One of our clients wanted to do retailing of medical products (i.e. contact lenses, frames, glasses and accessories, etc.) to its patients. This is a foreign-invested clinic with its head office in Ho Chi Minh City, Vietnam (hereinafter called as the “FIE”). Its patients often conduct medical checks at its head office. The FIE applied for obtaining a trading permit (also called as a business license or a trading license) at the local Department of Trade and Industry (“DOIT”). However, such authority requested the FIE to add a dossier for obtaining both trading permit and retail outlet license for its business.
The question is in which case the DOIT requires FIE to apply a trading permit only? Which case the FIE requires both trading permit and retail outlet license (for the first outlet)? BLawyers Vietnam would like briefly to discuss this issue.
1. General legal requirements for both licenses
The Government of Vietnam stipulated goods retail activity under Decree No. 09/2018/ND-CP dated 15 January 2018. In which, the FIE must implement the procedures for obtaining 02 licenses as follows:
To apply for a trading permit, an application dossier shall include:
- An application for obtaining the trading license;
- An explanation about: (i) satisfaction of conditions for granting the trading license; (ii) business plan; (iii) financial plan; (iv) status of business on goods sale and purchase and activities directly relating to the goods sale and purchase; and (v) financial status of the FIE as at the date applying for the trading permit;
- A document from local Tax authority on confirmation of no outstanding tax debt; and
- A copy of the enterprise registration certificate and investment registration certificate.
To apply a retail outlet license concurrent with the trading permit, beyond the documents as mentioned above, the FIE must submit an explanation on the outlet establishment. Accordingly, it must clearly present: (i) location of the outlet; (ii) business plan to be implemented at retail outlet; and (iii) financial plan for setting up retail outlet.
Timeline for settling application dossiers and competent authorities
Timeline for issuing a trading permit is about 10 working days from the date the FIE submitted all required documents.
For a retail outlet license, it could seek a “green light” from the Ministry of Industry and Trade before the local DOIT shall issue such license to the FIE. The total timeline is at least 20 working days from the date the FIE submitted all required documents.
2. Practical experience from our client’s case
When the FIE firstly applied for the trading permit, the DOIT issued a notice on rejection of the submitted dossier. The reason was, based on the DOIT’s viewpoint, the FIE had retail activities at its head office: after doctors checked patients and consulted them, patients would directly buy medical items at the clinic office. Thus, the FIE must establish a retail outlet with a specific plan for outlet establishment and should submit both dossiers for a trading permit and a retail outlet license oat the same time. In addition, for this case, the application dossier of retail outlet license is the one of the grounds for DOIT to grant the trading permit.
The DOIT also considered whether the FIE directly sells goods to end-users at its head office. Although the FIE planned to support patients by click-and-buy methods (and then the clinic would deliver the purchased items via a delivery company), the DOIT still realized that it was not reasonable because patients often go to see doctors before buying any medical items.
Thus, while preparing an application dossier for a trading permit, a FIE should consider the nature of its retail activity. If the retailing is directly conducted to end-users, a high possibility that the DOIT will require a dossier for an outlet establishment. Such requirement is not based on the laws but on the DOIT’s viewpoint and appraisal over the submitted dossier.