Steps to Start a Trading Company in Vietnam

How to start a trading company in Vietnam? How to import and export in Vietnam? These frequently asked questions will be answered in this article.

Given that it is a member of many large FTAs, Vietnam’s import and export of goods enjoy attractive tax incentives compared to other regions. For example, almost 100% of Vietnam’s exports to the EU will be tax-free, within a short timeframe. In addition, Vietnam’s domestic consumer market has a strong growth rate of 9.4%/year, with market size of 164.5 billion USD (in 2020). These promises are fertile land for sellers and service providers to capitalize on and benefit from.

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What is a Trading Company in Vietnam?

A Trading Company in Vietnam is a company lawfully established in Vietnam, has foreign-owned capital, and registers with the government to conduct the sale and trade of goods or other “sale of goods related” activities. In accordance with Vietnam’s WTO Commitment and its domestic regulations, foreign investors are allowed to establish trading companies in Vietnam, with foreign ownership rates up to 100%.

According to Decree 09/2018/ND-CP, foreign-owned trading companies may register to perform Sale of Goods and Other Sale of Goods Related Activities (Trading Activities), including:

Importation
Exportation
Distribution, including wholesaling, retailing, sale agencies, and franchising
Commercial appraisal service
Logistics service
Rental goods service, excluding finance leasing
Commercial promotion service, excluding advertising service
Commercial intermediary service
E-Commerce service
Bid-holding service

However, each of those activities has a different difficulty level and requirements, in order to get approval from competent authorities. Among them, the import, export, wholesale and retail of goods are the most popular trading activities chosen and successfully registered by many foreign investors based on our experience.

4 Steps to Start a Trading Company in Vietnam

Here are the 4 major steps to start a trading company in Vietnam, applied to the most popular trading business lines, which are import, export, wholesale and retail of goods:

Step 1. Incorporate a trading company
Step 2. Active the VNACCS code with Vietnam Customs
Step 3. Apply for Additional Licenses or Permits (if any)
Step 4. Apply for C/O in the exporting or importing country (if any)

Step 1. Incorporate a Trading Company

First, the foreign investors will need to incorporate a company. For more information, please see: How to Form a Company in Vietnam as a Foreign Investor.

The most important aspect of registering a Vietnamese trading company is the minimum investment capital requirements. Although there is no minimum registered capital requirement, in practice, proposed registered capital contributions will be closely examined by the licensing authority to assess whether the amount of money one has in their account is enough to keep the company running after the business establishment. In other words, if things go south, will the potential investor be able to cover their debts or not.

Per our observations, the minimum registered capital for a trading company should start from $10.000 in HCM City and from $150.000 in Hanoi City

The licensing process often takes about 1 to 1,5 months upon the application dossier submission date. The results for successfully establishing a Vietnam trading company are:

Step 2. Active the VNACCS code with Vietnam Customs

All Vietnamese importers and Vietnamese exporters must activate their VNACCS code (Vietnam Automated Cargo And Port Consolidated System) account by a USB token with Vietnam Customs before performing import/export activity. It generally takes 24-48 working hours for the account to be activated.

Step 3. Apply for Additional Licenses or Permits (if any)

Each of the different trading activities will require a slightly different kind of additional license or approval, on a one-time basis, or a case-by-case basis. Here are some common licenses or approvals that foreign trading companies in Vietnam often have to deal with.

a. The Business License

Besides the Company Licenses (including IRC and ERC), the Business License (or Trading License) is an additional license that is compulsory required for the following trading activities:

Retail distribution;
Import and wholesale distribution with respect to lubricants;
Logistics services, except those as committed in applicable international treaties;
Goods leasing (financial leasing not included), except leasing of construction equipment with operators;
Trade promotion services, except advertising services;
Trade intermediation services;
E-commerce services; and
Bidding organizing services for goods/services.

The licensing authorities are the Provincial Department of Industry and Trade, or the Ministry of Industry and Trade. Technically, the licensing process takes around 10 working days.

b. The Retail Outlet Establishment License

The company that plans to open a retail store, besides the Business License, must apply for a Retail Outlet Establishment License.

Conditions for setting up the first retail establishment are:

Having a financial plan to set up a retail establishment;
There is no overdue tax debt in case it has been established in Vietnam for 01 year or more;
The location of the retail establishment is consistent with the relevant planning in the geographical market area.

When opening a 2nd retail outlet onward, the trading company will be subject to Economic Needs Testing (ENT) (except for the case of establishing retail outlets within areas of less than 500 m2 of shopping malls, which also is not a convenience store or mini supermarket).

Circle K

c. Additional approval for trading specific products:

In general, a trading company can import, export, and wholesale most kinds of goods. However, for some conditional goods, the importer is required to receive prior approvals from management authority before importing, exporting, or distributing goods.

For example, before importing functional foods, dietary supplements, or cosmetics, the importers must register of Regulation Conformity announcement at the Department of Food Safety – Ministry of Health.

Step 4. Apply for C/O in the Exporting country (if any)

Currently, Vietnam is a contracting party of many FTAs such as EVFTA, VKFTA, and ASEAN, which provide a lot of favorable tariffs for import and export business.

If the imported goods are produced in a country that has an established FTA with Vietnam, the Vietnamese importers may request the exporter to apply for a Certificate of Origin (C/O) in the origin country to enjoy preferential tariffs for goods when entering Vietnam.

If exported goods from Vietnam are eligible to enjoy tax incentives in importing countries, the buyers may ask the Vietnamese exporters to apply C/O as well.

How to Export Goods from Vietnam?

Step by step to export goods from Vietnam to another country:

Step 1. Vietnamese exporter to activate its VNACCS code (when exporting for the first time)
Step 2. Prepare Cargo
Step 3. Book cargo
Step 4. Pre-carriage
Step 5. Open export customs declarations
Step 5. Register for additional licenses or approvals (if any)
Step 6. Lift-off the container at the port of departure
Step 6. Prepare a bill of lading
Step 8. Buy insurance (if any)
Step 9. The exporter applies for a C/O (if any)
Step 10. The exporter to transfer all original documents to the importer, such as Commercial invoice, Packing list, Bill of lading and C/O

Export products from Vietnam

How to Import Goods to Vietnam?

Step by step to import goods to Vietnam from another country:

Step 1. Vietnamese importer to activate its VNACCS code (when importing for the first time)
Step 2. The importer checks whether the exporter meets the conditions or be able to provide import documents for each specific shipment
Step 3. Sign the sale and purchase contract, then make preliminary payments
Step 4. The exporter sends goods
Step 5. The importer applies for a sub-license (if any)
Step 6. The importer receives all original documents from the exporter
Step 7. The importer receives a cargo arrival notice
Step 8. The importer opens an import customs declaration
Step 9. The importer pays for local charges
Step 10. The importer checks the goods
Step 11. The importer pays taxes (if any): import duties, VAT, excise tax
Step 12. Clearance of goods through customs
Step 13. On-carriage

Start your Company with Nova Law

Nova Law is a business law firm based in Hanoi, Vietnam. We have been assisting foreign investors in setting up businesses in Vietnam for years. Nova Law offers a wide range of business legal services: Legal Consulting, Company Registration, Licensing, Visas, and more. Contact our lawyers to register your Vietnam trading company today!