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Guidance on Business License for Foreign Investors
In the process of “Foreigner invested company in Vietnam”, in addition to the Business Registration Certificate, investors must pay attention to another type, the Business License. Readers will find guidance on business license-related topics in this portion of the website.
First of all, what is a business license?
A business license is a license for businesses operating in conditional industries. Depending on the industry, there will be different conditions and different competent authorities accepting applications. Companies must register for a business license when operating in conditional industries to have enough legal documents to participate in that industry.
To understand more about the business sectors you wish to invest in in Vietnam, readers can consult the articles “229 conditional business lines” and “84 business lines restricted for foreign investors in Vietnam”.
What is a business license used for?
Economic organizations suffering from foreign investment capital acquire business licenses to engage in the following activities:
- Exercising the right to retail distribution of goods
- Exercising the right to import and wholesale distribution of goods
- Exercising the right to retail distribution of goods
- Providing logistics services; except for logistics service sub-sectors for which Vietnam has committed to open the market in international treaties to which Vietnam is a member
- Leasing goods, excluding financial leasing; excluding leasing of construction equipment with operators
- Providing trade promotion services, excluding advertising services
- Providing trade intermediary services
- Providing e-commerce services
- Providing services to organize bidding for goods and services
Benefits of having a business license
– Helps businesses operate in accordance with legal regulations, avoiding penalties or legal risks.
– Having a business license helps businesses easily build trust with customers, partners, and suppliers.
– Businesses with a valid business license can participate in bidding for large projects or sign economic contracts with large partners.
– A business license is a necessary condition for businesses to access loans from banks and financial institutions.
Conditions for granting a business license?
There are 4 cases to consider the conditions for granting a business license:
Case 1: Foreign investors from different countries or territories that are parties to international treaties that Vietnam is a part of and who pledge to broaden the market for the acquisition and exchange of goods as well as activities associated specifically with these transactions such as:
- Meet the conditions for market access in the international treaties to which Vietnam is a member
- Have a financial plan to carry out the activities for which the Business License is requested
- No overdue tax debts in case of being established in Vietnam for 01 year or more
- Case 2: Foreign investors do not belong to countries or territories participating in international treaties of which Vietnam is a member:
- Have a financial plan to carry out the activities for which the Business License is requested
- No overdue tax debts if established in Vietnam for 01 year or more
- Following the provisions of specialized laws
- In accordance with the level of competition of domestic enterprises in the same field of operation
- Ability to create jobs for domestic workers
- Ability and level of contribution to the state budget
Case 3: Business services have not been committed to opening the market in international treaties of which Vietnam is a member:
- Have a financial plan to carry out the activities for which the Business License is requested
- No overdue tax debts if established in Vietnam for 01 year or more
- Following the provisions of specialized laws
- In accordance with the level of competition of domestic enterprises in the same field of operation
- Ability to create jobs for domestic workers
- Ability and level of contribution to the state budget
Case 4: Business goods that have not been committed to open the market in international treaties of which Vietnam is a member: Oil, lubricants; rice; sugar; recorded items; books, newspapers, and magazines:
- Have a financial plan to carry out the activities for which the Business License is requested
- No overdue tax debts if established in Vietnam for 01 year or more
- Following the provisions of specialized laws
- In accordance with the level of competition of domestic enterprises in the same field of operation
- Ability to create jobs for domestic workers
- Ability and level of contribution to the state budget
→ For goods that are oil and lubricants: Consider granting licenses to exercise import rights and wholesale distribution rights to foreign-invested economic organizations that carry out one of the following activities:
- Manufacture of lubricants and greases in Vietnam
- Manufacture or be permitted to distribute in Vietnam machinery, equipment, and goods using special lubricants and greases
→ For goods such as rice; sugar; recorded items; books, newspapers, and magazines: Consider granting licenses to exercise retail distribution rights to foreign-invested economic organizations that have retail establishments in the form of supermarkets, mini-supermarkets, and convenience stores to retail at those establishments.
What is the basis for considering and approving the issuance of a Business License?
The Ministry of Industry and Trade and the sector management ministry shall base on the following contents to consider and approve the issuance of a Business License
– Conformity with the planning and development strategy of the sector and field of the region and country.
