In the context of an increasingly expanded and deeply integrated global economy, the demand for foreign currency transactions by enterprises continues to rise. Purchasing foreign currency not only serves import-export activities but also supports various international transactions in business operations. However, enterprises are not free to buy, sell, or use foreign currency in all cases; they must comply with legal regulations and guidance from the State Bank of Vietnam.
So, what are the regulations and procedures for enterprise foreign currency transactions? Below, Siglaw provides a detailed overview:
What is Foreign Currency?
Pursuant to Point (a), Clause 1 of the 2005 Ordinance on Foreign Exchange and Clause 1, Article 2 of Circular 07/2012/TT-NHNN, foreign currency refers to the currency of another country or territory, the Euro, and other common currencies used in international and regional payments.
Foreign currency includes:
Payment instruments in foreign currency such as checks, payment cards, bills of exchange, promissory notes, and other payment instruments;
Valuable papers in foreign currency such as government bonds, corporate bonds, treasury bills, shares, and other valuable papers.
Cases Where Enterprises Are Allowed to Conduct Foreign Currency Transactions
Based on Article 4 of Circular 32/2013/TT-NHNN, Clause 1, Article 1 of Circular 16/2015/TT-NHNN, and Article 1 of Circular 03/2019/TT-NHNN, enterprises are permitted to use foreign currency in the following cases:
Internal capital transfers
Enterprises may transfer foreign currency internally between their accounts and those of dependent units such as branches or representative offices without legal status.
Capital contribution for foreign-invested projects in Vietnam
Enterprises may contribute capital in foreign currency via bank transfer to implement foreign-invested projects in Vietnam (e.g., joint ventures or business cooperation contracts) through direct investment capital accounts.
Provision of goods and services to non-residents
Enterprises may quote prices and receive payments in foreign currency via bank transfer when providing goods and services to non-residents.
(A non-resident is an organization or individual not falling under Clause 2, Article 4 of the 2005 Ordinance on Foreign Exchange, as amended in 2013.)
Salary payments to foreign employees
Enterprises may agree on and pay salaries, bonuses, and allowances in foreign currency (via transfer or cash) to foreign employees.
Transactions with export processing enterprises (EPEs)
- EPEs may quote, price, and settle transactions in foreign currency via bank transfer with other EPEs;
- Contracts may be denominated in foreign currency when purchasing goods domestically for production, processing, or export (except prohibited export goods).
Domestic enterprises may also quote prices and receive foreign currency payments when selling goods to EPEs.
Transactions with credit institutions
Enterprises may make foreign currency payments for foreign exchange services provided by banks, non-bank credit institutions, or foreign bank branches licensed in Vietnam.
Certain bidding activities
Domestic contractors may bid and receive payments in foreign currency for:
- Overseas expenses related to international bidding packages under the Law on Bidding;
- Oil and gas sector projects in accordance with specialized laws.
Payment of fees to foreign authorities
Enterprises may pay visa fees and other charges in foreign currency to foreign diplomatic or consular agencies in Vietnam.
Entrusted import-export services
- The enterprise entrusted with import authorization may state the contract value in foreign currency and receive payment in foreign currency from the entrusting party.
- The enterprise entrusted with export authorization may state the contract value in foreign currency and receive payment in foreign currency from the entrusting party.
Provision of foreign exchange services
Non-credit institutions authorized by the State Bank may conduct and list foreign currency transactions within their licensed scope.
Insurance business
Insurance enterprises may:
- Quote and receive payments in foreign currency for insurance services involving overseas reinsurance;
- Receive compensation in foreign currency from foreign reinsurers to cover overseas losses.
Duty-free business
Duty-free enterprises may list prices and receive payments in foreign currency in accordance with Decree 167/2016/ND-CP.
Services in isolated areas and bonded warehouses
Enterprises operating in international border gate isolation areas or bonded warehouses may quote and receive payments in foreign currency.
