A commercial agency contract in Vietnam is an agreement under which the agent, acting in its own name, sells or buys goods for the principal, or supplies the principal's services to customers, in return for remuneration (Article 166 of the Law on Commerce 36/2005/QH11, consolidated text 113/VBHN-VPQH of 2025). Both parties must be traders, the contract must be in writing or an equivalent form, and the goods handed to the agent remain the principal's property (Articles 167, 168 and 170). Almost every other rule on agency applies only "unless otherwise agreed", including the indemnity the agent can claim when the principal ends the relationship. What the contract says therefore decides most outcomes.
For a foreign supplier, a commercial agency contract in Vietnam is a way to sell into the market before setting up a company. This guide covers how agency differs from distribution, what to draft, what termination costs, and the licensing and tax points that apply when the principal is abroad or the agent is foreign-invested. It uses the texts in force on publication, including Decree 342/2026/ND-CP on trading by foreign-invested companies, which replaced Decree 09/2018/ND-CP on 18 October 2026. Insurance agents, tax agents and shipping agents follow their own laws and are not covered: a specialised commercial activity regulated by another law follows that law (Article 4(2) of the Law on Commerce).
What is a commercial agency contract in Vietnam?#
Four features, all drawn from Articles 166 to 171, define a commercial agency contract in Vietnam:
- The agent deals in its own name. Customers contract with the agent, not with the principal. Some English summaries say the agent acts "in the name of the principal"; that describes a different relationship, the commercial representative (Article 141), not agency.
- Both parties are traders (Article 167): a lawfully established economic organisation, or an individual trading independently and regularly with a business registration (Article 6(1)). A salesperson paid commission without a business registration is unlikely to qualify as a commercial agent under the Law on Commerce.
- Title does not pass to the agent (Article 170).
- The agent is paid by commission or by a price margin (Article 171(1)).
"Equivalent form" includes data messages (Article 3(15)), so e-signature works. The Law on Commerce does not require notarisation or registration of an agency agreement in Vietnam. Where it is silent, the Civil Code applies (Article 4(3)). In a contract with a foreign element, the parties may choose foreign law or international commercial practice if it does not contravene the fundamental principles of Vietnamese law (Article 5(2)).
Commercial agency contract in Vietnam vs distribution and other intermediaries#
The Law on Commerce lists four commercial intermediary activities: commercial representation, brokerage, sale and purchase by entrustment, and commercial agency (Article 3(11)). Many arrangements called "distribution" are in fact buy-sell contracts. The label on a commercial agency contract in Vietnam does not change its legal nature, but the model you choose decides who sets resale prices, who carries unsold stock, what happens on termination, and, as shown below, how the foreign supplier is taxed.
| In whose name the intermediary deals | Who owns the goods | On termination | |
|---|---|---|---|
| Commercial representative | The principal's (Article 141(1)) | Not applicable | If the principal terminates unilaterally, the representative may claim remuneration for deals it would have earned (Article 144(3)) |
| Broker | Does not deal; brings the parties together to sign (Article 150); fee earned when they sign, unless agreed otherwise (Article 153(1)) | Not applicable | No specific rule |
| Entrustment (buying or selling agent for a single transaction) | The entrusted party's (Article 155); the entrusting party need not be a trader (Article 157) | No specific article | No specific rule |
| Commercial agent | The agent's (Article 166) | The principal (Article 170) | 60-day notice and indemnity based on years of service (Article 177) |
| Distributor (buy-sell) | The distributor's | Passes to the buyer (Article 3(8)) | As agreed; no statutory indemnity |
In practice, an agent is not a buyer: if the agent becomes insolvent, unsold goods still belong to the principal, but the principal answers for the quality of the goods (Article 173(2)). A buy-sell distributor carries the stock risk and is outside Article 177. For a buy-sell contract with a foreign seller, see our guide to the international sale of goods contract in Vietnam; for an umbrella agreement governing future orders, see framework agreement in Vietnam.
Exclusive, guaranteed-sale and general agency#
Article 169 names three forms and lets the parties agree others (clause 4). One contract can combine them.
Guaranteed-sale agency ("bao tieu" agency in Vietnamese practice): the agent buys or sells the whole of a quantity of goods, or supplies a service in full, for the principal (Article 169(1)). This agent may set the resale price (Article 174(4)) and usually earns a margin. The goods remain the principal's until sold, so the contract should say what happens to unsold stock: returned, bought by the agent, or treated as sold. The law gives no answer.