– Vietnam’s market opening negotiation process.
– Vietnam’s market opening needs.
– Vietnam’s strategy for cooperation with foreign partners.
– Diplomatic relations, national security issues, social order and safety in cases where foreign investors do not belong to countries or territories participating in international treaties of which Vietnam is a member.
Noted:
Only applicable to cases 2, 3 and 4
Term of Business
For cases 2, 3 and 4, the term of business is 5 years. The law does not specify a term for case 1.
Business License Application
– Application for Business License
– Explanation with the following contents:
- Explanation of the conditions for granting the corresponding Business License
- Business plan: Outline of the business activities and implementation methods; detailed presentation of the business plan and market expansion strategy; labor requirements; evaluation of the socio-economic impact and effectiveness of the business plan
- Financial plan: A report on business performance derived from the audited financial statements of the most recent year, applicable if the business has been operating in Vietnam for one year or longer; an explanation of capital, funding sources, and the capital mobilization plan, supplemented by relevant financial documents
- The status of goods trading activities and activities directly related to goods trading, along with the financial condition of the foreign-invested economic organization at the time of requesting the Business License issuance
– Documents from the tax authority proving that there are no overdue tax debts.
– Copies: Certificate of business registration; Certificate of investment registration for projects on trading activities and activities directly related to trading activities (if any).
Procedure for Granting a Business License
Number of documents: From 01 set to 03 sets depending on the business activities to be registered
Basically the procedure goes as follows:
Regarding the detailed procedures, they will be divided into 2 cases: (i) Exercising the right to the retail distribution of goods; (ii) The remaining cases within the scope of activities of the Business License.
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Activities of exercising the right to retail distribution of goods |
The remaining activities |
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Step 1 |
Documents are sent directly or by post or via the internet (if applicable – https://dichvucong.gov.vn/ ) to the Licensing Authority |
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Step 2 |
Within 03 working days from the date of receipt of the documents, the Licensing Authority shall check and request amendments and supplements if the documents are not sufficient and valid |
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Step 3 |
Within 10 working days from the date of receipt of the sufficient and valid documents, the Licensing Authority shall check the compliance with the corresponding conditions as prescribed: Case 1: In case the conditions are not met: The Licensing Authority shall reply in writing and state the reasons; Case 2: In case of meeting the conditions: The licensing authority shall issue a Business License to carry out the activity; in case of refusal to grant a license, a written reply must be issued stating the reason |
Within 10 working days from the date of receipt of the sufficient and valid documents, the Licensing Authority shall check the compliance with the corresponding conditions as prescribed: Case 1: In case the conditions are not met: The Licensing Authority shall reply in writing and state the reasons; Case 2: In case of meeting the conditions: The licensing authority shall send the dossier with a written request for comments from the Ministry of Industry and Trade and the sector management ministry |
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Step 4 |
Within 15 days from the date of receipt of the dossier, the Ministry of Industry and Trade and the sector management ministry shall, based on the corresponding content, issue a written approval to grant a Business License; in case of refusal, a written reply must be issued stating the reason |
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Step 5 |
Within 03 working days from the date of receipt of the written approval from the Ministry of Industry and Trade and the sector management ministry, the licensing authority shall issue a Business License. In case the Ministry of Industry and Trade or the sector management ministry issues a written refusal, the licensing authority shall issue a written reply stating the reason |
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Noted:
The conditions and authorities responsible for processing applications vary by industry.
For example:
– To obtain an international travel business license, the application must be submitted directly to the General Department of Tourism under the Ministry of Culture, Sports, and Tourism.
– To obtain a food hygiene and safety license, the application should be submitted to the Ministry of Industry and Trade, the Ministry of Health, or the Ministry of Agriculture and Rural Development, depending on the specific business sector.
To determine whether your business operates in a conditional sector, understand the applicable requirements, and identify the relevant authority, please visit the National Information Portal at https://dangkykinhdoanh.gov.vn/vn/Pages/Nganhnghedautukinhdoanh.aspx for detailed information.
For more information on procedures related to business formation in Vietnam, please refer to our services and articles at “Starting a business in Vietnam”.
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