Transport agency services
Enterprises acting as agents for foreign carriers may:
- Quote international freight charges in foreign currency;
- Make payments in foreign currency for goods/services at international seaports or airports;
- Pay salaries and bonuses to non-residents under authorization.
Aviation, hospitality, and tourism sectors
Enterprises may list or advertise prices in Vietnamese Dong alongside converted foreign currency on foreign-language publications or websites.
Other necessary cases
For sectors related to defense, security, oil and gas, or other special cases, enterprises may conduct foreign currency transactions in Vietnam upon written approval from the State Bank.
Procedures for Enterprise Foreign Currency Transactions
To ensure compliance with legal regulations, enterprises should follow these basic steps:
Step 1: Prepare documents and transaction details
Enterprises must prepare necessary information, including the amount, currency type, transaction purpose, and supporting documents required by the bank to prove legitimate demand.
Step 2: Conduct transactions with a bank
Transactions may be carried out via e-banking platforms or directly at licensed bank branches.
Step 3: Verify transaction information
Enterprises should carefully review transaction details such as amount, exchange rate, currency type, and account information before confirmation.
Step 4: Authenticate and complete the transaction
Banks will require authentication (e.g., OTP or other security methods) to ensure safety and legality.
Step 5: Retain transaction documents
Enterprises should keep all related documents such as receipts, confirmation emails, contracts, and payment records for accounting, tax declaration, and inspection purposes.
Penalties for Illegal Foreign Currency Transactions
According to Article 23 of Decree No. 88/2019/ND-CP on administrative sanctions in the monetary and banking sector, violations relating to illegal foreign currency trading and payment may be sanctioned as follows:
Warning
- Buying or selling foreign currency at unauthorized foreign exchange establishments with a value below USD 1,000 or its equivalent;
- Making payment for goods or services in foreign currency in violation of regulations with a value below USD 1,000 or its equivalent.
Fines from VND 10,000,000 to 20,000,000
Applicable to:
- Illegal purchase or sale of foreign currency valued from USD 1,000 to under USD 10,000;
- Repeated violations or multiple violations involving amounts below USD 1,000;
- Payment in foreign currency not in compliance with regulations with a value from USD 1,000 to under USD 10,000.
Fines from VND 20,000,000 to 30,000,000
Applicable to:
- Illegal foreign currency trading valued from USD 10,000 to under USD 100,000;
- Payment in foreign currency not in compliance with regulations within the same value range;
- Trading foreign currency at incorrect exchange rates or charging foreign currency transaction fees contrary to regulations.
Fines from VND 30,000,000 to 50,000,000
Applicable to acts of quoting prices, listing prices, advertising, stating prices in contracts, or conducting similar transactions in foreign currency contrary to legal regulations.
Fines from VND 80,000,000 to 100,000,000
Applicable to:
- Illegal foreign currency trading valued at USD 100,000 or more;
- Payment for goods or services in foreign currency in violation of regulations with an equivalent value.
Fines from VND 100,000,000 to 150,000,000
Applicable to the failure to sell foreign currency proceeds to credit institutions as required by law.
Fines from VND 150,000,000 to 200,000,000
Applicable to foreign exchange transactions conducted between credit institutions, or between credit institutions and customers, in violation of regulations issued by the State Bank of Vietnam.
If you have any questions regarding foreign currency trading by enterprises, please contact Siglaw Firm for comprehensive and free consultation:
Head Office – Hanoi: No. 44/A32 – NV13, Block A Geleximco, Le Trong Tan Street, Tay Mo Ward, Hanoi.
Southern Branch – Ho Chi Minh City: No. 103–105, Nguyen Dinh Chieu Street, Xuan Hoa Ward, Ho Chi Minh City.
Central Branch – Da Nang: VIFC DN – ICT Building, Software Park No. 2, Nhu Nguyet Street, Hai Chau Ward, Da Nang.
Email: vp@siglaw.com.vn
Hotline: 0961 366 238
Facebook: https://www.facebook.com/hangluatSiglaw
