Foreign-invested enterprises (FIEs) engaging in commercial distribution and direct consumer sales in Vietnam operate under a dual-tier licensing framework. While the Investment Registration Certificate (IRC) and Enterprise Registration Certificate (ERC) establish corporate legal existence, they do not automatically confer the right to sell goods to retail consumers. Under Decree 342/2026/ND-CP, foreign investors must obtain a specialized Trading License (Giay phep kinh doanh) from the competent provincial authority before commencing commercial retail operations. The decree applies from 18 October 2026 and replaces Decree 09/2018/ND-CP. Licenses issued before that date stay valid for the activities already licensed, and dossiers the authority received before it are still processed under Decree 09/2018/ND-CP and Article 36 of Decree 146/2025/ND-CP, unless the applicant takes more than six months to supplement a dossier after the authority’s request, in which case Decree 342 applies.
Running a retail outlet without a license, or trading outside the licensed scope, exposes foreign enterprises to fines under Decree 98/2020/ND-CP, possible license suspension, and tax reassessment. For foreign founders establishing their operational presence, understanding distribution classifications, the Economic Needs Test (ENT), and statutory amendment triggers is essential to safeguarding market entry investments.
For corporate structuring guidance across all entry stages, consult the pillar guide to launching operations in Vietnam.
Regulatory Scope: Wholesale Versus Retail Triggers
Under the Trading Decree, foreign-invested economic organizations within its scope face specific licensing gates depending on the transaction type and target customer.
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| FDI COMMERCIAL DISTRIBUTION FRAMEWORK |
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v v
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| WHOLESALE ONLY (B2B) | | RETAIL (B2C) |
| - Sale to businesses / traders | | - Sale to end consumers |
| - Operates under IRC & ERC | | - Physical stores, e-commerce |
| - Trading License not required | | - TRADING LICENSE MANDATORY |
| for standard goods | | - RETAIL OUTLET LICENSE for |
| - Conditional goods need sub- | | each physical establishment |
| licenses (e.g. pharma) | | - ENT may apply from outlet 2 |
+---------------------------------+ +---------------------------------+The Dividing Line: Customer Classification and Commercial Invoicing
The core legal threshold separating wholesale from retail is the commercial identity of the buyer:
- Wholesale Operations (B2B): Defined as selling goods to other commercial enterprises, industrial manufacturers, or institutional purchasers who use the products for further processing or commercial resale. Wholesale operations do not require a separate Trading License under the Trading Decree, provided the specific Central Product Classification (CPC) distribution codes are registered on the IRC and ERC.
- Retail Operations (B2C): Defined as selling goods directly to individual consumers or end-user organizations for personal, family, or non-commercial consumption. Selling to end consumers without an active Trading License constitutes unauthorized retail trading.
- Omnichannel and E-Commerce Retail: Selling goods via corporate e-commerce websites or marketplace storefronts constitutes retail distribution. This model requires a Trading License, and the online channel must also meet the E-Commerce Law 122/2025/QH15 and Decree 248/2026/ND-CP, in force since 1 July 2026. Tax obligations for companies selling through marketplaces are covered in tax for e-commerce companies in Vietnam.
| Distribution Activity | Corporate IRC & ERC | Trading License | Retail Outlet License | E-Commerce Law Obligations |
|---|---|---|---|---|
| Wholesale Distribution (B2B) | Mandatory | Exempt (Standard Goods) | Not Applicable | Not Applicable |
| Physical Retail Store (B2C) | Mandatory | Mandatory | Mandatory (Per Outlet) | Not Applicable |
| Corporate Online Store (Own Goods) | Mandatory | Mandatory | Not Applicable | Apply to the online store |
| Selling on a Third-Party Marketplace | Mandatory | Mandatory | Not Applicable | Apply to the online seller |
| Hybrid Showroom & Direct Sales | Mandatory | Mandatory | Mandatory | Apply if selling online |
Entity structure determines trading eligibility. Foreign representative offices cannot engage in revenue-generating commercial distribution, whereas Limited Liability Companies (LLCs) provide complete flexibility for trading rights. Compare operational limitations across structures in our detailed guide on LLC, JSC, branch, and representative office comparison in Vietnam.
