Foreign-invested enterprises engaged in the business of "Exercising the right to retail distribution (without establishing retail outlets) of goods with codes..." need to apply for a retail business license.
The following article provides guidance on applying for a retail business license for foreign-invested enterprises.
Basis: Decree 09/2018/ND-CP on the trading of goods and activities directly related to the trading of goods by foreign investors and economic organizations with foreign investment capital in Vietnam.
Accordingly, the regulations stipulate that business licenses are granted to economic organizations with foreign investment capital. exercising the right to retail distribution of goods
1. What types of foreign-invested enterprises need to apply for a retail business license?
To answer the question of what percentage of foreign investment in a business requires a retail business license, the definition needs to be clarified:
1.1. What is an economic organization with foreign investment?
According to the provisions of the Investment Law:A foreign-invested economic organization is an economic organization that has Foreign investors are members or shareholders."
"Foreign investors are individuals with foreign nationality or organizations established under foreign law that conduct investment and business activities in Vietnam."
Therefore, if a foreign investor has a capital contribution in an economic organization, regardless of the percentage of capital, that economic organization is considered an economic organization with foreign investment.
1.2. What percentage of foreign investment requires a retail business license?
Based on clause a, point 1, Article 5 of Decree 09/2018/ND-CP:
“1. Business licenses are granted to economic organizations with foreign investment capital to carry out the following activities:
a) To exercise the right to retail distribution of goods, excluding goods specified in point c, clause 4, Article 9 of this Decree;”
Therefore, economic organizations with foreign investment (regardless of the percentage of foreign capital) that engage in retail business must apply for a Retail Business License.
2. What is the significance of the regulation requiring foreign capital to exceed 50% in the process of obtaining a retail business license?
Not all cases require foreign investors to invest in Vietnam. Carry out investment procedures in accordance with regulations applicable to foreign investors., which will depend on the percentage of capital held.
If the economic organization does not fall under the following cases:
- In the case of a partnership company, there are foreign investors holding more than 50% of the charter capital or the majority of the partners are foreign individuals.
- An economic organization as defined in point a above holds more than 50% of the charter capital;
- Foreign investors and economic organizations as specified in point a above hold more than 50% of the charter capital.
Then, the investment conditions and procedures stipulated for domestic investors shall be implemented when investing in the establishment of other economic organizations; investing in the form of capital contribution, share purchase, or purchase of capital contributions of other economic organizations; and investing in the form of BCC contracts.
=> This means that if the capital contribution is: Foreign investors or economic organizations with foreign investors (foreign investors holding more than 50% of the capital) or economic organizations with foreign investors (foreign investors holding more than 50% of the capital) and foreign investors holding 50% or less, then Fulfill the same investment conditions and procedures as domestic investors..
The regulations regarding retail business licenses are not... Investment procedures which is Business conditionsTherefore, the regulations applicable to Foreign-invested economic organizations.
Refer to the Government Newspaper's response on this issue here.
3. Penalties for not obtaining a Retail Business License
Fines from 10.000.000 VND to 15.000.000 VND for any of the following violations:Engaging in the business of goods and services in sectors subject to conditional investment and business regulations without a business license as required by law;"
Currently, the government is increasing penalties and inspections regarding compliance with regulations by businesses nationwide, including Vietnamese businesses and especially foreign businesses. Therefore, with increasingly high penalties, foreign investors and businesses should comply with regulations to avoid being inspected and penalized.
- Investment Law 2020: effective from January 1, 2021;
- Decree 09/2018: effective from January 15, 2018;
- Decree 98/2020/ND-CP: effective from October 15, 2020;
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