The market for buying and selling goods in Vietnam is witnessing a significant increase in foreign enterprises opening stores to do business and sell goods. To ensure that business and sales are carried out smoothly and in accordance with regulations, foreign enterprises need to comply with relevant legal regulations. In this article, NPLaw will analyze some of the regulations on foreign enterprises opening stores to sell goods in Vietnam.
I. The current situation of foreign enterprises opening stores to sell goods in Vietnam
International market integration has led to many changes in the shopping habits of Vietnamese consumers. Taking advantage of the potential of the developing market, international brands often choose Vietnam as a place to expand as the consumer market is growing rapidly. However, to adapt to the local market, foreign enterprises need to understand the culture, lifestyle, and special shopping trends of Vietnamese people. At the same time, it is necessary to understand and comply with the conditions and regulations of Vietnamese law on business activities in goods.
II. Legal regulations on foreign enterprises opening stores to sell goods in Vietnam
1. What is a Foreign Enterprise opening a store to sell goods in Vietnam?
A foreign-invested enterprise is a concept defined in the Investment Law 2005. However, this concept has been replaced by foreign-invested economic organization according to Clause 22, Article 3 of the Investment Law 2020 as follows: A foreign-invested economic organization is an economic organization with foreign investors as members or shareholders.
Therefore, a foreign enterprise opening a store to sell goods in Vietnam can be understood as a foreign-invested economic organization that carries out business activities of buying and selling goods in Vietnam.
2. Conditions for foreign enterprises opening stores to sell goods in Vietnam
To be granted a Business License in Vietnam, a foreign enterprise must meet the conditions according to Article 9 of Decree 09/2018/ND-CP as follows:
In the case of foreign investors from countries or territories participating in international treaties to which Vietnam is a member, with commitments to open the market for goods trading and activities directly related to goods trading:
- Meet the market access conditions in the international treaty to which Vietnam is a member;
- Have a financial plan to carry out the activities for which a Business License is requested;
- Have no outstanding tax debts if they have been established in Vietnam for at least 01 year.
In the case of foreign investors from countries or territories not participating in international treaties to which Vietnam is a member, or for business services that have not been committed to market opening in international treaties to which Vietnam is a member:
- Meet the financial and tax conditions mentioned above;
- Meet the criteria:
- Comply with the provisions of specialized laws;
- Comply with the level of competition of domestic enterprises in the same field of activity;
- Ability to create jobs for domestic workers;
- Ability and level of contribution to the state budget.
In the case of goods to be traded have not been committed to market opening in international treaties to which Vietnam is a member: Oil, lubricating grease; rice; sugar; recorded items; books, newspapers, and magazines:
- Conditions as specified in item b above;
- For goods that are oil, lubricating grease: Consider granting the right to import, the right to distribute wholesale to foreign-invested economic organizations that carry out one of the following activities:
- Produce oil, lubricating grease in Vietnam;
Manufacture or be authorized to distribute in Vietnam machinery, equipment, goods using special lubricating oil.
- For goods that are rice; sugar; recorded items; books, newspapers, and magazines: Consider granting the right to distribute retail to foreign-invested economic organizations that have retail facilities in the form of supermarkets, mini-supermarkets, and convenience stores for retail sale at those facilities.
3. Procedures for foreign enterprises opening stores to sell goods in Vietnam
Current sequence and procedures for granting Business Licenses according to Article 13 of Decree 09/2018/ND-CP:
Step 1: Submit the application file directly, by post, or electronically to the licensing authority.
Step 2: Within 03 working days from the date of receiving the application file, the licensing authority shall check and request to amend or supplement the application file if it is not complete and valid.
Step 3: Within 10 working days from the date of receiving the complete and valid application file, the licensing authority shall check the application file:
3.1. Does not meet the conditions: The licensing authority shall issue a reply letter and clearly state the reasons;
3.2. Meets the conditions:
- Grant a Business License.
- Send the application file together with the request for comments from the Ministry of Industry and Trade, the sectoral management agency in case it is necessary to seek comments.
- Within 15 days from the date of receiving the application file, the Ministry of Industry and Trade and the sectoral management agency shall issue a reply letter.
- Within 03 working days from the date of receiving the approval letter from the Ministry of Industry and Trade and the sectoral management agency, the licensing authority shall grant the Business License.
