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PROVISIONS ON BUSINESS SCOPE

Legal basis:

  • The Enterprise Law 2020 takes effect from January 1st, 2021;
  • Decree No. 01/2021/ND-CP issued on January 4th, 2021 on Enterprise Registration;
  • The Law on Investment 2020 takes effect from January 1st, 2021;
  • Decree 31/2021/QĐ-TTg Elaboration Of Some Articles Of The Law On Investment

When registering business scope for an enterprise of a foreign trader, Clients should note the following provisions:

1.    Principles of application of business lines conditions for foreign traders

  • Foreign investors investing in different business lines must satisfy the conditions for business investment according to the regulations of those business lines.
  • For sub-sectors that have not yet committed or are not specified in Vietnam’s schedule of commitments in the WTO and international treaties, but Vietnamese law already has provisions on investment conditions for investors, the provisions of Vietnamese law shall apply.
  • Foreign investors from countries that are not WTO members shall apply the same conditions for market access by investors from countries that are WTO members, unless otherwise prescribed by the law of Vietnam or international treaties between Vietnam and those countries.
  • Foreign investors that are regulated by an investment-related international treaty which prescribes more favorable conditions for market access than those prescribed by the law of Vietnam, the former may be applied.
  • A foreign investor that is regulated by investment-related international treaties which prescribe different market access conditions may apply the conditions prescribed by any of those treaties to all of the investor’s business lines. Once the conditions prescribed by one of the international treaties have been chosen (including new treaties and treaties that are revised after their effective dates which include the investor in their regulated entities), the foreign investor shall perform their rights and obligations in accordance with the chosen treaty.

2.    Regulations on Business lines for foreign investors in Investment Law 2020

A.   Banned business lines

  • Trade in the narcotic substances specified in Appendix I Law on Investment 2020;
  • Trade in the chemicals and minerals specified in Appendix II Law on Investment 2020;
  • Trade in specimens of wild flora and fauna specified in Appendix 1 of Convention on International Trade in Endangered Species of Wild Fauna and Flora; specimens of rare and/or endangered species of wild fauna and flora in Group I of Appendix III Law on Investment 2020;
  • Prostitution;
  • Human trafficking; trade in human tissues, corpses, human organs and human fetuses;
  • Business activities pertaining to asexual human reproduction;
  • Trade in firecrackers.
  • Provision of debt collection services.

B.   Conditional business lines in Investment Law 2020

  • Conditional business lines are the business lines in which the business investment must satisfy certain conditions for reasons of national defense and security, social order and security, social ethics, or public health.
  • Conditions for making business investment in the business lines are specified in the Laws and Resolutions of the National Assembly, Ordinances and Resolutions of the Standing Committee of the National Assembly, Decrees of the Government and international treaties to which the Socialist Republic of Vietnam is a signatory. Ministries, ministerial agencies, People’s Councils, People’s Committees at all levels, and other entities must not issue regulations on conditions for making business investment.
  • A List of conditional business lines is provided in Appendix IV hereof.
  • The conditional business lines shall be posted on the National Business Registration Portal.

Business lines that need legal capital

For example:

Scope Legal capital Legal document Proof record
Sending workers to work abroad 5.000.000.000 VNĐ Decree 38/2020/NĐ-CP on elaborating to Law on Vietnamese Guest Workers according to the Contract Document certifying the legal capital of 5.000.000.000 VND of the Commercial bank in accordance with regulations

 

Business lines that require a practicing certificate

For example:

Code Business lines’s name Required Professional certificate
7110 Architectural and engineering activities and related technical consultancy Architectural practice Certificate
6810 Trading of own or rented property and land use rights Real estate brokerage Certificate

C.   Business lines with prohibited and restricted market access applied to foreign investors

Market access conditions applied to foreign investors mean those which must be satisfied by foreign investors to make investment in the List of business lines with prohibited and restricted market access as mentioned above.

Conditions for foreign investors to access the market include:

  • Holding of charter capital by the foreign investor in a business organization;
  • Investment method;
  • Scope of investment;
  • Capacity of the investor; partners participating in the investment activities;
  • Other conditions specified in the Laws and Resolutions of the National Assembly, Ordinances and Resolutions of the Standing Committee of the National Assembly, Decrees of the Government and international treaties to which the Socialist Republic of Vietnam is a signatory.

