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Conditions for the clothing business in Vietnam

Currently, with a vibrant and potential market, the need for clothing businesses is increasing, especially when young people tend to start businesses with small-medium capital. However, not everyone has the knowledge to fully comply with clothing business conditions according to current law. The following article by Viet An Law Firm will provide you with the most detailed information about conditions for the clothing business in Vietnam, in order to avoid legal risks when starting this business.

Legal basis

  • Schedule of Vietnam’s trade in services commitments at the WTO;
  • Law on Enterprise 2020;
  • Decree 78/2015/ND-CP guiding business registration procedures;
  • Decree 39/2007/ND-CP regulates cases where business registration is not required.

Market entry for foreign investors to the clothing business in Vietnam

According to Vietnam’s commitments on translation trade within the WTO framework, in terms of the scope of activities, foreign investors can implement the following forms Vietnam has committed to, including:

  • Commission agent;
  • Wholesale;
  • Retail;

Particularly for retail forms, conditions for establishing a second or more retail establishment are prescribed as follows:

  • The establishment of a retail establishment (in addition to the first retail establishment) of a foreign-invested economic organization will be considered on the basis of examining the economic need test (ENT) of the area where the retail establishment is located according to the following criteria: Number of retail establishments, market stability, population density and size of the district level where the retail establishment is expected to be located.
  • Regulations do not apply to retail establishments with an area of less than 500m2 in areas that have been planned by the province or centrally run city for goods trading activities and have completed infrastructure construction. floor unless there is a change in planning and this condition no longer exists.

For commercial franchising activities, Vietnam sets conditions for investors within the WTO framework to meet the following conditions:

  • Operating business system with at least 1 year of operation; and
  • In case a Vietnamese trader is a primary franchisee from a foreign franchisor, that Vietnamese trader must do business in this field for at least 1 year in Vietnam before proceeding with franchise procedures.

Does clothing business need to be registered?

The law regulates cases that do not require business registration including:

  • Street trading (street trading): buying and selling activities without a fixed location (street buying, peddling, or both peddling and buying), including receiving books, newspapers, magazines, and culture. products of traders licensed to trade in these products;
  • Petty trading: the activity of buying and selling small items; with or without a fixed location; selling gifts, cakes, food, and drinks (drinks); with or without a fixed location;
  • Freight trading: the activity of buying goods from other places in each trip to sell to wholesale buyers or retailers;
  • Providing services: shoe shining, lottery ticket sales, lock repair, car repair, car parking, car washing, hair cutting, painting, photography, and other services with or without a fixed location;
  • Independent, regular commercial activities do not require other business registration.

Thus, according to the above regulations, business registration when trading clothes is mandatory when the clothing business is carried out in the form of:

  • A regular, independent, profitable commercial activity that serves as the main source of income; and
  • Does not fall into the cases where business registration is not required.

What are the forms of clothing business registration?

Clothing business registration can be divided into 2 forms:

  • Open a business;
  • Establishing a business.

In general, choosing to run a clothing business in the form of opening a business or establishing a business will depend on your initial capital and desired business scale. With a smaller amount of capital, the conditions and procedures for business registration in the form of opening a business household will be simpler than the form of establishing an enterprise.

Conditions for the clothing business in Vietnam

Business conditions Opening a business household Establishing an enterprise
The number of employees Employ no more than 10 workers. The number of employees is over 10 people and there is no limit to the number of employees.
Business location You can only register your business in one location, you cannot establish another branch, location, or representative office. Unlimited business location: has a stable transaction office, and can establish branches and representative offices.

 

Seal No seal. Must have a business seal.
Name ·     Includes the element “Business household” and the personal name of the business household.

·     The name must not be the same as the name of the type of business household registered within the district where the business location is located.

·     Includes at least two elements: Type of business and business name.

·     The company name must not be identical or easily confused with companies registered on the nationwide business registration portal.

 

Tax Selling clothes as a household business must pay 3 types of taxes:

·     License tax;

·     VAT tax;

·     Personal income tax.

A clothing business in the form of a company must pay 3 types of taxes:

·     License tax;

·     VAT tax;

·     Corporate income tax.

Procedures for clothing business in the form of opening a business household

Step 1: Prepare and submit the application package

You prepare a set of documents to establish a business household, including:

  • Application for business household registration. Contents of the application for business household registration include:
  • Name of business household, address of business location;
  • Business lines;
  • Amount of business capital;
  • Full name, number, and date of issuance of the ID card, residential address, and signature of individuals establishing business households for business households established by groups of individuals, of individuals for business households business established by an individual or a representative of a household in the case of a business established by a household.
  • Valid copy of Citizen Identification Card or ID card or valid Passport of individuals participating in the business household or household representative;
  • Store lease contract or land use right certificate.

You submit your business registration application to the district People’s Committee where your business location is located with a fee of 100,000 VND/time.

Step 2: Review business establishment documents

Upon receiving the dossier, the district business registration agency shall issue a Receipt and a Business Household Registration Certificate to the business household within 3 working days from the date of receipt of the dossier, if there are enough documents. the following conditions:

Business lines are not on the list of banned business lines;

  • Name of business household intended to register in accordance with this regulation;
  • Pay the registration fee in full as prescribed.

In case the dossier is invalid, within five working days from the date of receipt of the dossier, the business registration agency must clearly notify the content that needs to be amended and supplemented in writing to the business household founder. joint.

Step 3: Receive the business household registration certificate

  • The business household representative will receive a business registration certificate at the registration agency, register for tax declaration with the tax agency, and begin business operations.
  • If after 5 working days from the date of submitting the application for household business registration, you do not receive the Certificate of household business registration or do not receive a notice requesting amendments or supplements to the household business registration dossier. The person registering the business household has the right to complain according to the provisions of the law on complaints and denunciations.

Procedures for registering a clothing business in the form of establishing a business

Step 1: Prepare and submit the business establishment documents

The owner submits the application to the Department of Planning and Investment where the business is headquartered. Business establishment documents include:

  • Application for business registration;
  • Company charter;
  • List of founding shareholders and shareholders who are foreign investors (for joint stock companies); List of members (for LLCs with two or more members);
  • Certified copy of identity card or citizen identification card or passport (if an individual); Establishment decision, business registration certificate or equivalent document and citizen identification card or identity card or passport with authorization document for the capital manager in Vietnam (if an organization) ;
  • Certified copy of Investment Registration Certificate issued.

Step 2: Publish business information content

After being granted an Enterprise Registration Certificate, an enterprise must make a public announcement on the National Business Registration Portal and pay fees according to the provisions of law. The published content includes:

  • Enterprise Registration Certificate;
  • Specific information about business sectors and professions;
  • List of founding shareholders; List of shareholders who are foreign investors for joint stock companies (if any).
  • Publication fee: The request to publish the business registration content and pay the fee to publish the business registration content are made at the time the enterprise submits the business registration application. In case the enterprise is not granted business registration, the enterprise will be refunded the fee for publishing the business registration content.

The announced fee is 100,000 VND

Step 3: Engrave the business seal

  • Stamps include stamps made at a seal engraving facility or stamps in the form of digital signatures in accordance with the law on electronic transactions;
  • The enterprise decides on the type of seal, quantity, form, and content of the seal of the enterprise, branches, representative offices, and other units of the enterprise;
  • The management and storage of seals is carried out in accordance with the provisions of the company charter or regulations issued by the enterprise, branch, representative office, or other unit of the enterprise with the seal. Enterprises use seals in transactions according to the provisions of law.

Customers who want to receive advice and learn more information about conditions for the clothing business in Vietnam, please contact Viet An Law Firm for our best support!

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