Exclusive agency: within a defined territory the principal appoints only one agent for one or more items or services (Article 169(2)). The definition binds only the principal not to appoint another agent there. It does not by itself stop the principal from selling direct or online into the territory, and it does not stop the agent from carrying competing products: by default an agent may contract with several principals (Article 174(1)), unless a specific law requires a single principal (Article 175(7)). Both restrictions must be written in.
General agency: the agent runs its own network of sub-agents, which operate under its management and in its name (Article 169(3)). The principal usually contracts only with the general agent, so it needs rules on sub-agent standards and audit rights down to the point of sale.
Key clauses of a commercial agency contract in Vietnam#
The law sets no mandatory contents for an agency agreement in Vietnam. The rights and duties in Articles 172 to 175 apply only where the contract is silent, so the clauses below are where a principal or agent protects itself.
1. Parties, products, form of agency. Exact legal names, enterprise codes, signatories and their authority; a product schedule that can be updated by appendix; the form of agency. Check that the agent's registered business lines cover the activity, and, if the agent is foreign-invested, its licence (see below).
2. Territory, exclusivity, channels. Define the territory (provinces, cities or named accounts) and channels (stores, e-commerce platforms, public tenders); whether the principal may sell direct into the territory; whether the agent may carry competing goods during and after the term; minimum sales targets and the consequence of missing them (loss of exclusivity, smaller territory, termination).
3. Prices and remuneration. The principal may fix the resale price and the price at which it supplies the agent (Article 172(1) and (2)); the agent must sell at the fixed price (Article 175(1)), while a guaranteed-sale agent sets its own price (Article 174(4)). Remuneration follows the pricing (Article 171):
| What the principal fixes | Agent's remuneration |
|---|---|
| The resale price to customers | Commission as a percentage of that price (clause 2) |
| Only the price to the agent | The margin between the resale price and the price to the agent (clause 3) |
| Nothing agreed on remuneration | In order: the amount previously paid; the average paid to other agents for the same goods; the usual market rate (clause 4) |
State whether commission is calculated before or after VAT, how returns and customer discounts are treated, volume bonuses, and who bears marketing and freight. By default the principal pays the agent's remuneration and other reasonable costs (Article 173(3)); exclude costs expressly if you do not intend to cover them.
4. Delivery, risk, security. The agent must keep the goods safe after receipt (Article 175(5)), but the law does not allocate risk of loss from events outside the agent's control; do so in the contract and require insurance for valuable stock. The principal may require security such as a deposit or guarantee (Article 172(3)) and must return it at the end (Article 173(4)).
5. Payment and reporting. By default, sale proceeds and remuneration are settled in instalments after each quantity of goods is sold (Article 176). If you want monthly reconciliation, say so, with a remittance deadline and late-payment interest. The agent must accept inspection and report (Article 172(5); Article 175(6)); attach the report format and stock-count rights.
6. Quality, confidentiality, trademarks. The principal answers for quality and the agent is jointly liable where at fault (Article 173(2); Article 175(5)). The principal is also jointly liable for the agent's breaches of law where partly at fault (Article 173(5)). There is no default confidentiality duty for agents like the two-year duty of a commercial representative (Article 145(5)), so add a confidentiality clause or a separate NDA, and a licence for use of the principal's trademarks.
7. Penalties and damages. A penalty applies only if agreed (Article 300) and is capped at 8% of the value of the breached obligation (Article 301). Where a penalty is agreed, the injured party may claim both the penalty and damages (Article 307(2)), covering actual, direct loss and the direct profit it would have earned (Article 302(2)). See penalty for breach of contract in Vietnam and force majeure in Vietnam.
8. Disputes. Negotiation, mediation, arbitration or court (Article 317). Arbitration covers disputes arising from commercial activities (Article 2 of the Law on Commercial Arbitration) under a written arbitration agreement (Article 16); see commercial arbitration in Vietnam. The limitation period for commercial disputes is two years from the infringement (Article 319).
Ending a commercial agency contract in Vietnam: notice and termination indemnity#
Article 177 contains three rules; clauses 1 and 2 apply "unless otherwise agreed":
- The agency ends only after a reasonable period, and not earlier than 60 days after one party notifies the other in writing (clause 1).
- If the principal gives notice, the agent may claim an indemnity of one month's average remuneration for each year of service; for less than a year, one month (clause 2).