Thus, except for the business line that has not yet had market access and the industry with conditional market access, in the remaining cases, foreign investors will meet the same requirements as domestic investors under the Vietnam Standard Industrial Classification

  • The list of conditional business lines in Vietnam Standard Industrial Classification

For example:

Code Business lines’s name Conditions
6810 Trading of own or rented property and land use rights There are at least 2 employees obtaining real estate broker license
  • The list of conditional business lines in Part 2 -Schedule of Specific Commitments in Services (WTO)

For example:

Code Business lines’s name Conditions
CPC 8929 Franchising services A joint venture with a Vietnamese partner(s) is required, and foreign capital contribution shall not exceed 49%.  As of 1 January 2008, the 49% capital limitation shall be abolished.  As of 1 January 2009, none.

After 3 years from the date of accession, branching is allowed.

The chief of the branch has to be a resident in Viet Nam.

 

In addition to the market access conditions mentioned above, foreign investors and foreign-invested business organizations also need to fulfill the following conditions (if any) when carrying out business investment activities in Vietnam:

a) Use of land, employ workers; natural resources, minerals;

b) Manufacture, supply of public services, goods or goods and services under state monopoly;

c) Ownership, trade of housing, real estate;

d) Application of assistances, aids of the State in certain industries, sectors or geographical areas;

đ) Participation in state-owned enterprise equitization programs or plans;

e) Other conditions specified in the Laws and Resolutions of the National Assembly, Ordinances and Resolutions of the Standing committee of the National Assembly, Decrees of the Government and investment-related international treaties that prohibit or restrict market access by foreign-invested business organizations.

  • With Prohibited Market Access

For example:

    • Trade in goods and services on the list of goods and services under state monopoly.
    • Press activities and collection of news in any shape or form.
    • Catching or harvesting marine life.
    • Investigation and security services.
    • Administrative and judicial services, including judicial assessment services, bailiff services, property auction services, notary services, official receiver’s services.
  • With restricted Market Access

For example:

    • Postal and telecommunications services.
    • Advertising services.
    • Printing and publishing services.
    • Geodesy and cartography services.
    • Aerial photography services.
    • Education services.

●     Business lines eligible for investment incentives

For example:

    • Manufacture of steel billets from iron ore, high-grade steel, alloys.
    • Manufacture of coke, activated carbon.
    • Manufacture of energy-saving products.
    • Manufacture of oil, pharmaceutical chemistry, base chemicals and rubber.

3.     How to writing business lines for enterprise of foreign investors

The recording of business lines of foreign-invested enterprises is similar to the way of recording business lines  for Vietnamese enterprises in order to follow Vietnam Standard Industrial Classification

  • An enterprise shall select the level-4 business lines inVietnam Standard Industrial Classification to write them on the application for enterprise registration, notification of changes to enterprise registration, or application for the enterprise registration certificate.

For example:

No. Business lines’s name Code
1 Manufacture of furniture 3100
2 Construction of residential buildings 4101

 

  • Conditional business lines prescribed in other legislative documents shall be written according to such legislative documents.

For example:

No. Business lines’s name Code
1 Management consultant services CPC 865
2 Maintenance and repair of equipment

Detail: not including maritime vessels, aircraft or other transport equipment

CPC 633

                       (Part 2 -Schedule of Specific Commitments in Services (WTO))

  • In case business lines that are not mentioned in Vietnam Standard Industrial Classification but prescribed in other legislative documents will be written according to such legislative documents.

For example:

No. Business lines’s name Code
1 Activities auxiliary to financial service activities n.e.c

Detail: Investment consulting activities

6619
2 Other specialized wholesale n.e.c

Detail: Wholesale of textile and footwear supplies.

4669
  • Business lines that are mentioned in neither Vietnam Standard Industrial Classification nor other legislative documents, the business registration authority shall consider adding them to the National Enterprise Registration Database if they are not prohibited, and then request the Ministry of Planning and Investment (General Statistics Office of Vietnam) to consider adding them as new business lines.

Note: Enterprises can write business lines in more detail.

  • In case an enterprise wishes to register more detailed business lines than level 4, it shall select a level 4 business line in Vietnam Standard Industrial Classification, then specify the enterprise’s business lines right under the level-4 line, provided the detailed lines are appropriate for the selected level-4 line.

For example:

No. Business lines’s name Code
1 Computer programming activities

Detail: Writing, editing, testing and supporting software according to the unique use requirements of each customer.

6201
2 Retail sale in non-specialized stores with food, beverages, tobacco or aztec tobacco predominating

Detail: Retail sale in supermarkets

4711

However, it should be noted that foreign-invested enterprises, in addition to stating the business lines on the business registration certificate (ERC), the project’s operation aim must also be stated on the investment registration certificate (IRC). The recording of project activity aims to comply with Vietnamese laws and WTO commitments (indicating CPC business line code).

If you still have any questions during the process of registering a business scope for your business, please contact Businesslicense.vn for the best support.