The right to import and wholesale distribution of lubricating oils and greases of foreign-invested companies

Currently, for foreign-invested economic organizations, the business of some conditional items must be granted business licenses by competent agencies, specifically oil and grease. Because this is a conditional business item, for foreign-invested economic organizations that want to obtain the right to import and distribute retail, they must apply for a business license from the Department of Industry and Trade. The following article Vo Associates will provide information on conditions, procedures and penalties for a foreign-invested economic organization to exercise the right to import and wholesale distribution of oils and lubricants.

1. Legal basis

Law on investment 2025

Decree 09/2018/ND-CP

Decree 98/2020/ND-CP

In order to better understand the right to import and distribute oil and grease retail of foreign-invested companies, we will first learn about the provisions of the law on each concept.

2. Basics

• Foreign-invested economic organizations

According to Clause 21, Article 3 of the 2025 Law on Investment specifies: “economic organization means an organization established and operating in accordance with Vietnam’s laws. Economic organizations include enterprises, cooperatives, cooperative unions and other organizations that carry out business investment activities.” Clause 22, Article 3 of the 2025 Investment Law stipulates: “foreign-invested economic organization means an economic organization with a foreign investor being a member or shareholder.”In addition, Clause 19, Article 3 of this Law also stipulates: “foreign investor” means an individual holding a foreign nationality or an organization established under foreign laws carrying our business investment activities in Vietnam.”

Through the above grounds, we can understand that foreign-invested economic organizations are established in accordance with the provisions of Vietnamese law, established by investors who are foreign individuals or organizations or contribute capital to conduct business in Vietnam.

• Right to import

According to Clause 3, Article 3 of Decree 09/2018/ND-CP specifies: “Importation right means the right to import goods from foreign countries into Vietnam for sale to traders that have the right to distribute those goods in Vietnam; the importation right includes the right to have one’s name written in the import declaration in order to carry out, and take responsibility for, import-related procedures. The importation right excludes the right to establish, or participate in, a good distribution system in Vietnam, unless otherwise provided for by Vietnamese law or treaties to which the Socialist Republic of Vietnam is a contracting party.”

• Wholesale:

According to Clause 6 Article 3 of Decree 09/2018/ND-CP specified: “Wholesaling involves selling goods to wholesalers, retailers, other organizations and traders; excluding retailing.”

3. Conditions for Granting a Business License

• Conditions for granting business licenses to exercise the right to import, distribute and wholesale oil and lubricants for foreign-invested economic organization.

According to Clause 4 Article 9 of Decree 09/2018/ND-CP, foreign-invested economic organizations to be granted business licenses to exercise the right to import, distribute and wholesale oil and grease must satisfy the following conditions:

(1) Have a financial plan to carry out the application for a business license;

(2) No more overdue tax debts in case of having been established in Vietnam for 01 year or more.

Meet the following criteria:

(1) In accordance with the provisions of specialized laws;

(2) In accordance with the level of competition of domestic enterprises in the same field of operation;

(3) The ability to create jobs for domestic workers;

(4) Ability and level of contribution to the state budget.

Foreign-invested economic organizations carry out one of the following activities

(1) Producing oil and grease in Vietnam;

(2) Producing or permitted to distribute in Vietnam machinery, equipment and goods using specific oils and greases.

• Case of refusal to grant a business registration license

According to Article 21 of Decree 09/2018/ND-CP, the licensing agency will refuse to grant a business license in the following cases:

• The operation term of the project on goods purchase and sale activities and activities directly related to the purchase and sale of goods has expired.
• Foreign-invested economic organizations apply for business licenses within 02 years from the date of revocation of business licenses (specified in Clause 1, Article 43 of this Decree)

4. Business license application documents

• License registration dossiers are specified in Article 12 of Decree 09/2018/ND-CP

Application for business license (Form No. 01 in the Appendix issued together with Decree 09/2018/ND-CP dated January 15, 2018)

• The explanation reads as follows:

+ Explanation of conditions for granting corresponding business licenses as prescribed

+ Business plan: Describe the contents and methods of business activities; presentation of business plans and market development; the need for labor; assess the impacts and socio-economic efficiency of the business plan;

+ Financial plan: Report on business results on the basis of audited financial statements of the most recent year in case it has been established in Vietnam for 01 year or more; explanation of capital, capital sources and capital mobilization plans; enclosed with financial documents;

• A copy of the Certificate of Business Registration;
• A copy of the Certificate of investment registration of the project on goods purchase and sale activities and activities directly related to the purchase and sale of goods (if any);
• Tax authority documents proving no overdue tax debts.

The competent authority shall resolve:

The Department of Industry and Trade where the foreign-invested organization is located.

Resolution time:

28 working days from the date of valid application (According to Article 13 of Decree 09/2018/ND-CP).

5. Administrative sanctions for violations of business activities under business licenses

In case a foreign-invested organization deals in goods belonging to conditional business lines and lines (Oil, grease)

According to Clause 3 Article 6 of Decree 98/2020/ND-CP, stipulating:

“A fine ranging from VND 10.000.000 to VND 15.000.000 shall be imposed for committing one of the following violations:

1. a) Failing to obtain the business license when trading in goods or services classified as conditional business lines;
2. b) Using an expired business license when trading in goods or services classified as conditional business lines;
3. c) Failing to meet business conditions during the trading in goods or services classified as conditional business lines;
4. d) Using the business license of another trader.”

This  is imposed for an administrative violation committed by an individua and The fine imposed upon an organization is twice as much as that imposed upon an individual for committing the same administrative violation (point b, Clause 4, Article 4 of Decree 98/2020/ND-CP)

The above are the sharing of lawyers, providing information not for consulting purposes and not consulting opinions, Vo & Associates is not responsible for all cases.

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