Conditions for foreign investors in Alcohol business
The alcohol business is an area that attracts a lot of attention from domestic and foreign investors. However, alcohol is a special commodity subject to extremely strict control, especially for foreign investors. So foreign investors need to pay attention to what regulations they need to follow to legally operate alcohol businesses in Vietnam. Please follow the article below to learn more about this issue.
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1. Definition related to foreign investors in alcohol business
Pursuant to clause 19 Article 3 of the Law on Investment 2020, the definition of foreign investors is as follows:
“Foreign investor” means an individual with foreign nationality or an organization established under foreign law that conducts business investment activities in Vietnam.”
In addition, pursuant to Clause 22 Article 3 of the Law on Investment 2020, the definition of foreign-invested economic organizations is as follows:
“Foreign-invested business organization means an organization whose members or shareholders are foreign investors.”
2. Legal ground related to foreign investors in the alcohol business
Decree 09/2018/ND-CP, specifies in detail the Commercial Law and the Law on Foreign Trade Management on goods purchase and sale activities and activities directly related to the purchase and sale of goods by foreign investors, and economic organizations with foreign investment in Vietnam.
3. Conditions applicable to foreign investors
Pursuant to the definition in Clause 1, Article 3 of Decree 09/2018/ND-CP, the conditions for restricting market access for foreign investors related to the sale of goods and other related activities include, as follows:
“1. Sale of goods and other related activities include a) Exercising exportation rights; b) Exercising importation rights; c) Exercising distribution rights;…”
Accordingly, the activities of importing and distributing goods are considered activities of the sale of goods, and activities directly related to the sale of goods belong to the List of business lines with conditional market access for foreign investors (Section 22, Appendix I.B of Decree 31/2021/ND-CP).
4. Conditions for foreign investors and foreign-invested business organizations to trade goods in Vietnam
Pursuant to Clauses 1 and 5, Article 5 of Decree 09/2018/ND-CP, the following entities must carry out procedures for applying for a Business license when conducting goods trading and activities directly related to the sale of goods:
– Business organizations with foreign investment capital;
– Business organizations whose owners, members, or founding shareholders are business organizations with more than 50% foreign-invested capital holding more than 50% of charter capital; and
-Business organizations whose owners, members, or founding shareholders are business organizations with more than 50% foreign investment capital, and foreign investors hold more than 50% of charter capital.
Pursuant to Clause 2 Article 5 of Decree 09/2018/ND-CP, in case the aforementioned entities establish retail facilities as places to conduct retail activities, these subjects need to carry out the procedures for applying for a license to establish retail facilities for each retail establishment.
5. Are alcohol import, wholesale, and retail activities required to apply for a business license?
Pursuant to Points a, b, Clause 1, Article 5 of Decree 09/2018/ND-CP:
“1. A business license is issued to a foreign-invested business entity to:
a) Perform the retail distribution rights, excluding goods prescribed in Point c Clause 4 Article 9 of Decree 09/2018/ND-CP;
b) Perform importation rights and wholesale distribution rights prescribed in Point b Clause 4 Article 9 of Decree 09/2018/ND-CP;”
Considering the provisions of Point a, Clause 1, Article 5 of Decree 09/2018/ND-CP, retail sale activities of alcohol products are not listed at Point c, Clause 4, Article 9 of Decree 09/2018/ND-CP (rice, sugar, items recorded, books, newspapers, and magazines). Therefore, in this case, the retail sale of alcohol products is subject to a business license.
Considering the provisions of Point b, Clause 1, Article 5 of Decree 09/2018/ND-CP, the import and wholesale of alcohol products are not listed at Point b, Clause 4, Article 9 of Decree 09/2018/ND-CP (oil, lubricating grease), so the import and wholesale of alcohol products are not subject to the requirement to apply for a business license.
Pursuant to the above provisions, only alcohol retail business activities are required to apply for a business license before operating.
Thus, if a foreign investor wants to invest in Vietnam to carry out import, wholesale, and retail activities (with a retail establishment) of alcohol products in the cases analyzed above, the foreign investor needs to carry out application procedures for:
– Business license (for alcohol retail business); and
– License for the establishment of a retail outlet (for each retail establishment).
6. Procedures for applying for a Business License
See more administrative procedures:
Reissue business licenses to foreign-invested business organizations.
7. Procedures for issuing a license to establish a retail outlet
Pursuant to Article 22 of Decree 09/2018/ND-CP, the conditions for establishing a retail outlet are prescribed as follows:
a) Acquire a financial plan for setting up a retail outlet;
b) Incur no overdue tax in a case where it has been established in Vietnam for at least 1 year;
c) The location where the retail outlet is set up is compatible with the relevant planning in the relevant geographic market.
d) Meets Economic Needs Test (ENT) criteria (in case an ENT is required).
Pursuant to Clause 1 Article 23 of Decree 09/2018/ND-CP, in the case of ” Setting up a retail outlet other than the first retail outlet, unless such retail outlet is less than 500m2 in size and located in a shopping mall and not classified as a convenience store or mini supermarket”, ENT must be implemented.
See more administrative procedures:
Re-issue of the license to set up a retail establishment
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The latest alcohol import procedure needs to be known.
The latest alcohol distribution procedure needs to be known
Procedures for issuing a alcohol wholesale license need to be known.
Latest alcohol retail licensing procedures
Truc Vy – Bach Khoa Luat