- If termination is at the agent's request, the agent has no such claim (clause 3).
The indemnity in clause 2 does not depend on any fault of the principal. It arises simply because the principal is the one ending the relationship. Suppliers should not assume the rules of their home jurisdiction apply.
Worked example (an illustration built by LexData, not a client matter). A foreign supplier appoints Company B as exclusive agent from 1 March 2023; the contract says nothing else about termination. On 1 September 2026 the supplier serves written notice. B's average remuneration over the agency has been VND 40 million per month.
- The agency ends no earlier than 31 October 2026, 60 days after notice, and later if a "reasonable period" in the circumstances is longer.
- B's service is three years and six months counted to the notice date, or almost three years and eight months counted to the end date; the law does not say which date counts. Three full years give 3 x 40 = VND 120 million.
- The part year is not addressed: clause 2 speaks only of "each year" and of service under one year. Possible readings are to ignore it (VND 120 million), round up (VND 160 million) or pro-rate (about VND 140 to 147 million depending on the end point). No official guidance picks one, so the contract should set the formula.
When drafting:
- State expressly whether the Article 177 indemnity applies, or replace it with your own formula. A vague "either party may terminate at any time" is a weak substitute for a clear waiver of the termination indemnity.
- Separate termination for breach (missed targets, late remittance, selling outside the territory) from termination for convenience, with consequences for each. Article 177 has no exception for an agent in breach; whether suspending or cancelling the contract for the agent's fundamental breach (Articles 310 and 312) removes the indemnity is not settled by the text.
- For a fixed-term contract: Article 177 does not distinguish fixed and indefinite terms. In LexData's view, early termination without a contractual ground may also be a breach of contract. Whether expiry of the term counts as "notice by the principal" is not addressed either; say so in the contract.
- List post-termination steps: return of stock and security, final reconciliation, end of trademark use, open orders.
Exclusivity, resale prices and competition law#
Several familiar clauses in a commercial agency contract in Vietnam match the list of anti-competitive agreements in Article 11 of the Competition Law 23/2018/QH14: fixing prices (clause 1), sharing markets or customers (clause 2), refusing to deal with outsiders (clause 9). The risk depends on the parties' positions:
- Supplier and agent at different stages of the same distribution chain: the agreements in clauses 1, 2, 3 and 7 to 11 of Article 11 are prohibited only where they have, or may have, a significant restrictive effect (Article 12(4)), judged on market share, entry barriers and other factors (Article 13(1)).
- Two competitors in the same relevant market appointing each other as agents and then splitting territories or aligning prices: prohibited without any need to show significant effect (Article 12(1)).
- A prohibited agreement can obtain a time-limited exemption if it benefits consumers and meets one of the conditions in Article 14(1), on an application filed with the National Competition Commission before implementation (Article 15).
LexData's view: in a genuine agency, where the goods remain the principal's and the agent carries no stock risk, the principal's right to set prices comes from the Law on Commerce (Article 172(1)). But the Competition Law has no carve-out for agency, so price and territory clauses cannot be treated as automatically safe, especially where a so-called agent actually buys the goods and is still told what to charge. Exclusive agency contracts of suppliers with large market shares, combined with long non-compete clauses, deserve a separate competition review. The 15% market-share safe harbour for vertical agreements, relevant to supplier-agent clauses in a commercial agency contract in Vietnam (Article 11(3)(b) of Decree 35/2020/ND-CP), and the ban on a dominant supplier fixing a minimum resale price that harms customers (Article 27(1)(b) of the Competition Law) are covered in our guide to the distribution agreement in Vietnam.
A commercial agency contract in Vietnam with a foreign principal#
A foreign principal appointing a Vietnamese agent. A Vietnamese trader may act as buying or selling agent for a foreign trader, except for goods on the lists of goods banned from or suspended for export or import; for goods exported or imported under licence, the agency contract may be signed only after the licence is issued (Article 50(1) of Decree 69/2018/ND-CP). A buying agent must ask the foreign principal to remit freely convertible currency through a bank (Article 50(3)). The goods clear customs as ordinary imports or exports and bear Vietnamese taxes, which the Vietnamese trader declares and pays (Articles 51 and 52). Goods the agent cannot sell in Vietnam may be re-exported (Article 53). Conversely, a Vietnamese trader may appoint a foreign trader as its selling agent abroad (Article 54).
