Extension of Business License for trading activities: Legal perspectives and practical application in Vietnam
1. Introduction
In the context of foreign investment activities in Vietnam, the Business License for trading activities and activities directly related to the trading of goods (“Business License”) is a mandatory legal requirement for foreign-invested enterprises when exercising distribution rights, e-commerce activities, commercial intermediary services, and other related operations. In certain cases involving business lines not yet committed under international treaties, such as e-commerce and commercial brokerage[1], this license is granted for a maximum term of five (05) years.
Accordingly, upon the expiration of the license, enterprises wishing to continue their business operations face a legal question: whether the license can be extended or a new license must be obtained.
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2. Current legal framework for expired Business Licenses
Under Decree No. 09/2018/ND-CP, two procedures are provided, namely amendment and re-issuance of the Business License: (i) The amendment procedure applies where there are changes to the contents stated in the license, such as the enterprise name, head office address, or scope of business; however, the license term is not included among the amendable contents; (ii) The re-issuance procedure only applies in cases of relocation to another province/city or where the license is lost or damaged.
Thus, the current legal framework does not provide for any extension procedure for the Business License. Consequently, upon expiry, enterprises have no legal basis to prolong the validity of the existing license and are required to carry out procedures for obtaining a new license in accordance with the law.
It should be noted that this is not merely a formal extension but an independent licensing procedure, legally conducted from the beginning.
3. Practical application and legal issues in applying for a new Business License
As analyzed above, upon expiration of the Business License, enterprises wishing to continue operations must apply for a new license. In this regard, several issues should be noted:
3.1. Licensing conditions and practical assessment
Enterprises are required to explain and demonstrate their satisfaction of statutory licensing conditions[2], including: (i) having a financial plan for the proposed activities; (ii) having no overdue tax liabilities (for enterprises operating for one year or more); (iii) compliance with specialized laws; (iv) consistency with the competitive conditions of domestic enterprises in the same sector; (v) capacity to create employment for local workers; and (vi) ability and level of contribution to the state budget.
In practice, although this is legally a new licensing procedure, the appraisal process is not entirely independent of the enterprise’s operational history. The assessment is typically conducted based on: (i) current conditions, including financial capacity, business plans, market access conditions, and competitiveness criteria; and (ii) past performance, including business efficiency, tax compliance, and legal compliance.
This indicates that, in substance, while it is a new licensing procedure, the appraisal involves a relatively comprehensive reassessment, in which the enterprise’s past performance constitutes an important basis for consideration by the competent authority.
3.2. Authority and consultation mechanism
Previously, licensing authorities were required to seek opinions from the Ministry of Industry and Trade and relevant line ministries before making licensing decisions[3]. However, under current regulations, this consultation mechanism has been decentralized to the provincial-level People’s Committee. Accordingly, the licensing authority now consults the provincial People’s Committee[4] instead of central ministries.
This change reflects a trend toward decentralization in state management and may contribute to shortening the processing timeline. Nevertheless, in practice, the appraisal outcome still largely depends on the assessment approach of local authorities.
4. Practical impacts and legal risks for enterprises
(i) Burden of proving business conditions and operational capacity
Enterprises are required to reconstruct a complete dossier similar to the initial licensing application, including business plans, financial plans, and documents evidencing operational capacity. Additionally, enterprises must comprehensively demonstrate: (a) the level of competitive impact on the market and domestic enterprises; and (b) their ability to generate employment and contribute to the state budget in the future.
In practice, these requirements go beyond internal data and often require aggregated market data for comparison and analysis, while access to reliable data sources remains limited. Moreover, enterprises must demonstrate feasibility through financial indicators. Where financial performance is not positive, appropriate capital supplementation plans are required. These requirements significantly increase compliance costs, preparation time, and procedural complexity.
(ii) Risks arising from past performance
Business efficiency, financial losses, and the level of compliance with tax and reporting obligations may directly affect the licensing decision of the competent authority.
(iii) Legal risks regarding business continuity
Current laws do not clearly stipulate whether enterprises may continue operating while awaiting the issuance of a new Business License. In practice, the processing time may be prolonged, leading to risks of business interruption. In case of inspection, enterprises may be required to justify the legal basis for continuing operations during the period in which the new license has not yet been granted.
5. Conclusion and Recommendations
The current legal framework does not provide for an extension of the Business License; upon expiry, enterprises are required to apply for a new license. During this process, competent authorities will assess both the enterprise’s current conditions and its operational history.
Therefore, enterprises should proactively review their legal compliance and financial obligations, while preparing a comprehensive and well-substantiated application dossier in line with practical requirements to ensure effective appraisal and mitigate potential risks.
This article is prepared by Vy Le with consultation from Lawyer Y Huynh.
This article is for general informational purposes only and does not constitute legal advice for any specific case. The legal provisions cited herein are effective as of the date of publication but may have been amended, supplemented, replaced, or expired at the time of reference. Readers are advised to seek professional legal advice before application.
[1] Clause 2, Article 11 of Decree No. 09/2018/ND-CP:
“2. Duration of business operations
(a) The duration of business operations for the cases specified in Clauses 2, 3, and 4, Article 9 of this Decree shall be five (05) years.”
[2] Clause 1, Clause 2, and Clause 3, Article 9 of Decree No. 09/2018/ND-CP
[3] Article 10 of Decree No. 09/2018/ND-CP
[4] Clause 2 and Clause 3, Article 36 of Decree No. 146/2025/ND-CP (effective from July 1, 2025 to March 1, 2027)
