CP takes effect from 15/01/2018“Determining in detail the Commercial Law and the Law on Foreign Trade Management on goods trading activities and activities directly related to the purchase and sale of goods of foreign investors, foreign-invested economic organizations, etc. outside Vietnam”.

 

In general, when foreign investors want to open stores/retail agents, they must be familiar with the legal provisions on dossiers and procedures for applying for business licenses as well as licenses for setting up retail establishments. However, the law also details conditions for trading in goods purchase and sale activities. Therefore, doing retail business and setting up retail stores/outlets can take a long time and be difficult.

For assistance with matters related to goods purchase and sale procedures of foreign investors in Vietnam, you can contact Pham Consult. Our company with a team of professional staff, has many years of experience in carrying out business registration procedures as well as procedures related to tax, accounting,… Pham Consult is committed to providing high-quality services at reasonable fees, you can rest assured and accompany us in carrying out the above goods purchase and sale procedures.

To better understand the procedures for temporary issuance of goods purchase and sale business licenses as well as related issues, please contact Pham Consult – a unit specializing in providing tax consultancy, financial consulting, accounting services, salary preparation and payment. Customers can contact us via hotline: (84-28) 3930 2487 or Facebook communication channel if you need support.