Vietnam - 24 FQAs On Business Licenses For Goods Trading Activities Of Foreign Direct Investment Enterprises. - Conventus Law

Within these FAQs, we only mentioned the business license for goods trading activities and other activities related to goods trading (hereinafter referred to as “goods trading activities”) of foreign-invested enterprises (hereinafter referred to as “FIEs” or “FDI Enterprise”).

A business license is not an Enterprise Registration Certificate.

In which case an FDI Enterprise is required to have a business license for goods trading activities?

When conducting the following goods trading activities, FDI Enterprise shall apply for issuing business licenses:

Exercising the retail distribution right, excluding goods excluding lubricants, rice, sugar, visual-recording items, books, newspapers, and magazines;

Exercising the importation right, wholesale distribution right of lubricants;

Exercising the retail distribution right rice, sugar, recorded items, books, newspapers, and magazines;

Providing logistics services; excluding sub-sectors of logistics for which Vietnam has committed to open its market in accordance with the international treaties to which Vietnam is a party;

Leasing out goods, other than a finance lease; excluding the lease of construction equipment with operators;

Providing services of commercial promotion, excluding advertising services;

Providing services of commercial intermediary;

Providing services of electronic commerce; and

Providing services of organizing tenders for goods and services.

What is the role of business licenses in the business activities of enterprises?

Business licenses perform an important role for enterprises intending to carry out conditional business lines and for foreign investors intending to invest in business lines subject to restricted market access.

First, business licenses present evidence for the Government’s approval of allowing enterprises to conduct business lines restricted by prevailing policies and regulations of the law. Therefore, business licenses shall provide the basis for the Government and the law to protect the investment and business activities of investors and enterprises.

Second, business licenses create utility for transactions made between enterprises and their customers/ clients. Based on business licenses, customers/ clients can assess whether or not an enterprise has legal status to conduct business lines subject to conditions or restricted from market access.

Last, business licenses also provide the basis for the Government to consider offering such favorable incentives for enterprises and investors during their operation as a tax deduction, tax refund, loan capital, etc.

Are there any differences between a business license and other documents such as a practicing certificate or a business eligibility certificate?

Yes, there are. Business eligibility certificates are one of the specific forms of business licenses. The content of a business eligibility certificate is to confirm that an enterprise has fulfilled all the conditions for facilities, and personnel to implement business activities as required by law. For instance, they can be a Certificate of eligibility for fire protection service business or a Certificate of eligibility for pharmacy business.

A practicing certificate is a document issued for an individual who has satisfied sufficient professional requirements and experiments to operate in a particular major. The subject of a practicing certificate is an individual, not an economic organization such as an enterprise.

In the case of implementing an investment project with conditional business lines, is it possible to conduct the procedures of applying for a business license at the same time as applying for an Investment Registration Certificate?

The dossier of application for a business license usually includes the granted Investment Registration Certificate. Thus, an enterprise shall complete the procedure of applying for an Investment Registration Certificate before applying for a business license.

When will an FDI Enterprise conducting goods trading activities not be required to apply for a business license?

An FDI Enterprise conducting goods trading activities does not have to apply for a business license if satisfying the following requirements:

Being an economic organization that is required to issue an Investment Registration Certificate in accordance with Law on Investment;

Conducting goods trading activities that are not subject to the cases involving business licenses as mentioned above, and

Having completed the registration of goods trading activities in relevant documents according to provisions of the Law on Investment and the Law on Enterprise.

What is the sanctioning of an administrative violation for an FDI Enterprise conducting goods trading activities without a business license as required by law?

According to the prevailing law, FDI Enterprise that must have a business license for goods trading activities but fail to have a business license will be subject to a fine ranging from VND10,000,000 to VND15,000,000.

Additionally, the violating enterprise shall be compelled to implement the remedial measure of returning any benefits illegally obtained from committing the violation.

What are the conditions for an FDI Enterprise to carry out trading activities to be granted a business license?

On a case-by-case basis, the requirements for granting a business license for FDI Enterprise conducting goods trading activities may be different as follows:

Case 1: If a foreign investor from a country or territory participates in a treaty to which Vietnam is a contracting party and under which Vietnam has committed to open market access for goods trading activities, the enterprise shall fulfill the following requirements:

Meeting market access conditions as prescribed in international treaties to which Vietnam is a party;

Obtaining a financial plan to apply for the business license applied for a business license;

Incurring no overdue tax in a case where the enterprise has been established in Vietnam for at least 1 year.

Case 2: If the foreign investor of the enterprise is from a country or territory not participating in any treaty to which Vietnam is a contracting party, the enterprise shall fulfill the following requirements:

Obtaining a financial plan to apply for the business license applied for a business license;

Incurring no overdue tax in a case where the enterprise has been established in Vietnam for at least 1 year;

Meeting the following criteria: in accordance with special law; in conformity with the extent of competitiveness of domestic enterprises within the same industry; ability to generate employment for domestic workers; capacity and amount of contribution to the State budget.

Which authority will issue a business license for an FDI Enterprise conducting goods trading activities?

The Department of Industry and Trade where an FDI Enterprise locates its head office shall have the competence to issue a business license for its goods trading activities.

Under specific circumstances, the issuing authorities of the business license may seek an opinion from the Ministry of Industry and Trade, or other relevant managing Ministries.

What dossier is required for the issuance of a business license of an FDI Enterprise conducting goods trading activities?

The dossiers to apply for the business license herein shall be:

An application form for a business license;

An explanation specifying:

Conditions for issuance of a business license as prescribed by law;

Business plan;

Financial plan;

Status of conducting goods trading activities; financial status of the FDI Enterprise which is determined until the application for a business license, in case of circumstances as prescribed by law.

