1. Does entrusted goods trading constitute a commercial intermediary activity?
Commercial intermediary activities are defined in Clause 11, Article 3 of the Law on Commerce 2005 as follows:
Article 3. Interpretation of terms
[…]
11. Commercial intermediary activities are activities carried out by traders to conduct commercial transactions for one or more identified traders, including commercial representation, commercial brokerage, entrusted purchase and sale of goods, and commercial agency.
[…]
Accordingly, entrusted purchase and sale of goods constitute a commercial intermediary activity.
2. Is an FDI enterprise required to obtain a business license when providing entrusted goods trading services?
Article 5 of Decree No. 09/2018/ND-CP provides as follows:
Article 5. Issuance of Business Licenses and Licenses for Establishment of Retail Outlets
- A Business License shall be issued to an economic organization with foreign investment capital to carry out the following activities:
a) Exercising the right to retail distribution of goods, excluding goods specified in Point c, Clause 4, Article 9 of this Decree;
b) Exercising the right to import and the right to wholesale distribution of goods specified in Point b, Clause 4, Article 9 of this Decree;
c) Exercising the right to retail distribution of goods specified in Point c, Clause 4, Article 9 of this Decree;
d) Providing logistics services, except for logistics service sub-sectors for which Vietnam has committed to market access under international treaties to which Vietnam is a party;
đ) Leasing goods, excluding financial leasing; except for leasing construction equipment with operators;
e) Providing trade promotion services, excluding advertising services;
g) Providing commercial intermediary services;
h) Providing e-commerce services;
i) Providing services for organizing bidding for goods and services.
[…]
Accordingly, an FDI enterprise (i.e., an economic organization with foreign investment capital) is required to obtain a Business License when providing commercial intermediary services.
Conditions for issuance of a Business License
Article 9 of Decree No. 09/2018/ND-CP provides for the conditions for issuance of a Business License as follows:
- In the case where the foreign investor is from a country or territory that is a party to an international treaty to which Vietnam is a member and under which Vietnam has committed to market opening for goods trading and activities directly related thereto:
- Satisfying the market access conditions stipulated in the relevant international treaty to which Vietnam is a member;
- Having a financial plan for carrying out the activities for which the Business License is applied;
- Having no outstanding overdue tax liabilities, in cases where the enterprise has been established in Vietnam for one (01) year or more.
- In the case where the foreign investor is not from a country or territory that is a party to an international treaty to which Vietnam is a member:
- Having a financial plan for carrying out the activities for which the Business License is applied;
- Having no outstanding overdue tax liabilities, in cases where the enterprise has been established in Vietnam for one (01) year or more;
- Satisfying the following criteria:
+ Being consistent with specialized laws and regulations;
+ Being compatible with the level of competition of domestic enterprises in the same business sector;
+ Having the capacity to create employment for domestic labor;
+ Having the capacity and level of contribution to the state budget.
- In the case where the business services have not been committed to market opening under international treaties to which Vietnam is a member: the conditions prescribed in Clause 2, Article 9 of Decree No. 09/2018/ND-CP shall apply.
- In the case where the traded goods have not been committed to market opening under international treaties to which Vietnam is a member, including lubricating oils and greases; rice; sugar; recorded media; books, newspapers, and magazines:
- The conditions prescribed in Clause 2, Article 9 of Decree No. 09/2018/ND-CP shall apply;
- With respect to lubricating oils and greases: consideration shall be given to granting licenses for exercising the right to import and the right to wholesale distribution to economic organizations with foreign investment capital that carry out one of the following activities:
+ Manufacturing lubricating oils and greases in Vietnam;
+ Manufacturing, or being authorized to distribute in Vietnam, machinery, equipment, or goods that use specialized lubricating oils and greases.
- With respect to rice; sugar; recorded media; books, newspapers, and magazines: consideration shall be given to granting licenses for exercising the right to retail distribution to economic organizations with foreign investment capital that already have retail outlets in the form of supermarkets, mini-supermarkets, or convenience stores for retail sale at such outlets.
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