Can a foreign-invested business entities conduct merchanting trade transactions in Vietnam?
What is the transfer of goods through border-gates?
Pursuant to Article 30 of the 2005 Commercial Law of Vietnam (a number of provisions are annulled by Clause 3, Article 112 of the 2017 Law on Foreign Trade Management of Vietnam) on transfer of goods through border-gates, transfer of goods through border-gates means the purchase of goods from a country or territory for sale to another country or territory outside the Vietnamese territory without carrying out the procedures for importing such goods into Vietnam and the procedures for exporting such goods out of Vietnam.
Transfer of goods through border-gates shall be conducted in the following forms:
- Goods are transported directly from the exporting country to the importing country without going through Vietnamese border-gates;
- Goods are transported from the exporting country to the importing country through Vietnamese border-gates without carrying out the procedures for importing them into Vietnam and the procedures for exporting them out of Vietnam;
- Goods are transported from the exporting country to the importing country through Vietnamese border-gates and brought into bonded warehouses or areas for transshipment of goods at Vietnamese ports without carrying out the procedures for importing them into Vietnam and the procedures for exporting them out of Vietnam.
Can a foreign-invested business entities conduct merchanting trade transactions in Vietnam?
Can a foreign-invested business entities conduct merchanting trade transactions?
According to the provisions of Clause 2, Article 18 of Decree 69/2018/ND-CP of Vietnam stipulating merchanting trade in Vietnam as follows:
Merchanting trade in Vietnam
1. A Vietnamese trader is entitled to conduct merchanting trade transactions as follows:
a) The trader must obtain the license for merchanting transaction issued by the Ministry of Industry and Trade if the goods to be temporarily imported are included in the list of prohibited or suspended exports and imports, goods not be freely sold and used in Vietnam; goods subject to export and import quotas, tariff-rate quotas or requiring export or import licenses, except for automatic export or import license. If the goods move from the exporting country to the importing country, without entering Vietnam's checkpoints, the trader is not required to obtain a license for merchanting trade.
b) If the goods are not mentioned in Point a Clause 1 hereof, the trader is not required to obtain a license for merchanting trade issued by the Ministry of Industry and Trade.
2. Foreign-invested business entities may not conduct merchanting trade transactions.
3. The merchanting trade transaction will be conducted according to two separate contracts: A purchase contract and a sales contract concluded with the foreign trader. The purchase contract may be concluded before or after the sales contract.
4. The goods under merchanting trade transaction must be brought in and brought out of Vietnam at the same checkpoint area and subject to the inspections and supervisions carried out by the customs authority throughout such process.
5. The payment, under merchanting trade, must comply with regulation on foreign exchange and guidelines of the State bank of Vietnam.
According to this Article, foreign-invested business entities may not conduct merchanting trade transactions.
What are the principles of payment and money transfer related to goods transshipment?
Pursuant to Article 3 of Circular 02/2020/TT-NHNN of Vietnam stipulating the principles of payment and money transfer related to goods transshipment as follows:
Principles of payment and money transfer related to goods transshipment
1. Payment and money transfer related to goods transshipment shall be conducted by 2 separate instances of payment and money transfer: transfer of payment for procurement agreements and receipt of money from procurement agreements. Transfer of payment for procurement agreements may be conducted before or after the money receipt.
2. All instances of payment and money transfer related to goods transshipment must be conducted via licensed banks.
3. Traders may only pay and transfer the money in the same transshipment transactions under contracts for purchasing goods and contracts for selling the same goods in the same licensed banks.
4. Traders may use foreign currency in their accounts for payment in foreign currency and foreign currency bought of licensed banks to be transferred abroad to pay for contracts for purchasing goods.
Thus, payment and money transfer related to goods transshipment shall be conducted by 2 separate instances of payment and money transfer:
+ Transfer of payment for procurement agreements and receipt of money from procurement agreements.
+ Transfer of payment for procurement agreements may be conducted before or after the money receipt.
- All instances of payment and money transfer related to goods transshipment must be conducted via licensed banks.
- Traders may only pay and transfer the money in the same transshipment transactions under contracts for purchasing goods and contracts for selling the same goods in the same licensed banks.
- Traders may use foreign currency in their accounts for payment in foreign currency and foreign currency bought of licensed banks to be transferred abroad to pay for contracts for purchasing goods.
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