Application Procedures and Realistic Processing Timelines
Securing a Trading License requires submitting a regulatory dossier to the competent provincial authority under current regulations.
Statutory Dossier Requirements
Under Decree 342/2026/ND-CP, the business license dossier consists of:
- Application Form 01: Standardized petition detailing corporate identity, charter capital, and the requested trading activities.
- Explanation of Conditions and Business Plan: How the licensing conditions are met, plus a five-year business plan covering business content and method, market development, labor demand, and socio-economic impact.
- Tax Confirmation: Tax authority confirmation of no overdue tax (for enterprises established at least one year), issued no more than six months before filing.
- Registration Copies: Copies of the ERC and the IRC (or an equivalent document) covering the trading activities.
Site documents, such as the lease, come later with the retail outlet license application. The authority asks for the tax and registration documents only when it cannot retrieve them from national databases.
Procedural Steps and Real-World Processing Delays
Under Decree 342, the authority has 3 working days to ask for supplements and 10 working days from a complete dossier to check the conditions. Practical processing time still varies with each dossier. An application moves through three stages:
- Phase 1: Initial Dossier Screening: Within 3 working days the licensing authority checks completeness and, where needed, issues a written request for supplements.
- Phase 2: Substantive Review and Security Consultation: In the cases set by the decree, such as investors from countries outside a market-opening treaty, the authority sends the dossier to the Ministry of Public Security and the Ministry of National Defence, which have 14 working days to reply.
- Phase 3: Licensing Determination and Issuance: Where no consultation is needed, the authority decides within its 10-working-day review period. Where both ministries agree, it issues the license within 3 working days of receiving their replies.
Applicants may file in person at the one-stop unit, by public postal service, through an agent, or online via the National Public Service Portal where eligible; online filing uses validated corporate digital ID and VNeID credentials.
Retail Outlet Licensing and the Economic Needs Test (ENT)
A Trading License grants the fundamental legal capacity to conduct retail sales, but it does not authorize the operation of physical storefronts. Establishing physical retail establishments requires securing an additional Retail Outlet License (Giay phep lap co so ban le) for each distinct operational location under the Trading Decree.
The First Retail Outlet Versus Subsequent Locations
Decree 342 establishes a distinct regulatory bifurcation based on outlet sequence:
- First Retail Outlet: Foreign investors setting up their initial physical store are exempt from the Economic Needs Test (ENT). Licensing criteria focus on no overdue tax (for companies established at least one year) and a site that meets land, planning, investment, construction, fire safety, traffic, and environmental rules.
- Second and Subsequent Outlets: Each subsequent outlet may trigger the Economic Needs Test (ENT), evaluated by a provincial ENT council. The ENT applies only to investors from countries or territories without a treaty commitment to abolish it, and not to the small mall outlets described below.
Statutory ENT Exemptions and International Trade Agreements
The decree exempts a second or later outlet from the Economic Needs Test when all of these conditions are met:
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| STATUTORY ENT EXEMPTION CRITERIA |
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All 3 conditions must be satisfied simultaneously:
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[1] Sales area is strictly under 500 square meters (< 500 m2)
[2] Located within a shopping mall licensed under investment and construction law
[3] Not a convenience store, mini-supermarket, or supermarketThe 500 m2 threshold is measured on the sales area: the space used to display, store and retail goods and for directly supporting activities. A sales area of 500 m2 or more removes the exemption, so an investor covered by the ENT faces full committee scrutiny.
Status of EVFTA and CPTPP Commitments
Under international trade agreements such as the EVFTA (EU-Vietnam Free Trade Agreement) and CPTPP, Vietnam committed to progressively phasing out the Economic Needs Test for qualifying member-state investors. Under Decree 342, effective 18 October 2026, the ENT does not apply to investors from countries or territories covered by a treaty commitment to abolish it, and where a treaty differs from the decree, the treaty prevails. Check which treaty covers the investor’s home country, and the licensing authority, before filing or signing a lease.