Documents from tax authorities prove no more overdue tax debt.

The copied versions of the Enterprise Registration Certificate; Investment Registration Certificate (if any).

For FDI Enterprise that does not belong to countries or territories participating in an international treaty to which Vietnam is a contracting party, on which basis shall the competent authorities examine to issue business licenses for FDI Enterprise conducting goods trading activities?

Regarding the foreign investor of enterprise from a country or territory not participating in any treaty to which Vietnam is a contracting party, the Ministry of Industry and Trade, and other relevant managing ministries shall assess the following elements:

The conformity with sector development planning and strategies of the region or country;

Vietnamese market opening negotiation process;

Vietnamese market opening needs;

Vietnam and foreign partner cooperation strategies;

Diplomatic relations, national security, social safety and order; and

Other requirements that enterprises need to satisfy in accordance with the law.

What is the content of a business license granted to an FDI Enterprise conducting goods trading activities?

The content of a business license for goods trading activities of FDI Enterprise shall contain items as follows:

Name, business identification number, address of headquarters, and legal representative;

Owners, capital contributors, founding shareholders;

Goods to be distributed;

Other activities related to goods trading; and

Others.

When shall an FDI Enterprise conducting goods trading activities be required to apply for amending its business license?

The business license is required to amend when there is a change in one of the contents specified on the business license.

What is the timeline for State authority to handle a request for amending a business license of an FDI Enterprise conducting goods trading activities?

By law, it is 10 working days from the date of receipt of a complete and valid dossier. However, it may take longer in practice.

What is the sanctioning of an administrative violation when an FDI Enterprise conducting goods trading activities does not fulfill the procedure of amending the business license as required by law?

According to the provisions of law, when an FDI Enterprise conducting goods trading activities does not fulfill the procedure of amending the business license will be considered a violation of business activities and shall be subject to a fine of between VND 20,000,000 and VND30,000,000.

When shall an FDI Enterprise conducting goods trading activities be required to apply for re-issuing a business license?

FDI Enterprise conducting goods trading activities must apply for re-issuing a business license in the following cases:

Relocating the head office from one province/city directly under the Central Government to another province/city under the other Central Government; or

Business license is lost or damaged.

What are the procedures for re-issuing a business license of an FDI Enterprise conducting goods trading activities?

Step 1: Preparing the dossiers.

Step 2: Submitting the dossiers.

Within 10 working days from the day on which the Enterprise Registration Certificate records the amending contents, the enterprise must submit the dossiers to the competent authority.

Step 3: Settling the dossiers

Within 03 working days from the date of receipt of the dossier, the competent authority shall examine and request amendments and supplements if the dossier is not sufficient and valid.

Within 05 working days from the day on which the complete and valid application is received, the competent authority shall re-issue the business license. In case of refusal, the competent authority shall reply in writing and clearly state the reason.

What are the dossiers for re-issuing a business license of an FDI Enterprise conducting goods trading activities?

the dossiers for re-issuing a business license of an FDI Enterprise conducting goods trading activities include:

An application for re-issuing of a business license;

A copy of the Enterprise Registration Certificate in case the head office is moved from one province/city under the Central Government to another province/city under the other Central Government.

What is the sanctioning of an administrative violation when an FDI Enterprise conducting goods trading activities does not fulfill the procedure of re-issuing a business license as required by law?

According to the law, when an FDI Enterprise conducting goods trading activities does not fulfill the procedure of re-issuing business license as required by law, it will be considered a violation of business activities and subject to the following sanctions:

A fine ranging from VND 10,000,000 to VND 20,000,000 shall be imposed for failing to declare the loss of business license to competent authorities as prescribed.

A fine ranging from VND 20,000,000 to VND 30,000,000 shall be imposed for failing to carry out the procedures for re-issuing a business license in case the business license or permit for setting up a retail establishment is lost, or torn, burned, or destroyed in another form as prescribed.

When shall a business license of an FDI Enterprise conducting goods trading activities be revoked?

The business license is revoked in the following cases:

The Enterprise Registration Certificate is revoked;

The Investment Registration Certificate has the objectives of goods trading activities is revoked;

The content declared in the application for issuing, re-issuing, and amending a business license is forged;

Stopping goods trading activities for more than 12 months without reporting to the competent authority;

Failing to make periodical reports for 24 consecutive months; and

Failure to send reports, documents, and explanations after 03 months from the requested expiration date.

When shall the competent authority make an administrative sanctioning decision and revoke the business licenses of FDI Enterprise conducting goods trading activities?

In case the contents are declared in the application for issuing or re-issuing of a business license; Issuing, re-issuing, and renewing the license to set up a retail establishment is forged. Competent authorities issue notices of violations and the decisions on revoking the issued or re-issued business licenses; Decision on the revocation of granted, re-issued, or extended retail establishment licenses.

Which procedure shall be implemented if an FDI Enterprise conducting goods trading activities wishes to terminate the goods trading activities as prescribed in the business license?

Within 15 days from the date of the decision to terminate operation or 15 days before the expiry date of the business license or the expiry date of the retail establishment license; FDI Enterprise shall send notices of termination of goods trading activities, a notice of termination of operation of retail establishments to the competent authority.

Within 10 working days from the date of receiving the notice of operation termination, the competent authority shall issue a decision to terminate the operation.

Within 05 working days from the date of receipt of the Decision on termination of operation, the foreign-invested enterprise shall return the original business license to the competent authority.