4. Authority to resolve registration dossiers for foreign enterprises opening stores to sell goods in Vietnam
Article 8 of Decree 09/2018/ND-CP stipulates on the licensing authority, license to establish a retail establishment as follows:
- The Department of Industry and Trade where the foreign-invested economic organization has its head office shall grant, re-grant, adjust, and withdraw Business Licenses.
- In some special cases, the licensing authority must seek comments from the Ministry of Industry and Trade, the sectoral management agency as prescribed in Clause 3 of Article 8 of Decree 09/2018/ND-CP.
Thus, the Department of Industry and Trade where the foreign-invested economic organization has its head office is authorized to handle the dossier for granting Business Licenses to foreign enterprises opening stores to sell goods in Vietnam.
III. Frequently asked questions related to foreign enterprises opening stores to sell goods in Vietnam
1. Are foreign enterprises opening stores to sell goods in Vietnam required to register their business?
Clause 1 of Article 6 of Decree 09/2018/ND-CP stipulates cases where a Business License is not required, including:
- Goods trading activities of enterprises that do not fall under the cases requiring a Business License according to Clause 1 of Article 5 of Decree 09/2018/ND-CP;
- Foreign-invested economic organizations that must meet the conditions and carry out investment procedures according to regulations and have completed the registration of goods trading activities on related documents according to the provisions of the Investment Law and the Enterprise Law.
Thus, not all cases of foreign enterprises trading goods in Vietnam are required to register their business.
2. Do foreign enterprises opening stores to sell goods in Vietnam have to pay taxes? What preferential policies are they entitled to?
Clause 1 of Circular 103/2014/TT-BTC stipulates:
Foreign contractors and foreign subcontractors are business organizations that perform value-added tax (VAT) and corporate income tax (CIT) obligations according to the instructions in this Circular.
Foreign contractors and foreign subcontractors are foreign individuals who do business to perform VAT obligations according to the instructions in this Circular and personal income tax (PIT) according to the PIT Law.
Thus, foreign enterprises opening stores to sell goods in Vietnam must pay taxes according to regulations.
In case enterprises trading goods in Vietnam are eligible for investment incentives according to Clause 2 of Article 15 of the Investment Law 2020, they will enjoy investment incentives. The forms of incentives include tax incentives and land use incentives. In each specific case and stage, enterprises will enjoy the level of incentives according to regulations.
3. Do foreign enterprises opening stores to sell goods in Vietnam have to apply for a Business License for trading goods?
Except for some cases where a Business License is not required, foreign enterprises carrying out trading activities in Vietnam must have a Business License according to points a, b, c of Clause 1 of Article 5 of Decree 09/2018/ND-CP:
A Business License is granted to a foreign-invested economic organization to implement the following activities:
a) To exercise the right to distribute retail goods, not including goods specified at point c, Clause 4 of this Decree;
b) To exercise the right to import and distribute wholesale goods specified at point b, Clause 4 of this Decree;
c) To exercise the right to distribute retail goods specified at point c, Clause 4 of this Decree.
Thus, foreign enterprises opening stores to sell goods in Vietnam must apply for a Business License for trading goods according to the above regulations.
4. For goods imported from abroad for sale in stores, what language must be used on the product label? Are there any documents that need to be met?
Clause 1 of Decree 43/2017/ND-CP stipulates on the language of presentation of product labels as follows: The mandatory contents that must be shown on labels of goods circulating on the Vietnamese market must be written in Vietnamese, except for exported goods that are not for domestic consumption and except for the case prescribed in Clause 4 of this Article.
Imported goods into Vietnam must also have a secondary label according to Article 8 of Decree 43/2017/ND-CP.
Thus, the mandatory contents that must be shown on labels of goods circulating on the Vietnamese market must be written in Vietnamese. Imported goods into Vietnam must have a secondary label according to regulations.
IV. Legal consulting services related to foreign enterprises opening stores to sell goods in Vietnam
The above is an article by NPLaw analyzing some regulations on foreign enterprises opening stores to sell goods in Vietnam. With a team of experienced lawyers and legal experts, NPLaw provides reputable and professional legal services, ensuring the rights and legitimate interests of customers.