Evaluating retail conditions requires strict alignment with statutory restrictions. Review permitted foreign ownership levels in our analysis of conditional business lines in Vietnam.
All financial transactions related to retail setup capital and overseas equipment procurement must flow strictly through the company’s designated Direct Investment Capital Account (DICA) to satisfy foreign exchange compliance.
Mandatory Amendments, Reporting, and Administrative Penalties
A Trading License lasts as long as the ERC for investors from countries with a market-opening treaty, and five years for other investors and for goods or services not yet opened to the market. A retail outlet license runs for the shorter of the retail project’s IRC term and the site lease term. Changes to company details or owners are filed within 10 working days after the ERC records them.
Key Amendment Triggers
Foreign enterprises must formally petition the licensing authority for license adjustments upon:
- Expanding Product Lines: Adding new commodity categories, especially those transitioning from industrial wholesale to consumer retail.
- Corporate Ownership Restructuring: Changes in foreign shareholding percentages, parent entity mergers, or appointments of new legal representatives with corporate liabilities.
- Head Office Relocation: Updating the registered head office address. Moving the head office to another province requires a reissued license, while an address change caused by a provincial administrative-unit rearrangement needs no amendment.
Administrative Penalties Under Decree 98/2020/ND-CP
Commercial inspections conducted by Market Surveillance Authorities (Quan ly thi truong) and provincial inspectorates penalize non-compliance under current regulations on administrative sanctions in commerce:
| Compliance Violation | Administrative Fine (VND) | Commercial Impact & Sanctions | Legal Ground |
|---|---|---|---|
| Retail outlet without a license, or trading outside the licensed scope | 30,000,000-40,000,000 | License suspension for 1-3 months | Decree 98/2020, Art. 70.3 |
| License not amended or reissued when required | 20,000,000-30,000,000 | Under current regulations | Decree 98/2020, Art. 70 |
| Trading after the license is revoked or has expired | 40,000,000-50,000,000 | Under current regulations | Decree 98/2020, Art. 70 |
| Periodic report missing or incorrect | 10,000,000-20,000,000 | License revocation after 24 consecutive months without reports | Decree 98/2020, Art. 70; Decree 342/2026 |
| Online channel breaching e-commerce rules | Under current regulations | Under current regulations | E-Commerce Law 122/2025 and its decrees |
These fines apply to the enterprise itself: Decree 98/2020/ND-CP, as amended by Decrees 17/2022 and 24/2025, does not double them for organizations (Article 4.4.b).
Every foreign-invested enterprise trading goods must also file a goods-trading report twice a year, by 15 January for the calendar year and by 15 July for the first six months. Failing to file for 24 consecutive months can lead to revocation of the business license or the retail outlet license concerned.
Tax Reassessment and Commercial Repercussions
Beyond direct administrative fines, operating an unlicensed retail business introduces tax exposure:
- CIT Expense Disallowance: Commercial revenues generated without appropriate business licenses may be reviewed by tax authorities, with a risk of disallowed expenses and tax reassessment under tax administration rules.
- Loss of Input VAT Deductions: Tax authorities may review input VAT credits claimed on merchandise purchased for unlicensed retail activities.
- Contractual Nullification: Commercial supply agreements entered into by an unlicensed retail entity risk being challenged as invalid in court.
For corporate entities reassessing distribution commitments without full physical incorporation, evaluate alternate market engagement paths in our guide on representative offices versus employer of record (EOR) services in Vietnam.
Indochina Link Vietnam provides end-to-end licensing advisory for foreign investors, managing dossier drafting, licensing authority liaison, Economic Needs Test defense, and annual regulatory compliance. Explore our full suite of corporate solutions in our company formation and licensing services or contact our legal advisory team for customized retail expansion support.
This publication provides general regulatory analysis of goods trading by foreign investors as of 14 October 2026. It does not constitute formal legal counsel. Foreign investors should seek professional legal verification for specific commercial operations.
