IN WHICH CASES IS BUSINESS LICENSE MANDATORY?

Business license is a mandatory requirement for merchants engaging in certain activities related to the distribution, trading, and commercial operations in Vietnam. It serves as a legal mechanism to regulate and ensure compliance with commercial business regulations, especially for foreign investors. So, under current regulations, in which specific cases is a business license required?

Which activities require business license?

Business license is a mandatory requirement for foreign-invested economic organizations engaging in certain business activities in Vietnam. Specifically, this license applies to the following activities:

– Exercising the right to retail distribution of goods (excluding rice, sugar, recorded media, books, newspapers, and magazines);

– Exercising the right to import and wholesale distribution of lubricants;

– Exercising the right to retail distribution of rice, sugar, recorded media, books, newspapers, and magazines;

– Providing logistics services, except for sub-sectors where Vietnam has committed to market access under international treaties to which Vietnam is a party;

– Leasing goods, excluding financial leasing (except for leasing construction equipment with operators);

– Providing trade promotion services (excluding advertising services);

– Providing intermediary trade services;

– Providing e-commerce services;

– Providing services for organizing bidding of goods and services.

What conditions must be met to obtain business license?

For foreign investors from countries or territories with market access commitments with Vietnam

Foreign investors originating from countries or territories covered under international treaties to which Vietnam is a party, with market access commitments for the trading of goods and directly related activities, must meet the following conditions:

– Compliance with market access regulations as stipulated in the relevant international treaties.

– A feasible financial plan for conducting the activities requiring a business license.

– No overdue tax debts if the investor has operated in Vietnam for more than one year.

For foreign investors not from countries or territories with market access commitments or for business services not covered under international treaties

Foreign investors from countries or territories outside the scope of international treaties to which Vietnam is a member, or engaging in business services not covered under Vietnam’s market access commitments, must meet the following conditions:

– A feasible financial plan for conducting the activities requiring a business license.

– No overdue tax debts if the investor has operated in Vietnam for more than one year.

– Compliance with regulations under specialized laws.

– Alignment with the competitive capacity of domestic enterprises in the same business sector.

– Potential to create employment opportunities for local labor.

– Ability and level of contribution to the state budget.

For goods not covered by market access commitments in international treaties to which vietnam is a member

a. General conditions applicable to the trade of specific goods including lubricating oils and greases, rice, sugar, recorded media, books, newspapers, and magazines:

– A feasible financial plan for conducting the activities requiring a business license.

– No overdue tax debts if the investor has operated in Vietnam for more than one year.

– Compliance with regulations under specialized laws.

– Alignment with the competitive capacity of domestic enterprises in the same business sector.

– Potential to create employment opportunities for local labor.

– Ability and level of contribution to the state budget.

b. Specific conditions for each type of goods:

– For goods as lubricating oils and greases

Licenses for the right to import or wholesale distribution may be issued to foreign-invested economic organizations that engage in one of the following activities in Vietnam: (i) production of lubricating oils and greases; or (ii) production or authorized distribution of machinery, equipment, or other goods requiring specialized lubricants.

– For goods as rice, sugar, recorded media, books, newspapers, and magazines:

Licenses for the right to retail distribution may be granted to foreign-invested economic organizations that already operate retail establishments in the form of supermarkets, mini-marts, or convenience stores for retailing at those locations.

Penalties for operating without a business license?

Engaging in business activities without obtaining the required business license or operating without proper authorization constitutes a legal violation subject to administrative penalties. Specifically, businesses operating without a valid business license may face fines of up to VND30 million and be required to forfeit any unlawful profits gained from such activities.

Non-compliance not only results in financial losses and operational disruptions but also significantly and directly damages the business’s reputation and long-term development plans.

>> CONDITIONS FOR ISSUANCE OF INVESTMENT REGISTRATION CERTIFICATE https://linconlaw.vn/conditions-for-issuance-of-investment-registration-certificate-not-subject-to-approval-for-investment-guidelines/

>> FDI ENTERPRISES IN VIETNAM, WHAT SHOULD BE PAID ATTENTION? https://linconlaw.vn/foreign-investment-into-vietnam-what-should-be-paid-attention/