(Chinhphu.vn) – Through the receiving and responding system to businesses’ recommendations, the IPIC Law Firm would like to request for an answer of related problems to the difference between the concept of wholesale and retail as prescribed in the Decree 09/2018 / ND-CP.

According to Clause 6 and Clause 7, Article 3 of the Decree 09/2018 / ND-CP:

“6. Wholesaling means the activity of selling goods to other wholesaling and retailing business entities and other organizations and does not include the activity of retailing.

 7. Retailing means the activity of selling goods to individuals, family households and other organizations for use for consumption purposes”.

Article 5 of the Decree 09/2018 / ND-CP stipulates: “1. Business licenses are granted to foreign-invested economic organizations to conduct the following activities:

1. Business licences shall be issued to economic organizations with FOC to conduct the following activities:

 a) Exercise the goods retail distribution right excluding the goods prescribed in article 9.4(c) of this Decree;

 b) Exercise the import right and the goods wholesale distribution right prescribed in article 9.4(b) of this Decree;

c) Exercise the goods retail distribution right prescribed in article 9.4(c) of this Decree”.

With the above provisions, the IPIC Law Firm has a number of difficulties and queries during the application of the Decree 09/2018 / ND-CP as follows:

- Is another organization specified in Clause 7, Article 3 of the Decree 09/2018 / ND-CP different from other organizations specified in Clause 6, Article 3 of the Decree 09/2018 / ND-CP? How is the other organization in Clause 7, Article 3 included companies and businesses? Can companies and businesses purchase products to serve consumer purposes?

If a company and an enterprise purchase products for consumption purposes, the sale of goods to those organizations is considered a retail activity as prescribed in Clause 7, Article 3 of Decree 09/2018 / ND -CP? And foreign-invested companies sell goods to companies and businesses for their consumption, are they required to apply for a retail license?

- At present, issuing the retail license on the license that is not consistent, there is a locality that clearly states the product name, some localities specify the the product HS code, some localities do not specify the product nor the HS code.This leads to the application of inconsistency throughout the country, making it difficult for businesses to comply with business licenses. Is it mandatory on the business license to write the name of the product or the product group according to the HS code?

Regarding this issue, The Ministry of Industry and Trade answered as follows:

The concept of wholesale and retail:

According to Clause 6 Article 3 of the Decree No. 09/2018 / ND-CP dated January 15, 2018: “Wholesaling means the activity of selling goods to other wholesaling and retailing business entities and other organizations; and does not include the activity of retailing”.

According to the above provisions, the sale of goods to other traders or organizations does not use goods for wholesale, retail or consumption purposes (such as cases of enterprises, cooperatives, ... buying goods for directly use for production and service deployment according to the investment objectives and registered business lines: the cooperative has registered the garment manufacturing industry and purchased sewing machines for installation and service. production, purchase of fabrics and raw materials for production of garments for sale; enterprises that have registered construction services to buy construction materials for construction and installation of works that have won the bid. The enterprise has registered for food and beverage service, purchased food and drinks for processing into dishes, serving with or without food to serve on-site guests or take away; branches of foreign traders that have been licensed to provide computer services to purchase supplies, components and computers for assembly and installation under contracts signed with customer ...) is a wholesale activity.

According to Clause 1, Article 3 of the Law on Protection of Consumer Rights: “7. Consumers are those who buy and use goods and services for the purpose of consumption and daily activities of individuals, families and organizations.”.

According to the above provisions, an organization is also a buyer of goods for consumption. The sale of goods to organizations for consumption and living purposes of organizations (for example, representative offices of foreign traders, enterprises that buy food, beverages, stationery ... to serving the regular consumption and daily life of officials and employees of representative offices, enterprises) without using them directly in the production process, or deploying services according to investment objectives and industries. Registered business venture is the retail operation.

According to Point a, Clause 1, Article 5 of the Decree No. 09/2018 / ND-CP, in order to exercise the right to retail distribution of fire goods, foreign-invested economic organizations must carry out the procedures for granting certificates business license. According to Clause 2, Article 5 of the Decree No. 09/2018 / ND-CP, in order to set up a retail establishment, a foreign-invested economic organization must carry out the procedures for granting a license for setting up a retail establishment. Foreign-invested economic organizations shall base themselves on the above provisions to carry out the procedures for business licenses and licenses for setting up retail establishments strictly according to regulations.

The guidance in this section corrects the guidance of the Ministry of Industry and Trade in the Official Letter No. 4248 / BCT-KH dated May 30, 2018.

How to write Business License and Retail Establishment License:

The Decree No. 09/2018 / ND-CP does not have the compulsory regulation on foreign-invested economic organizations to declare the list of goods exercising the right to retail distribution according to HS codes, appellations or chapters. The determination of the scope of the goods list traded and the declaration of the goods list by HS code, by name or by chapter ... is the right of investors and economic organizations on the basis of self-balance, business plan and competency, financial plan and capacity, retail establishment size, type of retail establishment (if a retail establishment is proposed), convenience for economic organizations when carrying out customs clearance and tax declaration procedures in accordance with relevant tax, financial and customs laws.

The licensing agency (Department of Industry and Trade) shall write the contents of the goods in the business license or the license for setting up a retail establishment on the basis of the economic organization's proposal dossier, in accordance with the results of the consideration, evaluation of Department of Industry and Trade on the fulfillment of licensing conditions, suitability of business plan, financial plan with business scale, retail establishment scale, type of retail establishment (if foreign-invested economic organizations requesting to set up retail establishments), characteristics of the goods expected to be traded ..., in accordance with the provisions of the Decree No. 09/2018 / ND-CP.