Importer of Record Model in Vietnam: Legal Risks in Cross-Border E-Commerce

Cross-border e-commerce via Importer of Record: A familiar approach, but not necessarily the right one.

In recent years, when foreign businesses want to try their hand in the Vietnamese market, they often choose a relatively easy approach: instead of establishing a local company, they use a domestic business to import goods, often referred to as an Importer of Record (IOR).

This method sounds very reasonable. Goods are imported into Vietnam under the name of a domestic legal entity, then transferred directly to the warehouses of e-commerce platforms such as Shopee, Lazada, or TikTok to be sold to consumers. Meanwhile, the foreign party retains full control over operating the store, running advertisements, and collecting payments.

From a business perspective, this is clearly a neat and easy-to-implement option. It requires no large initial investment, no time spent setting up a system in Vietnam, and allows for quick sales.

But precisely because it’s so streamlined, this model creates problems. When examined closely from a legal perspective, it’s no longer just a matter of optimizing operations, but rather a sign that the original structure had discrepancies between the paperwork and the actual operation.

How the IOR Model Operates in Practice in Vietnam

To understand this, it’s best to look directly at how it’s being operated in the market. Typically, a Vietnamese business is listed on all import documents and receives the goods according to customs paperwork. After customs clearance, instead of going through traditional distribution channels, the shipment is almost directly transferred to the warehouses of e-commerce platforms to prepare for sale.

The key point is that the business listed as the importer is not the actual “seller.” They don’t manage the store, don’t determine prices, and don’t participate in collecting payments from buyers. These aspects are entirely handled by the foreign party.

In other words, one party is listed and responsible on paper, while another party is the one running the entire business operation. The gap between the “legal ownership” and the “actual operation” begins to form here, and that’s also what makes this model sensitive from a legal perspective.

The three core elements of a transaction are being separated.

If we look at a commercial transaction in its true nature, there will always be three elements together: goods, cash flow, and legal liability. Normally, these three elements should “go in the same direction,” as they reflect the same business entity. But in the IOR model, that connection is separated.

The goods are imported and registered under the name of a Vietnamese enterprise. At the same time, this enterprise also bears the related obligations such as taxes, compliance with regulations on goods, and liability for the product circulating in the market. However, the most important part—cash flow and the right to manage sales operations—does not lie with them, but with the foreign enterprise.

When these three elements, which should be unified within a single economic entity, are separated in this way, the transaction no longer reflects its original nature. And this is precisely what makes this structure inconsistent from a legal perspective in Vietnam.

The problem lies in the structure, not in the scale of operation.

A common misconception is that legal risks only arise when a business grows large. This is not the case. In many IOR models, the problem is inherent in the structure from the outset, even at a very small scale.

The law doesn’t look at the size of the business to assess compliance, but focuses on whether the paperwork accurately reflects the nature of the transaction. If the records show one entity as the owner, but the actual business operations are run by a different entity, that discrepancy is enough for regulatory authorities to question.

Therefore, this shouldn’t be understood as a “potential future” risk, but rather as a discrepancy that existed in the initial design of the model.

Perspective from Tax Authorities and Data Management Systems

In the current management context, data is no longer as isolated as before. Information from e-commerce platforms, payment systems, and customs records can all be connected and compared. When these data sources are placed side-by-side, the actual picture of the transaction becomes much clearer.

If the importing business is not the entity generating the revenue, while the money is transferred abroad, then the question of who is actually responsible for the tax is almost certainly raised.

From a management perspective, models with such structures are often seen as having high potential risks. Not because of the scale of operations, but because it is not clearly defined who is ultimately responsible in the entire transaction chain.

Why IOR Cannot “Fix” the Model

One commonly mentioned solution is to use import consignment contracts to make the structure more “valid” on paper. However, it is necessary to look at the essence: import consignment is not a mechanism to separate legal responsibility from actual business operations. When a business has signed on to importing goods, the responsibility associated with that role cannot be merely formal.

If the consignee does not actually control the goods, does not participate in the cash flow, and does not carry out the corresponding commercial activities, then their role in the transaction becomes skewed from the very legal nature it should reflect.

In such cases, even a complete consignment contract only solves the procedural part. It does not change how regulatory agencies assess the reality of the transaction, which is always based on its operational nature, not just its form.

It’s not just about importing, but also about business rights.

Besides being the importer, there’s another point that many models overlook or deliberately simplify: the right to conduct business in the Vietnamese market.

In reality, the law doesn’t combine import and sales into one entity. Importing simply means bringing goods into Vietnam. Selling to the market, organizing distribution, or operating the business is a different story. These two activities don’t automatically go hand in hand.

In the IOR model, this separation is quite clear. Domestic businesses usually only act as importers, handle paperwork, and are responsible on paper. They don’t actually participate in sales or business operations. The rest is handled by the foreign company. From how to bring products to market, implement sales, to the flow of revenue, everything is controlled externally.

The problem is that business operations take place right in Vietnam, but the entity carrying them out isn’t fully linked to the corresponding business rights within the country. This is where the discrepancy begins between “who does it” and “who has the right to do it.”

From a holistic perspective, it’s no longer simply a matter of assigning roles for operational convenience. It becomes a structure with a certain degree of disconnect between legal and practical aspects, and it is this disconnect that makes the model always require careful scrutiny when assessing compliance.

Conclusion: The problem lies not in the operation, but in the initial design.

In reality, many IOR models run quite smoothly in the early stages. Goods arrive regularly, orders are fulfilled, and cash flow is uninterrupted. Therefore, many businesses easily feel that everything is fine, even optimized.

However, from the perspective of regulatory authorities, the issue isn’t whether the model works or not. More importantly, it’s about whether the structure accurately reflects the nature of the transaction.

When goods are on one side, cash flow is on the other, and legal responsibility rests with a third party, the issue isn’t whether a problem arises, but that it existed from the very beginning. At that point, further optimization in the operational phase often doesn’t solve the root cause. What needs to be re-examined is the design of the model from the start, because even a slight structural error will become increasingly difficult to correct over time.

Businesses entering Vietnam’s e-commerce market should not only focus on operational efficiency, but also on building a structure that aligns with local legal requirements from the beginning.

At Green NRJ, we support companies in designing compliant market entry structures and selecting the right partners through our distribution solutions in Vietnam.