Business license for retail distributions in Vietnam

Retail distribution is an important and fundamental activity of many foreign capital companies and domestic companies. Unlike domestic companies, foreign investors are required to meet the conditions to carry out retail distribution of goods. In this article, Viet An Law provides regulatory analysis and guidelines for investors to apply for business licenses to exercise the right to retail distribution of goods.

Legal bases

• WTO commitments and international treaties on investment to which Vietnam is a signatory or accedia;
• Investment Law 2020;
• Decree 09/2018/ND-CP details the commercial law and the law on foreign trade management on goods purchase and sale activities and activities directly related to goods purchase and sale by foreign investors and foreign-invested economic organizations in Vietnam.

Special groups of goods when applying for a business license exercising the right to retail distribution in Vietnam

Group 1: For  goods not on the list of goods banned from export and import and the list of goods not distributed in accordance with Vietnamese law or not subject to restrictions under international commitments to which Vietnam is a contracting party.

Group 2: For goods that are oils and greases;

Group 3: For goods such as rice; sugar; recorded items; books, newspapers and magazines;

Procedures for applying for a business license exercising  the right to retail distribution in Vietnam

Dossier of application for a business license

• Application for a Business License
• Explanation
• Explanation of the conditions for issuance of corresponding business licenses as prescribed.
• Business plan: Description of contents and methods of conducting business activities; presentation of a business plan and market development; demand for labor; assessment of impacts and socio-economic efficiency of business plans;
• Financial plan: Report on business results on the basis of audited financial statements of the latest year in case it has been established in Vietnam for 01 year or more; explanation of capital, capital sources and capital mobilization plans; enclose documents on finances;
• Business situation of goods purchase and sale activities and activities directly related to goods purchase and sale.
• Documents of the tax authorities proving that there is no longer any overdue tax owed.
• Copy: Business Registration Certificate; Investment Registration Certificate of the project on goods purchase and sale activities and activities directly related to goods purchase and sale (if any).

Order of issuance of business licenses

• Applications shall be submitted in person or by post or electronically (if eligible) to the Licensing Authority.
• Number of records
• In case of issuance of a business license to exercise the right to retail distribution of goods in Group 1: 01 set;
• In case of issuance of a business license to exercise the right to retail distribution of goods in Group 2: 02 sets;
• In case of issuance of a business license to exercise the right to retail distribution of goods in Group 3: 03 sets.
• Within 28 working days after receiving a valid dossier, the licensing agency shall check the validity and send the dossier together with a written opinion to the Ministry of Industry and Trade and the Ministry of Industry and Industry Management for comments on the contents of issuance of business licenses according to regulations.

After being granted a business license, company continues to apply for a retail license in Vietnam

Conditions for setting up a retail establishment

• Have a financial plan to set up a retail facility;
• No more overdue tax debts in case they have been established in Vietnam for 01 year or more;
• The location of the retail establishment in accordance with the relevant planning in the geographical market area.

Dossier of issuance of permit for establishment of retail establishment

• Application for a license to establish a retail establishment (Form No. 04 in the Appendix enclosed with Decree No. 09/2018/ND-CP)
• The explanation reads:
• Location of 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 the prescribed conditions (in particular, the location of the retail establishment must conform to the relevant planning in the geographical market area); enclose documents on the location of the retail establishment;
• Business plan at 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 is no longer any overdue tax owed.
• Copy: Business Registration Certificate, Investment Registration Certificate of the project to establish a retail establishment (if any), Business license

Order of issuance of permits for establishment of retail establishments

• Dossier of 02 sets, sent directly or by post or electronically (if applicable) to the Licensing Authority.
• Within 03 working days from the date of receipt of the dossier, the licensing agency shall inspect and request amendments and supplements if the dossier is insufficient and valid.
• Within 10 working days from the date of receipt of a complete and valid dossier, the licensing agency shall check the satisfaction of the prescribed conditions.
  • In case the conditions are not met, the Licensing Authority shall issue a written reply clearly stating the reason;
  • In case the conditions are satisfied, the licensing agency shall send a dossier together with a written request for opinions of the Ministry of Industry and Trade
• Within 07 working days from the date of receipt of the dossier, the Ministry of Industry and Trade shall base itself on the corresponding contents to obtain a written approval for the issuance of a license for setting up a retail establishment.

In case company has been set up the first retail establishment and wants to set up a retail establishment in addition to the first retail establishment in Vietnam

Conditions for setting up a retail establishment other than the first retail establishment

• Where economic needs checks are not required:
  • Have a financial plan to set up a retail facility;
  • No more overdue tax debts in case they have been established in Vietnam for 01 year or more;
  • Location of retail establishment in accordance with relevant planning in geographical market area
• Where an economic needs check must be performed:
  • Meet the conditions in the absence of having to carry out an economic needs check;
  • Meet the Economic Needs Test criteria (hereinafter referred to as the ENT criteria) as follows:
    • The size of the geographic market area is affected when the retail establishment operates;
    • The number of retail establishments operating in the geographic market area;
    • The impact of retail establishments on the stability of the market and business activities of retail establishments and traditional markets in the geographical market area;
    • Impacts of retail establishments on traffic density, environmental sanitation, fire protection in the geographical market area;
    • The ability of retail establishments to contribute to the socio-economic development of the geographical market area, specifically: Creating jobs for domestic workers; Contribute to the development and modernization of the retail industry in the geographical market area; Improving the environment and living conditions of the population in the geographical market area; The possibility and extent of contribution to the state budget.

Application for a retail license outside the first retail establishment

• The composition of the dossier is identical to that of setting up a retail establishment;
• An explanation of the ENT criteria.

Some questions about foreign investors applying for business licenses to carry out retail distribution in Vietnam

What additional conditions does the company need to exercise the right to retail distribution at the retail establishment?

With a business license to conduct retail distribution, the company is allowed to retail online on company websites and e-commerce platforms. However, in order to retail at a retail establishment, the company must apply for a business license and a permit to set up a retail establishment.

What is the maximum percentage of foreign investors’ ownership in the company that performs retail distribution?

Restrictions on the percentage of contributed capital are set for a number of industries with specific conditions that investors intend to register. However, the retail industry has no requirement for the percentage of capital contributed by investors. Thus, investors can apply for a maximum capital ratio of 100%.

Foreign investor consulting services applying for retail distribution business licenses of Viet An Law Firm

• Advising on conditions, guiding investors to prepare necessary documents to carry out procedures for applying for business licenses;
• Representing investors and economic organizations to submit and process dossiers arising with concerned agencies in the process of carrying out procedures for applying for business licenses;
• Support consulting and guiding customers on activities arising in the process of investment and business in Vietnam.

Foreign investors wishing to apply for a license, please contact Viet An Law Firm for the fastest support.