Is a foreign-invested enterprise established in Vietnam by a foreign trader a Vietnamese trader or a foreign trader?

1. Foreign traders conducting commercial activities in Vietnam

Pursuant to Article 4 of the 2005 Commercial Law, there are specific regulations on foreign traders conducting commercial activities in Vietnam as follows:

“s1. A foreign trader is a trader established and registered for business in accordance with foreign law or recognized by foreign law.

2. Foreign traders are allowed to set up representative offices and branches in Vietnam; establish foreign-invested enterprises in Vietnam in the forms prescribed by Vietnamese law.

3. Representative offices and branches of foreign traders in Vietnam have rights and obligations as prescribed by Vietnamese law. Foreign traders must be responsible before Vietnamese law for all activities of their Representative Offices and Branches in Vietnam.

4. Foreign-invested enterprises established in Vietnam by foreign traders in accordance with the provisions of Vietnamese law or international treaties to which the Socialist Republic of Vietnam is a member shall be considered Vietnamese traders.

Thus, according to the above provisions, foreign-invested enterprises established in Vietnam by foreign traders in accordance with the provisions of Vietnamese law or international treaties to which the Socialist Republic of Vietnam is a member are considered Vietnamese traders.

Do foreign-invested enterprises established in Vietnam by foreign traders have the right to request a License to establish a retail establishment?

2. The rights and obligations of foreign-invested enterprises are stipulated in Article 21 of the 2005 Law on Commerce specifically as follows:

Rights and obligations of foreign invested enterprises

The rights and obligations of foreign-invested enterprises are determined according to the provisions of Vietnamese law or international treaties to which the Socialist Republic of Vietnam is a member.

In addition, according to the provisions of Clause 3, Article 5 of Decree 09/2018/ND-CP, there are regulations on granting Business Licenses and Licenses to establish retail establishments as follows:

“3. Foreign-invested economic organizations have the right to request a License to establish a retail establishment after having a Business License and documents on the location of the retail establishment.

4. In case the location of the first retail establishment is in the same province/centrally-run city as the head office, the foreign-invested economic organization has the right to request a Business License at the same time as the License to establish the first retail establishment. The dossier and procedures shall comply with the provisions of Article 20 of this Decree.

5. Economic organizations falling under the cases specified in Points b and c, Clause 1, Article 23 of the Investment Law must satisfy the conditions and carry out: Procedures for granting a Business License when performing activities requiring a Business License; procedures for granting a License to establish a retail establishment when establishing a retail establishment, according to the provisions of this Decree".

Thus, according to the above regulations, foreign-invested enterprises have the right to request a License to establish a retail establishment after having a Business License and documents on the location of the retail establishment.

Are Vietnamese traders allowed to operate in duty-free zones?

Subjects permitted to operate in duty-free zones are specified in Article 5 of the Regulations on operations of duty-free zones in economic zones and border gate economic zones issued by the Prime Minister together with Decision 100/2009/QD-TTg as follows:

Subjects permitted to operate in duty-free zones

Entities operating in duty-free zones (hereinafter referred to as duty-free zone enterprises) include:

- Vietnamese traders;

- Branches and representative offices of Vietnamese traders;

- Branches and representative offices of foreign traders in Vietnam;

- Investors according to the provisions of law on investment.

According to the above regulations, entities operating in the duty-free zone (hereinafter referred to as duty-free zone enterprises) include:

- Vietnamese traders;

- Branches and representative offices of Vietnamese traders;

- Branches and representative offices of foreign traders in Vietnam;

- Investors according to the provisions of law on investment.

Thus, Vietnamese traders are allowed to operate in the duty-free zone.