Foreign traders are increasingly becoming a common entity in the trade activities taking place in Vietnam. In order to ensure that the commercial activities of foreign traders are carried out effectively and without legal obstacles, it is important to have a clear understanding of legal provisions on this issue. Join Lawyer X to find out which foreign traders’ commercial activities need the permission of competent agencies? And when these commercial activities terminate through the following situation: “My current main competitor is a foreign company, through the information I have, I suspect that foreign company is not currently allowed to conduct commercial activities in Vietnam but at present, they still conduct commercial transactions. Can you tell me which state agency is authorized to allow foreign traders to conduct commercial activities in Vietnam?”
Legal grounds
Viet Nam’s Commercial law
What is a foreign trader?
Current commercial law recognizes and contains regulations governing commercial activities of foreign traders in Vietnam.
Under Clause 1, Article 6 of the 2005 Commercial Law, Traders are understood to include legally established economic organizations, individuals conducting commercial activities independently, on a regular basis and with business registrations.
Foreign trader as defined in Clause 1, Article 16 of the 2005 Commercial Law means a trader established and registered for business in accordance with the provisions of foreign law or recognized by foreign law.
Foreign traders must comply with the provisions of Vietnam’s commercial law when conducting the following commercial activities:
– Commercial activities performed in the territory of the Socialist Republic of Vietnam.
– Commercial activities performed outside the territory of the Socialist Republic of Vietnam in case the parties agree to choose to apply Commercial law or foreign laws or treaties to which the Socialist Republic of Vietnam is a party have the applicable provisions of the Vietnam Commercial Law
– Non-profitable activity of a party in a transaction with a trader performing in the territory of the Socialist Republic of Vietnam in case the party performing the non-profitable activity chooses to apply Viet Nam’s Commercial Law
Foreign traders conducting commercial activities in Vietnam
– Foreign traders mean traders established and making their business registrations according to the provisions of foreign laws or recognized by foreign laws.
– Foreign traders are entitled to set up their representative offices or branches in Vietnam; to establish in Vietnam foreign-invested enterprises in the forms provided for by Vietnamese law.
– Vietnam-based representative offices and branches of foreign traders have the rights and obligations specified by Vietnamese law. Foreign traders shall be held responsible before Vietnamese law for all activities of their Vietnam-based representative offices and branches.
– Foreign-invested enterprises established in Vietnam by foreign traders according to the provisions of Vietnamese law or international treaties to which the Socialist Republic of Vietnam is a contracting party shall be regarded as Vietnamese traders.
Legal status of representative offices and branches of foreign traders in Vietnam
The position of representative offices and branches of foreign traders in Vietnam is most clearly demonstrated through the legal provisions on rights and obligations of representative offices and branches in Vietnam, according to there:
Rights of representative offices of foreign traders in Vietnam
– To operate for the purposes, within the scope and duration stipulated in their establishment licenses.
– To rent offices, rent and purchase equipment and facilities necessary for their operations.
– To recruit Vietnamese and expatriate employees to work for them according to the provisions of Vietnamese law;
– To open accounts in foreign currencies or foreign currency-based Vietnam dong at banks licensed to operate in Vietnam, and to be allowed to use those accounts solely for their operations.
– To have seals bearing their names according to the provisions of Vietnamese law.
– To have other rights as defined by law
Obligations of Representative Office
– Not to directly conduct profit-generating activities in Vietnam.
– To conduct commercial promotion activities within the scope permitted by Commercial law.
– Not to enter into contracts, not to amend or supplement contracts already entered into by foreign traders, except where chief representatives obtain valid letters of authorization from foreign traders or other cases specified in Clauses 2, 3 and 4, Article 17 of Commercial law.
– To pay taxes, fees and charges, and fulfil other financial obligations provided for by Vietnamese law.
– To report on their operations according to Vietnamese law.
– To have other obligations as defined by Vietnamese law.
Rights of branches
– To rent offices, rent and purchase equipment and facilities necessary for their operations.
– To recruit Vietnamese and expatriate employees to work for them according to Vietnamese law.
– To enter into contracts in Vietnam in compliance with their operation contents specified in their establishment licenses and the provisions of Commercial law.
– To open Vietnam dong accounts and foreign-currency accounts at banks licensed to operate in Vietnam.
– To transfer profits overseas according to the provisions of Vietnamese law.
– To have seals bearing their own names according to the provisions of Vietnamese law.
– To conduct activities of goods purchase and sale and other commercial activities in compliance with their establishment licenses according to the provisions of Vietnamese law and treaties to which the Socialist Republic of Vietnam is a contracting party.
– To have other rights provided for by law.
Obligations of branches
– To observe the accounting regime provided for by Vietnamese law; in cases where it is necessary to apply another commonly used accounting system, the approval by the Finance Ministry of the Socialist Republic of Vietnam is required.
– To report on their operations according to the provisions of Vietnamese law.
– To have other obligations provided for by law.
Competence to license foreign traders to conduct commercial activities in Vietnam
– The Government shall uniformly manage the licensing of commercial activities of foreign traders in Vietnam.
– The Planning and Investment Ministry shall be answerable to the Government for managing the issuance of licences to foreign traders investing in Vietnam according to the provisions of Vietnamese law.
– The Trade Ministry shall be answerable to the Government for managing the issuance of licences to set up Vietnam-based representative offices of foreign traders; or licenses to set up branches, joint-venture enterprises or enterprises with 100% foreign capital in Vietnam in cases where such traders are specialized in conducting activities of goods purchase and sale or other activities directly related to goods purchase and sale in compliance with Vietnamese law and treaties to which the Socialist Republic of Vietnam is a contracting party.
– Where a specialized law contains specific provisions on the competence of ministries or ministerial-level agencies, which are responsible before the Government for managing the issuance of licences to foreign traders for conducting commercial activities in Vietnam, the provisions of such specialized law shall apply
Termination of operations in Vietnam of foreign traders
– Foreign traders shall terminate their operations in Vietnam in the following cases:
+ Upon expiration of the operation duration stipulated in their licenses;
+ At the request of traders, which is approved by competent state management agencies;
+ Under decisions of competent state management agencies as a sanction against their violations of law and their licenses;
+ Where traders are declared bankrupt;
+ Where foreign traders terminate their operations according to foreign laws, for representative offices, branches or foreign parties to business cooperation contracts with Vietnamese parties;
+ Other cases provided for by law.
– Before terminating their operations in Vietnam, foreign traders are obliged to pay debts and fulfill other obligations toward the State, concerned organizations and individuals in Vietnam.
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Frequently asked questions
The Ministry of Planning and Investment is answerable to the Government for managing the grant of permits to foreign traders to invest in Vietnam according to the provisions of Vietnamese law
Yes! Commercial activities of foreign traders in Vietnam terminate when foreign traders terminate their operations in accordance with provisions of foreign laws for representative offices, branches or foreign parties to business cooperation contracts with Vietnamese parties;
The Government shall uniformly manage the licensing of commercial activities of foreign traders in Vietnam
Conclusion: So the above is Commercial activities of foreign traders in Vietnam. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
