In Vietnam, a signed contract is not always an enforceable one. Many foreign investors are surprised to learn that a fully negotiated and executed contract can be declared invalid by a court, simply because it failed to meet specific, overlooked, legal formalities. This critical gap between a contract’s formation (the moment of signing) and its […]
Vietnam joined RCEP after a wave of investment into the distribution sector and export, trading companies in Vietnam maps at AC. After the agreement is signed, electronics, retail, agriculture and fisheries will be very attractive for foreign retailers. For a foreign company that is interested in expanding the business in a new country or region, Vietnam is a promising destination with many business opportunities. This article will provide the guideline to establish company in Vietnam as a trading company.
While Covid-19 disrupted the global supply chain, the trend of protection is emerging, the RCEP was signed to mark an important milestone in the economic integration of the negotiating countries. With the participation of 15 members, it will create a market of 2.2 billion people, equivalent to 26,200 billion USD, creating the largest free trade area in the world. Thanks to the commitment to open markets for goods, services and investments, rules of origin in the RCEP geographic area and trade facilitation measures, this FTA will provide opportunities to develop chains, new supply.
The Agreement also establishes stable and long-term export markets for ASEAN countries in the context of recent supply chain instability. The implementation of the RCEP also creates a binding legal framework in the region on trade policy, investment, intellectual property, e-commerce ... and creates a fair playing field in the region.
So, it can be said that setting up a trading company in Vietnam at this timing, especially after the lock-down is a worthy option.
What's a Trading Company?
Trading companies or dealers (formerly known as wholesalers) are businesses that deal with different types of products sold to consumers, for business or for government purposes. Merchants buy a wide range of products, maintain stock or a store, and deliver products to customers.
In order to setting up a company in Vietnam or specifically a trading company in Vietnam investors should comprehensively understand the formality and function of the legal entity to be formed according to Vietnam Law. The consultancy and guidance of skilled and qualified lawyers from top consulting firms in Vietnam throughout the process shall mostly be needed.
A trading company:
- Engaging in import and export activities as well as domestic distribution.
- Allowing a business to retain more control over their operations and manage supply chain issues quicker.
- While there are no minimum capital requirements, you need to review and maintain compliance with regulations for their business activities.
If you wish to engage in import and export activities as well as domestic distribution (i.e., retail, wholesale, and franchising trade activities) in Vietnam, the most common method chosen is to establish a trading company.
Generally, a trading company is inexpensive to establish and can be a great assistance to your enterprise by combining both sourcing and quality control activities, thus providing quicker reactions compared to remotely based.
First of all, you need to decide what type of business in Vietnam will be. Currently, there are different types of businesses in Vietnam, including:
- Joint stock company (JSC)
- One member limited liability company (LLC)
- Limited liability companies with two or more members (LLCs)
- Private company
- Partnerships for establishment registration with state agencies.
Then we will go next to the procedures and compliance step.
What do you need to establish a trading company?
#1 Investment license
The first step of registering any foreign business in Vietnam is to obtain an investment license from the Department of Planning and Investment. The investment registration certificate is the primary license necessary for conducting any business in Vietnam.
It usually takes up to one month to acquire it.
#2 Business registration certificate
This step requires an enterprise registration certificate. In general, the Department of Planning and Investment will issue the business registration certificate in one week.
Also, take note that after you have received the certificate, you have 90 days to make the initial capital contribution.
Company registration documents:
- Trade company charter document.
- List of shareholders, members of the same company.
- An application form for an enterprise registration certificate.
- Documents proving the status of individuals and legal entities such as: ID card, citizen identification card, passport, business registration certificate ...
#3 Trading license
The third step of registering a trading company in Vietnam is to get a trading license. This process includes:
- Sending an application to the Department of International Trade (DIT). The DIT will then give an approval or invite additional documents, if necessary.
- After a response from the DIT, they're going to prepare a politician Letter and submit it to the Ministry of Industry and Trade (MIT).
- The MIT will then either confirm your request for the trading license or invite additional documents. If the appliance is approved, the DIT will issue the trading license within one week.
If the application is rejected, then, you need to provide supplementary documents and the DIT will then prepare a new official letter for the MIT.
READ MORE: Franchise Agreement and Business in Vietnam
What are the relevant procedures?
After successfully registering the procedures for the establishment of a trading company at the Department of Planning and Investment, the Company Owner is required to:
- Tax:
Companies will need to declare, report and pay taxes such as value added tax, corporate income tax and license tax.
- Announcement of company information:
The commercial enterprise will be on the national portal and post company information and publicly and transparently the company registration.
- Digital signature registration.
Register to buy digital signatures at the tax agency and make online tax payments.
- Engrave the company round seal
- Issue the invoice
- Open a bank account for transactions
- Contribute capital to the company on time (if not fully paid).
If you are wishing to set up a trading company and to quickly go into business activities in time, please contact us via Viettonkin Consulting. Here, we are assisting you as well as many other foreign businesses in the process of globalizing and unlocking the potential to expand your enterprises.
