A foreign-invested specialized clinic contacted BLawyers Vietnam to inquire about its trading permit (also called trading license/ business license and called “TP” in this article). In brief, its TP was issued before the effective date of Decree No. 09/2018/ND-CP (“Decree 09”). As a need to change the address of their headquarters, it received the instruction from local competent authority that it shall apply for a outlet establishment license (“OEL”) concurrently. So, what is the competent authority’s viewpoint in this case? And is it compliance with current regulations? BLawyers Vietnam will briefly analyze below.

1. Which case is the PT required by a competent authority?

From the time Decree 09 took effect on 15 January 2018, when foreign-invested enterprises (“FIEs”) conducting the following goods trading activities shall be granted the PT:

1. 1. 1. Exercising the right to the retail distribution of goods, excluding goods such as rice, sugar, recorded items, books, newspapers, and magazines;
      2. Exercising the right to import and wholesale distribution of goods such as oil and lubricant grease; and
      3. Exercising retail distribution rights for goods such as rice, sugar, video products, books, newspapers, and magazines.

Thus, an FIE that has retail distribution activities or purchases and sells goods for the items in (ii) and (iii) above, shall apply for the PT from a competent authority. From the time of obtaining the PT, such FIE has the right to wholesale activities.

2. Which case is the OEL required by a competent authority?

Pursuant to Decree 09, the OEL is granted to enterprises to set up retail establishments/ outlets. A retail establishment is a place where an enterprise’s goods are retailed.

The condition for setting up a retail establishment is when an enterprise conducts retail activities at its business location (according to the mode of transaction, delivery of goods with customers at a business location of the enterprise). When carrying out retailing by this method, enterprises must apply for the OEL by laws.

An enterprise may set up a retail establishment at its head office or at a location other than the head office. At the same time, the retail location must fully meet the conditions to be issued the REL according to regulations.

3. Why would the licensing competent authority require a FIE to apply for both such permits for retail activities?

For FIEs that have been granted the PT before the effective date of Decree 09 and have incurred an adjustment to the PT (for example, changing information of FIEs), competent authorities would require FIEs to must further define the actual retail scope. There are two ways to consider:

1. 1. 1. In case an FIE conducts transactions and supplies goods to customers at its business location, such enterprise must request the competent authority to issue the OEL, together with the issuance of the PT in accordance with regulations of the current Decree.
      2. In case an enterprise only retails goods that are not banned from import or distribution, but exclude books and magazines, according to the business method of not transacting, delivering, and receiving goods to customers directly with the enterprise (for example, retail activities on social networks, e-commerce websites, product marketing, etc.) shall be granted the PT by the competent authority, no need to issue the OEL.

The review from this point of view is not only based on documents provided by the FIE to the competent authority but also according to the information that the enterprise provides itself on the Internet.

The above is not official advice from BLawyers Vietnam’s lawyers. If you have any questions or suggestions about the above, please contact us at consult@blawyersvn.com. BLawyers Vietnam would love to hear from you.

Date: 04 July 2023

Writer: Uyen Tran