A retail outlet refers to a location where retail activities take place. It encompasses the initial retail outlet as well as any other retail outlets that share the same name or brand. The term “retail outlet in addition to a retail outlet” specifically denotes a retail outlet in Vietnam that established by either a Company or foreign-invested economic organization already operating a retail outlet in Vietnam, or by a foreign-invested economic organization in Vietnam under the same name or brand as an existing retail outlet. Moreover, furthermore indicates that this type of establishment falls into the category described.
Conditions for the establishment of retail outlets
In order to establish the first retail outlet, the Company needs to fulfill several requirements. Firstly, it must have a financial plan in place for the establishment of the retail outlet. Additionally, it should not have any outstanding tax debts for a foreign-invested economic organization established in Vietnam for a period of one year or more. Lastly, the location chosen for the retail outlet must comply with the relevant master plan of the geographical market it is intended for.
If the Company wishes to establish an additional retail outlet, the requirements differ depending on whether an economic needs test is necessary or not. If no economic needs test is required, the Company must meet the conditions mentioned in paragraph as stated above.
However, if an economic needs test is necessary, the Company must fulfill several additional conditions. These include satisfying the conditions mentioned in below, assessing the impact of the proposed retail outlet on the relevant geographical market. This assessment involves considering factors such as the scope of the market affected by the new retail outlet, listing the existing retail outlets currently operating in that area, evaluating the impact on market stability and the business activities of other retail outlets and traditional markets, examining the effects on traffic density, environmental sanitation, and fire prevention and fighting measures in the relevant geographical market, and assessing the potential contributions of the retail outlet to the socioeconomic development of the area.
When is an Econimic Needs Test (ENT) required
The economic needs test procedure is the procedure that investors in the distribution sector (wholesale or retail all products manufactured in Vietnam or lawfully importing into Vietnam) must meet for their needs or establishing retail outlets (besides the first outlet). The competent authority will apply ENT when the company registers to establish a retail outlet in addition to the first one, except for the following cases:
i. The property has an area of less than 500 m2
ii. Established in a commercial center
iii. Not belonging to a type of convenience store or mini supermarket.
Dossier and procedure for an Retail outlet establishment license (ROL)
Dossier:
The dossier includes 5 main items as follows:
i. An application for an ROL
ii. A written explanation providing the location details of the retail outlet, including the address and a description of the overall and relevant used for establishing the outlet. The applicant should also express satisfaction with the location’s compliance with relevant planning in the geographical market area, and enclose relavant documents about the location. Additionally, the application should include a business plan for the retail outlet, which outlines the business and market development plan, labor demand, and assessment of the plan’s socio-economic impacts and efficienct. Furthermore, the financial plan should report the business results based on the audited financial statement of the latest year for a foreign-invested economic organization established in Vietnam for at least 1 year. The financial plan should also explain the funds, funding sources, and fundraising plans, and be accompanied by relevant financial document.
iii. A tax authority’s documents that prove that the applicant owes no overdue tax debts.
iv. Copies of the enterprise registration certificate, investment registration certificate of the project to establish the retail outlet (if any), and Trading Permit.
v. A written explanation about the ENT criteria, in case an ENT is required.
Procedure:
Not subject to ENT procedures:
To apply for a non-ENT procedure ROL (Registration of License), the Company must complete the following steps:
+ Submit 02 sets of dossiers directly, by post, or online to the licensing agency.
+ Within 3 working days of receiving the dossier, the licensing agency will review it and may request modifications or additional information if the dossier is incomplete or invalid.
+ Within 10 working days of receiving a complete and valid dossier, the licensing agency will assess whether the applicant meets the prescribed conditions:
In addition, if the applicant does not meet the prescribed conditions, the licensing agency will provide a written response explaining the reasons. Furthermore, if the applicant meets the prescribed conditions, the licensing agency will send the dossier, along with a written request for an opinion, to the Ministry of Industry and Trade (MIT) as required.
