Risks for FDI enterprises engaging in unlicensed retail sale of goods

The retail distribution of goods by foreign-invested economic organizations (“FDI Enterprise”) constitutes a conditional business line and must be licensed by the competent state authority prior to implementation. This article analyzes the applicable legal conditions and potential administrative sanction risks that can arise where an FDI Enterprise conducts retail activities before obtaining the requisite license.

1. Legal provisions governing the exercise of the retail distribution right:

a. Definition:

Pursuant to Clause 7 Article 3 of Decree No. 09/2018/ND-CP, retail is defined as the sale of goods to individuals, households, or other organizations for consumption purposes.[1]

Specifically:[2]

  • Retail means the resale of new and used goods for personal or household consumption, regardless of the sales channel, including sales through shops, department stores, stalls, mail-order houses, door-to-door sales, street vendors, consumer cooperatives, auction houses, etc.
  • Retail also includes sales through showrooms (where displayed goods can be sold), temporary points of sale (e.g., pop-up stores), and automated retail outlets.
  • Retail may also be conducted by means of mail-order or internet-based ordering.
  • A retailer is typically the owner of the goods being traded.

Where the customers of an FDI Enterprise are individuals, households and/or other organizations, and the purchase of goods is for consumption purposes, such sale of goods shall be deemed an activity involving the exercise of the retail distribution right. Accordingly, in order to exercise the right to conduct retail distribution of goods in Vietnam, an FDI Enterprise must satisfy the relevant conditions and complete the corresponding legal procedures prior to carrying out such business activities in practice.

b. Exercise of the right to conduct retail distribution of goods by FDI Enterprise:

Pursuant to Point a Clause 1 Article 5 of Decree No. 09/2018/ND-CP, a Business License shall be issued to a foreign-invested economic organization in Vietnam for the exercise of the right to conduct retail distribution of goods, excluding rice; sugar; recorded media; books, newspapers and magazines.[3] Accordingly, an FDI Enterprise in Vietnam can only exercise the right to conduct retail distribution of goods after it has been granted a Business License by the competent State authority in accordance with law.

Pursuant to Clause 2 Article 5 of Decree No. 09/2018/ND-CP, a Retail Outlet Establishment License shall be issued to a foreign-invested economic organization for the establishment of a retail outlet.[4] Accordingly, after being granted a Business License, an FDI Enterprise can conduct retail sale of goods online or through e-commerce platforms. However, in order to conduct retail sale of goods at showrooms located in shopping malls or at physical stores, the FDI Enterprise must obtain a Retail Outlet Establishment License for each corresponding retail outlet.

2. Risks of administrative sanctions in sectors relating to goods trading activities and activities directly related to goods trading by FDI Enterprise in Vietnam:

In the event of non-compliance with the foregoing regulations, an FDI Enterprise can be exposed to the following legal risks relating to administrative sanctions:

No. Potential violation

 

 Fine applicable to organizations

(Vietnamese Dong)

 Remedial measures
1. Trading in goods subject to conditional market access/business investment conditions without having obtained the business license prescribed by law[5]

 

 20.000.000 – 30.000.000 Compulsory remittance of the illegal gains obtained from the commission of the violation[6].

 
2. Illegally establishing a retail outlet in Vietnam[7] 30.000.000 – 40.000.000

 

Additional sanction[8]:

 

·      Suspension of the right to use the business license for a period from 01 month to 03 months; or

 

·      Suspension of operations for a period from 01 month to 03 months.

 

 Compulsory remittance of the illegal gains obtained from the commission of the violation[9].

Accordingly, in addition to monetary fines and the additional sanctions mentioned above, the FDI Enterprise shall also be compelled to remit the illegal gains obtained from the commission of the violation. Illegal gains in monetary form are calculated according to the following formula[10]:

Illegal gains = Quantity of goods transferred or consumed x Unit price of goods – Direct costs constituting the goods

Where:

  • Quantity of goods transferred or consumed: determined on the basis of the declaration made by the FDI Enterprise and the inspection and verification conducted by the person competent to impose the sanction.
  • Unit price of goods: determined on the basis of records and documents provided by the FDI Enterprise. Where the FDI Enterprise has no records or documents for determination, the unit price shall be determined according to the market price of similar goods at the time the violation is detected.

Where the quantity, volume, or unit price cannot be determined, the illegal gains obtained shall be the entire amount collected by the FDI Enterprise from the transfer or consumption of goods in contravention of the law.

An FDI Enterprise should complete the procedures for obtaining a Business License and, as applicable, a Retail Outlet Establishment License before conducting retail sale of goods. Conducting such activities without the requisite license(s) may give rise to undesirable legal risks.

[1] Clause 7, Article 3 of Decree 09/2018/ND-CP.

[2] Decision 36/2025/QD-TTg.

[3] Point a Clause 1 Article 5 of Decree No. 09/2018/ND-CP.

[4] Clause 2 Article 5 of Decree No. 09/2018/ND-CP.

[5] Point a, Clause 3, Article 6, Point b, Clause 4, Article 4 of Decree 98/2020/ND-CP and Clause 2, Article 1, Point a, Clause 1, Article 2 of Decree 24/2025/ND-CP.

[6] Clause 7, Article 6 of Decree 98/2020/ND-CP and Point b, Clause 3, Article 3 of Decree 17/2022/ND-CP.

[7] Point b, Clause 4, Article 4, Point d, Clause 3, Article 70 of Decree 98/2020/ND-CP and Point b, Clause 1, Article 3 of Decree 17/2022/ND-CP.

[8] Clause 5, Article 70 of Decree 98/2020/ND-CP.

[9] Clause 6, Article 70 of Decree 98/2020/ND-CP.

[10] Clause 2, Article 5 of Circular 65/2022/TT-BTC.

Submission date: July 20, 2026

Related posts

  1. Procedures for establishing a retail establishment in Vietnam ( In case of ENT economic needs test procedure)
  2. Vietnamese organization/individual establishes a company in Singapore to wholesale and retail activities of goods
  3. Apolat legal has represented to work with inspectors to resolve penalties and tax arrears for late renewing their retail licenses

Disclaimers:

This article is for general information purposes only and is not intended to provide any legal advice for any particular case. The legal provisions referenced in the content are in effect at the time of publication but may have expired at the time you read the content. We therefore advise that you always consult a professional consultant before applying any content.

For issues related to the content or intellectual property rights of the article, please email cs@apolatlegal.vn.

Apolat Legal is a law firm in Vietnam with experience and capacity to provide consulting services related to Business and Investment and contact our team of lawyers in Vietnam via email info@apolatlegal.com.



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