Question:
A company established overseas, with valid incorporation documents, intends to establish a branch in Vietnam to conduct restaurant business activities.
In this case, what conditions must the foreign enterprise satisfy to establish a branch in Vietnam?
Answer:
Pursuant to Article 8 of Decree No. 07/2016/ND-CP, the issuance of a License for Establishment of a Branch of a foreign trader in Vietnam is subject to requirements concerning the trader’s legal status, operating history, remaining term of operation (where a term is specified), and the scope of the proposed branch’s activities in accordance with Vietnam’s market-opening commitments.
Based on the information currently available, the following matters should be considered:
- Legal Establishment and Business Registration in the Foreign Country
Clause 1, Article 8 of Decree No. 07/2016/ND-CP requires a foreign trader to be legally established and registered for business in accordance with the laws of a country or territory meeting the conditions prescribed by law.
- Minimum Operating Period of the Foreign Trader
Clause 2, Article 8 of Decree No. 07/2016/ND-CP requires a foreign trader to have been in operation for at least five (05) years from the date of its establishment or registration.
Accordingly, the company’s official date of establishment must be verified. If the company has been in operation for at least five (05) years, it may satisfy this requirement.
- Remaining Term of Operation of the Foreign Trader
Clause 3, Article 8 of Decree No. 07/2016/ND-CP provides that, where the foreign trader’s business registration certificate or equivalent document specifies a term of operation, at least one (01) year of that term must remain as of the date on which the application for the branch establishment license is submitted.
- Market Access Conditions for Restaurant Business Activities
4.1. Country of Establishment of the Foreign Trader
The country in which the company was legally established must be identified, and Vietnam’s relevant international commitments concerning the proposed business activities must be reviewed.
4.2. Vietnam’s Market-Opening Commitments for Restaurant Services
Under Vietnam’s Schedule of Specific Commitments on Services upon accession to the World Trade Organization (WTO), food-serving services and beverage-serving services fall under CPC codes 642 and 643, respectively. The commitments applicable to the supply of services through commercial presence included an eight-year restriction, commencing from the date of Vietnam’s accession to the WTO, on certain forms of service provision linked to investment in hotels.
This restriction period has expired. However, the expiry of the restriction under Vietnam’s WTO commitments does not automatically entitle every form of restaurant business in Vietnam to obtain the relevant licenses. The establishment of a branch must still comply with Vietnamese law, and the branch’s proposed activities must fall within the scope of the foreign trader’s business activities.
4.3. Business Lines Subject to Market Access Restrictions for Foreign Investors
The proposed business lines must be checked against the List of Business Lines Restricted from Market Access for Foreign Investors and any applicable market access conditions under current Vietnamese law.
For restaurant business activities, the specific services to be provided and their corresponding business classification codes and CPC codes must be identified to determine the applicable conditions. The fact that an activity is not classified as a restricted market access business line does not exempt the foreign trader from satisfying the separate requirements for obtaining a License for Establishment of a Branch under Decree No. 07/2016/ND-CP.
- Conclusion
The company should verify: (i) its official date of establishment and current legal status; (ii) its remaining term of operation, if a term is specified in its registration documents; and (iii) whether the proposed scope of the branch’s activities is consistent with the foreign trader’s business activities and Vietnam’s market-opening commitments.
If all the above requirements and other applicable legal conditions are satisfied, the company may proceed with considering an application for a License for Establishment of a Branch in Vietnam.