A foreign company needs a presence to act as agent in Vietnam itself. The agent is the trader that receives goods to sell or money to buy (Article 167(2) of the Law on Commerce). A foreign trader is present in Vietnam through a representative office, a branch or a foreign-invested company (Article 16(2)), and a representative office may not carry on directly profit-generating activities (Article 18(1)). To act as an agent, the foreign party therefore needs a branch or a foreign-owned company.
A foreign-invested company acting as agent: check Decree 342/2026. Decree 342/2026/ND-CP treats agency for the sale of goods as distribution (Article 3(6)): wholesale agency is wholesale and retail agency is retail (Article 3(8) and (9)).
| The foreign-invested company acts as | What it needs | Basis |
|---|---|---|
| Retail agent for goods | A business licence, plus a retail outlet licence if it sells from a store | Article 5(1)(a) and (c); Article 5(2) |
| Wholesale agent | Registration of the activity in its investment or enterprise registration documents; no business licence | Article 6(1) |
| Wholesale agent for petroleum-based lubricants and greases | A business licence | Article 5(1)(b); Article 9(4)(c) |
| Agent for rice, sugar, recorded media, books, newspapers and magazines | Goods not opened under Vietnam's treaties; the Decree only provides for a retail right at the company's own convenience stores, mini-supermarkets or supermarkets, so ask the licensing authority first | Article 9(4)(d) |
| Other commercial intermediary services (excluding wholesale and retail agency for goods) | A business licence | Article 3(3)(dd); Article 5(1)(g) |
Buying agency and service agency are not within the definitions of wholesale and retail, so in LexData's reading they may fall under commercial intermediary services and need a licence. Confirm with the licensing authority, the provincial People's Committee where the company has its head office (Article 8(1)), before signing. See our business licences service.
Tax for the foreign principal. Signing a commercial agency contract in Vietnam does not take the foreign supplier outside Vietnamese tax:
- An "agent for a foreign enterprise" is one of the listed forms of permanent establishment (Article 2(3)(d) of the Law on Corporate Income Tax 67/2025/QH15). The wording stops there: unlike most tax treaties, it does not distinguish dependent from independent agents. A foreign enterprise with a permanent establishment is taxed on income arising in Vietnam and on foreign income connected with it (Article 2(2)(b)). The treaty between Vietnam and the principal's country may define an agency permanent establishment more narrowly; check the treaty concerned.
- Circular 20/2026/TT-BTC applies corporate income tax under the foreign contractor rules to a foreign organisation that supplies and distributes goods in Vietnam, including by authorising or engaging a Vietnamese party for part of the distribution, where it still owns the goods delivered to the Vietnamese party, or bears distribution, advertising or quality costs, or fixes the selling price (Article 7(1)(b)). Those are the defining features of agency under Articles 170 and 172 of the Law on Commerce. Negotiating and signing contracts in the foreign enterprise's name through a Vietnamese party is also covered (Article 7(1)(d)). A plain sale delivered at a border gate, without services in Vietnam, is outside the scope (Article 7(2)(a) and (b)).
See foreign contractor tax in Vietnam for rates and filing. When comparing an agency with a subsidiary, include this tax cost, not only set-up costs.
VAT on the agent's commission. For agency paid by commission, the agent's VAT base is the commission excluding VAT (Article 7(1)(i) of the Law on VAT 48/2024/QH15). No VAT is computed on goods received for sale and on commission in listed cases: agents selling at the principal's price for postal, telecom, lottery, air, coach, rail and ship tickets; international transport agents; aviation and maritime agency services at 0%; insurance sales agents; agency for VAT-exempt goods and services (Article 9(1) of Decree 181/2025/ND-CP, point (b) as amended by Decree 144/2026/ND-CP from 20 June 2026). For margin-based agents and the invoicing flow between principal, agent and customer, agree the process with your accountant and the tax office before go-live.
Quick answers#
Does an agent that resigns owe the principal anything? It loses the termination indemnity (Article 177(3)) and must still give notice under clause 1. It owes damages only if it breaches the contract, for example by walking away without notice.
Is there an official template? No. The Law on Commerce provides none. If you use a template, check that it deals with the points the law leaves open: the part-year in the indemnity, direct sales into an exclusive territory, unsold stock in guaranteed-sale agency.
If you are setting up a dealer network in Vietnam or weighing an agent against a buy-sell distributor or a subsidiary, our commercial contracts service covers drafting and review of a commercial agency contract in Vietnam or any other agency agreement in Vietnam.
