Establish foreign enterprise for export, import, distribution of goods in Vietnam

The wholesale and retail market is one of the potential trade and service attracting foreign investors to Vietnam. Along with the establishment of GATS, TRIMs, Vietnam’s commitments in the WTO as well as Free Trade Agreements, the establishment of foreign-invested companies operating in export, import and distribution of goods in Vietnam becomes “access” more than ever. Foreign investors may be individuals or organizations who wish to invest in Vietnam, however, the fact that the establishment of foreign-invested enterprise operating in this field has certain among between a foreign investor of a country or territory acceding or not acceding an international treaty to which Vietnam is a signatory and commits to give access market.

Conditions for establishing foreign companies to import, export and distribute goods:

• About the scope of activities: foreign-invested bussiness organization in the field of distribution and import-export services normal operate the following business activities:
  •  Wholesale (CPC 622, 61111, 6113, 6113, 6121);
  • Retail (CPC 631 + 632, 61112, 6113, 6121);
  •  Commercial Franchsing (CPC 8929).
• HS code of goods are not included in the lists of goods banned or limited import and distributiion as Vietnam law;
• Foreign-invested enterprises can import- export and distribute goods only when they have the following legal documents:
• Certificate of investment registration (For companies with 1% to 100% of the capital contributed by foreign investors right from the establishment of the enterprise);
• Certificate of bussiness registration;
• Bussiness licenses in the case of a retail business;
• License for establishment of retail outlet in case of setting up a retail outlet.

Procedures for issuing the Certificate of Investment Registration:

Note that in case foreign investors contributing capital or buying shares in a Vietnamese company that has a Certificate of bussiness registration (including cases of buying up to 100% capital) do not have to carry out procedures to apply for investment registration certificate. Hence, instead of contributing capital from the beginning, investors can repurchase capital from Vietnamese individuals and organizations in the company. Enterprises will not have to apply for an investment license, but just make the transfer procedure.

Dossier for the Certificate of Investment Registration:

If investor is an individual

• A copy of ID card or passport of foreign investors;
• A written request for permission for execution of the investment project;
• Investment proposal, which specifies: investor(s) in the project, investment objectives, investment scale, investment capital, method of capital rising, location and duration of investment, labor demand, request for investment incentives, assessment of socio-economic effects of the project;
• Demonstration of investor’s financial capacity;
• Dossier proving the location of project implementation and company headquarters: note that: condominiums, community house cannot register company headquarters and project execution location for foreign invested companies.

If the investor is legal entity

• Certificate of business registration of a foreign company (Certified copy with consular legalization);
• A copy of ID card or passport of legal representative of the company in Vietnam;
• Document to prove the financial capacity of investors;
• Investment proposal, which specifies: investor(s) in the project, investment objectives, investment scale, investment capital, method of capital rising, location and duration of investment, labor demand, request for investment incentives, assessment of socio-economic effects of the project;
• Demonstration of investor’s financial capacity;
• Dossier proving the location of project implementation and company headquarters

Duration:

Within 15 days from the receipt of the valid dossier, the registry office shall issue the Certificate of Investment Registration. In case the registry office refuse to do so, a written respond with explanation shall be issued.

Competence to issue of investment registration

• Management boards of industrial parks, export-processing zones, hi-tech zones, economic zones with the investment projects located therein;
• The Services of Planning and Investment with the investment projects outside industrial parks, export-processing zones, hi-tech zones, economic zones;
• The Service of Planning and Investment of the province where the investor intends to place the head office or operating office to execute the investment project in case:
• Any investment project that spreads over multiple provinces;
• Any investment project executed both inside and outside industrial parks, export-processing zones, hi-tech zones, and economic zones.

Procedures for registering business organization after granting the Certificate of Investment Registration:

After being granted Investment Certificate, Enterprises process business registration at the Services of Planning and Investment at the place where the enterprise is headquartered or via the website https://dangkyquamang.dkkd.gov.vn. Business registration time is currently only 3-7 days.

Dossier for the Certificate of Business Registration includes:

• An application form for business registration;
• The company’s charter;
• A list of members or founding shareholders and shareholders being foreign investors;
• Copies of the ID card or other ID papers of founding shareholders and foreign investors being individuals;

Decision on Establishment, Certificate of Business registration, or an equivalent document of the organization and the letter of authorization; the ID card or other ID papers of the authorized representatives of founding shareholders and foreign investors being organizations.

If shareholders are foreign organizations, the copy of the Certificate of Business registration or an equivalent document must be consularly legalized.

