How to Become a Commercial Agent for a Foreign Trader in Vietnam

What procedures must be followed to become a commercial agent for a foreign trader operating in Vietnam?

1. What Is a Foreign Trader Operating in Vietnam?

Pursuant to Article 16 of the Commercial Law 2005 on foreign traders conducting commercial activities in Vietnam as follows:

– A foreign trader is a trader established and registered for business under foreign law or recognized by foreign law.

– Foreign traders may establish representative offices and branches in Vietnam; and establish in Vietnam foreign-invested enterprises in the forms prescribed by Vietnamese law.

– Representative offices and branches of foreign traders in Vietnam have rights and obligations under Vietnamese law. Foreign traders are responsible before Vietnamese law for all activities of their representative offices and branches in Vietnam.

– A foreign-invested enterprise established in Vietnam by a foreign trader in accordance with Vietnamese law or international treaties to which the Socialist Republic of Vietnam is a member is considered a Vietnamese trader.

Pursuant to Article 22 of the Commercial Law 2005 on the authority to permit foreign traders to conduct commercial activities in Vietnam as follows:

– The Government uniformly manages the permitting of foreign traders to conduct commercial activities in Vietnam.

– The Ministry of Planning and Investment is responsible before the Government for managing the licensing of foreign traders investing in Vietnam in accordance with Vietnamese law.

– The Ministry of Trade is responsible before the Government for managing the licensing of the establishment of representative offices of foreign traders in Vietnam; the establishment of branches, joint-venture enterprises, and 100% foreign-owned enterprises in Vietnam where such traders specialize in conducting goods trading activities and activities directly related to goods trading in accordance with Vietnamese law and consistent with international treaties to which the Socialist Republic of Vietnam is a member.

– Where a specialized law specifically prescribes the authority of the ministry or ministerial-level agency responsible before the Government for managing the licensing of foreign traders conducting commercial activities in Vietnam, the provisions of that specialized law apply.

2. How Are Agency Contracts Regulated?

To become a commercial agent for a foreign trader conducting commercial activities in Vietnam, you must enter into an agency contract in accordance with Article 168 of the Commercial Law 2005 as follows:

An agency contract must be made in writing or in another form of equivalent legal validity.

And the principal is the owner of the goods or money delivered to the agent (as prescribed in Article 170 of the Commercial Law 2005).

3. What Procedures Must Be Followed to Become a Commercial Agent for a Foreign Trader in Vietnam?

Pursuant to Article 50 of Decree No. 69/2018/ND-CP on traders acting as agents for the purchase and sale of goods for foreign traders, specifically as follows:

– Traders may act as agents for the purchase and sale of goods for foreign traders, except goods on the List of prohibited exports, suspended exports, goods on the List of prohibited imports, and suspended imports. For goods exported or imported under Licenses, traders may only sign agency contracts after being licensed by the competent ministry or ministerial-level agency.

– Where the law specifically prescribes that the agent may only enter into agency contracts with one principal for a certain type of goods or services, the trader must comply with that law.

– A trader acting as a purchasing agent must require the foreign trader to transfer money in freely convertible foreign currency through banks to purchase goods under the agency contract.

– A trader acting as a purchasing agent is responsible for registering, declaring, and paying taxes and other financial obligations related to goods under the goods purchase and sale agency contract and its own business activities in accordance with the law.

Note that for goods on the list of goods exported or imported under licenses, traders may only sign agency contracts after being licensed by the competent authority.

Regarding payment in agency, as prescribed in Article 176 of the Commercial Law 2005, specifically as follows:

Unless otherwise agreed, payment for goods, service provision, and agency remuneration is made in installments after the agent completes the purchase or sale of a certain quantity of goods or the provision of a certain quantity of services.

From the bases set out above, commercial agency is a commercial intermediary activity and is neither a form of enterprise nor a business line (with some special cases). Therefore, you do not need to carry out registration or add business lines, but only need to sign a commercial agency contract in accordance with the law.