+ Within 07 working days of receiving the dossier, MIT will issue a written approval for the ROL. If the application is disapproved, MIT will provide a written response stating the reasons.
+ Within 03 working days of receiving the written approval from the Ministry of Industry and Trade, the licensing agency will grant the ROL. If the Ministry of Industry and Trade rejects the license grant, the licensing agency will provide a written response stating the reasons.
In cases requiring the carrying out of ENT procedures:
To apply for a ROL that requires ENT procedures, the Company must follow the following procedures:
Procedure 1:
The Company needs to follow Steps 1 & 2 of the ROL application procedure, even when ENT is not required.
Procedure 2:
Within 05 working days of receiving a complete and valid dossier, the licensing agency will inspect whether the applicant is satisfied with the prescribed conditions.
+ If the applicant is dissatisfied with the conditions, the licensing agency will provide a written reply stating the reason.
+ If the applicant is satisfied with the conditions, the licensing agency will propose the formation of an ENT council.
Procedure 3:
Within 07 working days of receiving the request for forming an ENT council, the relevant provincial-level People’s Committee will establish the council.
Procedure 4:
Within 30 days of its formation, the ENT council will evaluate the ENT criteria and issue a written conclusion.
Procedure 5:
Within 03 working days of receiving the written conclusion from the ENT council’s chairperson:
If the conclusion proposes denying the license, the licensing agency will issue a written reply stating the reason. If the conclusion proposes granting the license, the licensing agency will send the dossier, along with a written request for an opinion, to the Ministry of Industry and Trade.
Procedure 6:
Within 10 working days of receiving the dossier, the Ministry of Industry and Trade will issue written approval for granting the license. If disapproved, a written reply stating the reason will be provided.
Procedure 7:
Within 03 working days of receiving the written approval from the Ministry of Industry and Trade, the licensing agency will grant the Retail Outlet License. If the Ministry of Industry and Trade disapproves the license, they will promptly provide a written reply stating the reason.
Cancellation of the ROL
There are seven cases in which the Retail Outlet License (ROL) may be revoked, and they include:
+ They revoke the investment registration certificate or equivalent legal document for the project to establish the retail outlet or the Trading Permit.
+ False information is provided in the application for granting, re-granting, modifying, or extending the license for establishing a retail outlet.
+The FIEs fails to obtain the required investment registration certificate within twelve months from the date of receiving the license, without reporting it to the licensing agency.
+ Foreign-invested enterprises fails to obtain the required investment registration certificate within twenty-four months from the date of receiving the license.
+ The business ceases retail activities at the retail outlet for more than twelve months without reporting it to the licensing agency.
+ The foreign-invested economic organization fails to submit periodic reports for twenty-four consecutive months.
+ The foreign-invested economic organization fails to submit reports, documents, and explanations within three months from the prescribed deadlines.
Fine and cancellation of permits:
For this offense, the Company may face a fine of up to VND 40,000,000 (approximately USD 1,700) for operating outside the scope stated in the Retail Outlet License (ROL). This fine specifically applies to the organization.
Furthermore, the violating organization will have their Trading Permit and ROL revoked or suspended for a period ranging from one to three months, depending on the severity of the violation. Additionally, they will be required to repay any illegal profits obtained through the violation.
Conclusion
In conclusion, the regulations regarding retail outlets of Foreign Invested Enterprises (FIEs) in Vietnam play a crucial role in ensuring fair and transparent business practices. These regulations aim to protect the interests of both consumers and local businesses, as well as maintaining the integrity of the market. By strictly implementing and enforcing these regulations, in addition, the Vietnamese government seeks to create a level playing field for all businesses, and more importantly, encourage responsible investment. With continued vigilance and effective oversight, the retail sector in Vietnam can thrive and contribute to the overall economic growth and development of the country.
HMLF is always available to offer assistance in understanding the procedures with authorities.
Harley Miller Law Firm “HMLF”
Head office: 14th floor, HM Town building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone number: +84 937215585
Website: hmlf.vn Email: miller@hmlf.vn
