Establishing a foreign-invested enterprise operating in the E-commerce field
Currently, with the rapid advancement of technology, purchasing goods and connecting for service provision via e-commerce platforms have become familiar to Vietnamese consumers. Consequently, a significant number of foreign investors are seeking to invest in Vietnam to conduct e-commerce service business. Thus, what conditions must foreign investors satisfy, and what procedures must they carry out, in order to establish an e-commerce service enterprise in Vietnam?
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1. Concepts related to foreign-invested enterprises providing e-commerce services
1.1. Foreign-invested enterprises
Pursuant to Clauses 19 and 22 Article 3 of the Law on Investment 2020:
– A foreign-invested economic organization is an economic organization having foreign investors as its members or shareholders.
– A foreign investor means an individual holding foreign nationality or an organization established under foreign laws that conducts investment and business activities in Vietnam.
Accordingly, an economic organization whose members or shareholders include individuals holding foreign nationality or organizations established under foreign laws and conducting investment and business activities in Vietnam shall be referred to as a foreign-invested economic organization or a foreign-invested enterprise.
1.2. E-commerce services
Pursuant to Clause 14 Article 3 of Decree No. 09/2018/NĐ-CP, e-commerce services mean commercial activities whereby an e-commerce service provider establishes an e-commerce website to provide an environment for other traders, organizations, or individuals to conduct trade promotion activities, sell goods, or supply services.
2. Conditions for establishment of a foreign-invested enterprise providing e-commerce services
Pursuant to Article 9 and Point b Clause 1 Article 22 of the Law on Investment 2020, foreign investors establishing enterprises in Vietnam to conduct business lines falling under the list of market access sectors subject to conditions applicable to foreign investors as prescribed in Section B Appendix I of Decree No. 31/2021/NĐ-CP must satisfy market access conditions stipulated in laws, resolutions of the National Assembly, ordinances and resolutions of the Standing Committee of the National Assembly, Government decrees, and international treaties to which Vietnam is a member.
Under Point i Clause 1 Article 3 of Decree No. 09/2018/NĐ-CP, e-commerce services are classified as goods trading activities and activities directly related to goods trading, which fall under the list of market access sectors subject to conditions applicable to foreign investors specified in Section B Appendix I of Decree No. 31/2021/NĐ-CP.
Therefore, foreign investors wishing to invest in and conduct the above-mentioned activities must simultaneously consider the market access conditions under Vietnamese law and the international investment commitments to which Vietnam and the investor’s home country are parties, including:
(i) Market access conditions under international treaties
According to Vietnam’s Schedule of Specific Commitments on Trade in Services under the WTO, e-commerce activities are not committed by Vietnam to be opened to the market. However, depending on the nationality of the foreign investor, other international treaties providing more favorable provisions may be considered for application.
For example, in the case of Japanese investors, the Agreement between Vietnam and Japan for the Liberalization, Promotion and Protection of Investment dated November 14, 2003 (“2003 BIT”) may be applied. Under the 2003 BIT, e-commerce does not fall under the list of restricted or prohibited investment sectors; therefore, Japanese investors are permitted to invest in this sector in Vietnam.
Alternatively, under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”), whose members include Australia, Canada, Japan, Mexico, Singapore, New Zealand, Vietnam, Peru, Malaysia, Chile, Brunei, and the United Kingdom of Great Britain and Northern Ireland, Chapter 14 of the Agreement sets out fundamental provisions on e-commerce. However, the CPTPP does not specifically regulate the required capital contribution or ownership ratio of investors from CPTPP member countries when establishing commercial presence and providing e-commerce services in Vietnam.
In addition, the ASEAN Agreement on Electronic Commerce provides preferential provisions for e-commerce among its signatory countries. Accordingly, foreign investors from ASEAN member states wishing to provide e-commerce services in Vietnam are required to have a commercial presence in Vietnam and satisfy the conditions prescribed under the Agreement. This demonstrates ASEAN members’ recognition of and policy orientation toward opening the market for this activity.
(ii) Market access conditions under Vietnamese law
Current Vietnamese law does not impose restrictions on investment forms or foreign ownership ratios for e-commerce service activities. Instead, it requires that foreign-invested enterprises obtain a business license prior to commencing operations.
Investment Registration Practice for E-commerce Services
In practice, particularly in Ho Chi Minh City, there have been numerous cases where foreign investors were permitted to establish 100% foreign-owned enterprises providing e-commerce services. This indicates that Vietnam is currently open to granting market access to foreign investors in this sector. Such practice is consistent with Vietnam’s policy of encouraging investment and developing e-commerce activities, thereby promoting convenient and efficient trade in goods and services.
3. Procedures for establishment of a foreign-invested enterprise providing e-commerce services
To establish a foreign-invested enterprise providing e-commerce services, investors are required to carry out the following steps:
– Step 1: Apply for an Investment Registration Certificate (“IRC”) for the investment project in Vietnam at the Department of Finance of the province or city where the enterprise is headquartered. Foreign investors should clearly explain compliance with market access conditions as well as the scope, methods, and proposed business plan in the application dossier to enhance the likelihood of obtaining approval.
– Step 2: Register the establishment of the foreign-invested enterprise providing e-commerce services with the provincial business registration authority where the enterprise is headquartered.
Foreign investors should also note that, under the amended Law on Investment expected to take effect in 2026, foreign investors will be permitted to establish enterprises prior to carrying out procedures for obtaining an IRC for investment projects in Vietnam. Nevertheless, market access conditions must still be satisfied at the time of enterprise establishment.
4. Matters to be noted after establishment of a foreign invested enterprise providing e-commerce services
First, after establishment, the enterprise must engrave its seal, display its signboard, and carry out initial tax registration procedures, including registration for the use of electronic invoices, in accordance with applicable laws.
Second, the enterprise must open and use a Direct Investment Capital Account (“DICA”). Pursuant to Clause 1 Article 5 of Circular No. 06/2019/TT-NHNN, foreign direct investment enterprises established in the form of investment in establishing an economic organization and granted an Investment Registration Certificate are required to open and use a DICA. All capital contribution transactions and other inflows and outflows must be conducted through the DICA in compliance with foreign exchange management regulations under Articles 6 and 7 of Circular No. 06/2019/TT-NHNN.
Third, the enterprise must satisfy the conditions for providing e-commerce services and carry out procedures for notification and registration of websites/applications in accordance with Decree No. 52/2013/NĐ-CP, Decree No. 85/2021/NĐ-CP, Circular No. 47/2014/TT-BCT, and Circular No. 59/2015/TT-BCT; and obtain a Business License in accordance with Decree No. 09/2018/NĐ-CP. At the same time, the enterprise must perform periodic reporting obligations on investment activities and e-commerce operations in accordance with applicable laws.
This article was prepared by Vy Le with consultation from Lawyer Huong Vu.
This article is provided for general informational purposes only and does not constitute legal advice for any specific case. The legal regulations cited herein are effective as of the time of publication but may have been amended, supplemented, replaced, or expired at the time of readers’ reference. Therefore, readers are advised to seek advice from qualified lawyers before applying the information contained herein.
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