Retail activities of foreign investors (Part 2)

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Retail activities of foreign investors (Part 2)

In addition to the issues that need to be noted before deciding to invest in Vietnam for retail operations, continue this Term 2, Apolat Legal Will analyze the Conditions to obtaining a Business License for retail operations, as follows:

According to Clause 1, Article 5 of Decree 09/2018/ND-CP, Business Licenses are granted to Foreign-Invested Business Organizations to carry out the following activities:

  • To exercise the right to the retail distribution of goods, excluding “rice” goods; sugar; recorded items; books, newspapers and magazines ”;
  • To exercise the right to import and distribute wholesale goods of “oil and lubricants”;
  • Exercise the right to the retail distribution of “rice” goods; Street; recorded items; books, newspapers and magazines ”;
  • Providing logistics services; except logistics service sub-sectors to which Vietnam has committed to open markets in international treaties to which Vietnam is a signatory;
  • Leasing goods, excluding financial leasing; except for construction equipment operators with operators;
  • Providing trade promotion services, excluding advertising services;
  • Providing commercial intermediary services;
  • Providing e-commerce services;
  • Providing services for organizing bidding for goods and services.

As such, Foreign-Invested Business Organizations will have to apply for a Business License for retail operations.

The conditions for obtaining a Business License for retail operations are as follows:

(i) In the case, If a foreign investor is a member of a country or territory participating in an international treaty to which Vietnam is a contracting party, undertaking to open the market for goods trading and directly related activities goods sale and purchase, they must meet the following conditions:

1. Satisfying market access conditions in international treaties to which Vietnam is a contracting party: Foreign-Invested Business Organizations need to identify the Country to which the capital-contributing member/shareholder/owner participates in trade agreements, treaties to which Vietnam is a member. Then, Foreign-Invested Business Organizations will determine the conditions that must be met in order to conduct retail activities in the Vietnamese market.

2. Having a financial plan for retail operations: Foreign-Invested Business Organizations should make specific plans on the allocation of financial sources such as:

Having a financial plan for retail operations: Foreign-Invested Business Organizations should make specific plans on the allocation of financial sources such as:

  • Expenses for retail operation are expected in 03 years from the start of the operation;
  • Expenses for human resources (personnel positions serving retail activities);
  • Market development, marketing and branding and goods promotion expenses;
  • Cost of input materials;
  • Office rental, retail locations (if any);
  • Expenses paid into the state budget;
  • Plan to raise capital in case of business loss.

3. No more overdue tax debts in cases Foreign-Invested Business Organizations have been established in Vietnam for 1 year or more up:

In case Foreign-Invested Business Organizations has been operating in Vietnam for 1 year or more, Foreign-Invested Business Organizations need to fulfil tax obligations before preparing for retail operations. The licensing agency needs the Foreign-Invested Business Organizations to provide certification of no tax debt granted by the tax administration agency of the organization.

Therefore, this is also an important and noteworthy condition for the Foreign-Invested Business Organizations having outstanding tax debts.

(ii) In case a foreign investor is not a foreign country or territory to which a treaty to which Vietnam is a signatory is, the following conditions must be met:

1.Satisfying the same conditions as for case (i) including Having a financial plan for retail operations and No overdue tax debt in case it has been established in Vietnam for 01 years or more up;

2. Satisfying the following points:

  • In accordance with the provisions of specialized laws;
  • In accordance with the level of competition of domestic enterprises in the same field of activity: Foreign-Invested Business Organizations need to analyze and assess their competitiveness with other organizations currently operating in the Vietnamese market, which have the same goods. Since then, Foreign-Invested Business Organizations point out their strengths so that licensing agencies can find their potential and product value that can bring many benefits in Vietnam market and is one of the bases for approving the license;
  • Make Jobs for domestic workers: Foreign-Invested Business Organizations need to assess the job creation capacity for Vietnamese workers such as listing the number of employees to be recruited and job positions. of the workers;
  • Capability and level of contribution to the state budget: Foreign-Invested Business Organizations need to provide expected data from 3-5 years on revenue, expenses, Enterprise income tax, The added value tax will contribute to the state budget.

(iii) In case, the goods have not been committed to opening markets in the international treaties to which Vietnam is a member include: rice; sugar; recorded items; for books, newspapers and magazines, Foreign-Invested Business Organizations need to satisfy the following conditions:

1.Satisfying the conditions stated in case (ii);

2. Licensing agencies shall only consider licensing retail activities to Foreign-Invested Business Organizations that already have retail establishments in the form of supermarkets, mini supermarkets and convenience stores for retail in those facilities.

The above are some specific conditions for a Foreign-Invested Business Organization to apply for a business license for a retail operation. Apolat Legal will analyze the conditions for obtaining a Retail Establishment License in term 3.

If you have any questions or require any additional information, please contact Apolat Legal – An International Law Firm in Viet Nam.

This article is for general information only and is not a substitute for legal advice.