• The Certificate of Investment registration of the foreign investors.

After having the Certificate of Business Registration,  enterprises announce business registration information and engraved seal, posted seal.

Procedures for issuing the business licenses:

Cases that must be applied for business licenses:

• Enteprise performs retail business;
• Perform importation right and wholesale distribution right to a foreign-invested business entity performing one of following activities:
• Manufacturing lubricants in Vietnam;
• Manufacturing or distributing machinery, equipment or goods using particular lubricants in Vietnam.

Dossier for the business licenses:

• An application form for a business license;
• A representation specifying about Conditions for issuance of a business license, Business plan, Financial plan;
• A document justifying that the enterprise incurs no overdue tax issued by the tax authority;
• Copies of: the business registration certificate; certificate of registration for sale of goods and other related activities;
• Authorizing for Viet An Law Firm to submit documents

Within 25-30 days from the date on which the application is received,  Compepent agencies approve the issuance of a business license; if the application is refused, it shall provide explanation in writing.

*Notice: A foreign investor from a country or territory which has not acceded to a treaty to which Vietnam is a signatory and under which Vietnam has committed to open its market for sale of goods and other related activities , Department of Industry and Trade consulted with Ministry of Industry and Trade before issuing Business Licenses.

License For Establishment Of Retail Outlet

A license for establishment of retail outlet is issued to a foreign-invested business entity to set up a retail outlet. Therefore, in the event that the company does not establish retail facilities, it is not necessary to apply for this license. In fact, many enterprises only perform the right to wholesale and retail but do not set up retail outlet, therefore, when  business registration will be detailed “(No establishment of retail outlet )”. For example:

Foreign-invested business organizations have the right to apply for a License For Establishment Of Retail Outlet right after obtaining a business license and documents on locations of retail outlets.

*Notice:

• If the first retail outlet is located in the same province and central-affiliated city with the headquarters, the foreign-invested business entity is entitled to apply for both a business license and a license for establishment of retail outlet;
• A business entity having retail outlet(s) in Vietnam shall, upon receipt of stakes leading becoming a foreign-invested business entity or a business entity from 51% or more of charter capital apply for both a business license and a license for establishment of retail outlet.

Setting up the first retail outlet

• Acquire a financial plan for setting up retail outlet;
• Incur no overdue tax in a case where it has been established in Vietnam for at least 1 year;
• The location where the retail outlet is set up is conformable with the relevant planning in the relevant geographic market.

Setting up retail outlet other than the first retail outlet

Setting up a retail outlet other than the first retail outlet, unless such retail outlet is less than 500m²in size and located in a shopping mall and not classified as convenience store or mini supermarket. Thus, depending on the circumstances, investors need to meet different conditions to be granted a license for establishment of retail outlet:

• In case of without requiring compliance with an economic needs test: Conditions corresponds to the condition of setting up the first retail outlet.
• In case of requiring compliance with an economic needs test: Conditions corresponds to the condition of setting up the first retail outlet and economic needs test are fulfilled.
• The scale of relevant geographic market being affected by to-be-retail outlet;
• The number of existing retail outlets in the relevant geographic market;
• Impact of the retail outlet on the market stability and operating activities of other retail outlets and traditional markets in the relevant geographic market;
• Impact of retail outlet on traffic density, environment hygiene, fire safety in the relevant geographic market;
• Potential contribution of the retail outlet to the socio-economic development of the relevant geographic market.

Application for license for establishment of retail outlet

• An application shall include:
• An application form for license for setting up retail outlet
• A representation specifying about the location, Business plan at retail outlet, Financial plan for setting up retail outlet;
• A document justifying that the enterprise incurs no overdue tax issued by the tax authority.
• Copies: Business registration certificate, certificate of registration for project setting up retail outlet (if any), business license;
• A representation of ENT criteria in case of requiring compliance with ENT.

Competent agency: Department of Industry and Trade where the enterprise places a retail outlet.

*Notice: There are certain differences in the consideration and approval of issuing licenses for establishment of retail outlet among investors,  in particular:

Foreign investor from a country or territory which has acceded to a treaty to which Vietnam is a signatory and under which Vietnam has committed to open its market for sale of goods and other related activities shall: The conformity with sector development planning and strategies of the region or country.

A foreign investor not from a country or territory which has acceded to a treaty to which Vietnam is a signatory shall:

• The conformity with sector development planning and strategies of the region or country;
• Vietnam market opening negotiation process;
• Vietnamese market opening need;
• Vietnam and foreign partner cooperation strategies;
• Diplomatic relations, national security, social safety and order.