Procedures for issuance of a retail distribution license for foreign investors in Viet Nam
Procedures for issuance of a retail distribution license for foreign investors in Viet Nam
The original article Procedures for issuance of a retail distribution license for foreign investors in Viet Nam
Question: I am a Japanese investor and I intend to invest in a company in Viet Nam. The main activity in the Vietnamese company that I plan to operate is selling foods, such as dried fruits, cashews, etc. to consumers through e-commerce websites, such as Shopee, Lazada in Viet Nam. Then, when buying and selling products through these websites, does the Vietnamese company need any license related to this trading activity after I make an investment?
Answer: Thank you for your question to Nghiep Thanh Law. First, it is necessary to clarify what the business line of the Vietnamese company is.
Because the company’s activity is to sell foods to consumers, that means the consumer is the last person to use the products sold directly by the Vietnamese company without going through any other organization or individual to resale, which is called retail.
1. Registration of retail industry when making investment in Viet Nam
Particularly, because the retail industry related to food, the Company needs to register the industry No. 4781. Retail of victuals, food, drink, tobacco, pipe tobacco or at the market[1] (CPC 631). If the company in Viet Nam has not registered the above industry, when you make the investment, you must have the retail industry mentioned above registered.
2. Issuance of retail licence
Regarding retail involving foreign elements, Vietnamese law has strict regulations on this activity. In particular, when retailing goods, foreign investors, foreign-invested economic organizations in Viet Nam must have a business license and a retail outlet license issued by the Department of Industry and Trade.[2]
In which, only if your company has retail at convenience stores, shopping malls, mini supermarkets, etc., it must carry out the procedures for applying for a retail outlet license. Each retail outlet will be required to have an associated retail outlet license.
However, in your case, it does not refer to selling at a bricks and mortar but only selling online on an e-commerce website, so it is only required to issue a business license, specifically a retail distribution license. Note that this step is done after completing all the procedures for registration of investment changes on the business registration certificate or new issuance of the investment registration certificate, etc.
So is there any limit on the types of goods that can be distributed at retail?
For foreign-invested economic organizations, the right to retail distribution of listed goods does not include rice; sugar; recorded items; books, newspapers and magazines.[3] Therefore, excluding the above goods, foreign-invested economic organizations have the right to retail distribution with the remaining goods.
3. Procedures for issuance of a retail distribution license
First, requirements for licensing[4]
– Foreign investors must belong to a country or territory that is a party to an International Treaty to which Viet Nam is a contracting party and has committed to open its market for the sale and purchase of goods.
Specifically, Japan and Viet Nam are both members of the WTO (World Trade Organization) and have the same commitments on trade in services, including commitments to open the goods market, to open the service market, and to multilateral commitments. In which, there is a commitment on distribution services (including retail services), which is one of the contents mentioned in the WTO’s Schedule of Commitments.
– Having a financial plan when applying for a license
– Having no outstanding tax debt
Second, a dossier of business license[5]
(1) Application form of Business License
(2) Explanation of:
– The license requirements stated in the First Section
– Business plan: Description of content and method of conducting business activities; demonstration of business and market development plans; demand for labor; assessment of the socio-economic impact and efficiency of the business plan;
– Financial plan: Report on business results on the basis of audited financial statements of the latest year, in case it has been established in Viet Nam for 01 year or more; explanation of capital, capital sources and capital raise plans; accompanying financial documents;
– Business situation of purchase and sale of goods and activities directly related to the purchase and sale of goods; financial situation of the foreign-invested economic organization up to the time of application for a business license.
In general, the content of the explanation covers issues about the organization’s business plan in terms of retail, financial allocation, current business and financial situation of the company. The request for the above contents from investors is to demonstrate to the competent authorities the ability to implement as well as the serious and oriented investment of foreign investors in Viet Nam.
(3) Document(s) proving that there is no longer overdue tax debt from the tax authority.
(4) Copy/Copies: Certificate of Business Registration; Certificate of Investment Registration for the project of goods trading and activities directly related to the purchase and sale of goods (if any).
Submit at: Department of Industry and Trade where the company is located, quantity: 01 set of dossier
Processing time: 31 days from the date of receipt of the dossier.
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Translator: Le Khanh Linh
Editor: Nguyen Linh Chi
Instructor: Lawyer Thuan
[1] Decision 27/2018/QD-TTg.
[2] Article 5 Decree 09/2018/ND-CP.
[3] Article 5.1.(a) and Article 9.4.(c) Decree 09/2018/ND-CP.
[4] Article 9.1 Decree 09/2018/ND-CP.
[5] Article 12 Decree 09/2018/ND-CP.
