In the context of increasingly deep global economic integration, Vietnam continues to become an attractive destination for foreign direct investment projects. Alongside investment activities, the demand for transferring foreign currency abroad for payment purposes, profit remittance, or serving the production and business operations of FDI enterprises is also becoming increasingly common.
Accordingly, foreign currency transfers must strictly comply with Vietnamese regulations on foreign exchange management and investment. In the article below, Siglaw will analyze the cases in which FDI enterprises are permitted to transfer foreign currency abroad, as well as the relevant legal regulations.
Forms of Foreign Currency Transfer Abroad by FDI Enterprises
Pursuant to Article 2 of Circular No. 186/2010/TT-BTC, the Ministry of Finance provides guidance on the remittance of profits abroad by foreign organizations and individuals earning profits from direct investment activities in Vietnam in accordance with the Law on Investment. Accordingly, the remittance of profits in foreign currency may be carried out in the following two forms:
- Remittance of profits in accordance with the laws on foreign exchange management;
- Remittance of profits in kind, with the value of such assets converted in accordance with the laws on import and export of goods and other relevant legal regulations.
Accordingly, in addition to transferring profits in cash or via foreign currency bank transfer, FDI enterprises may also choose to remit profits in kind. In such cases, the enterprise must determine the value of the assets corresponding to the amount of profit to be remitted abroad. The form of profit remittance shall be proactively selected by the enterprise and clearly stated in the notification of overseas profit remittance in accordance with Article 5 of Circular No. 186/2010/TT-BTC.
The notification of overseas profit remittance must be prepared in accordance with the form issued together with Circular No. 186/2010/TT-BTC and submitted to the tax authority directly managing the foreign-invested enterprise.
The enterprise is required to submit such notification at least 07 working days prior to the date of the profit remittance. The notification must fully specify information relating to the profits to be transferred abroad, including the value remitted in cash or in kind.
When Are FDI Enterprises Permitted to Transfer Foreign Currency Abroad?
According to Vietnamese law, FDI enterprises are permitted to transfer foreign currency abroad in the following cases:
Payment for Commercial Transactions
Pursuant to Clause 1, Article 6 of Decree No. 70/2014/ND-CP, FDI enterprises are permitted to transfer foreign currency abroad for the payment of imported goods and services or for carrying out lawful international commercial transactions. Such payments must be made through foreign currency accounts opened in Vietnam.
To carry out such transactions, the enterprise must satisfy the following conditions:
- Having a foreign currency account opened at a licensed credit institution authorized to conduct foreign exchange activities in Vietnam;
- The remittance must be based on a lawful commercial contract executed with a foreign partner;
- Payment dossiers and supporting documents must be complete, transparent, and compliant with applicable legal regulations.
Remittance of Lawful Profits and Income
FDI enterprises are permitted to transfer abroad the lawful profits earned from their investment activities after fully fulfilling all financial obligations and tax liabilities in Vietnam in accordance with Circular No. 186/2010/TT-BTC and other relevant legal regulations.
Repatriation of Investment Capital
In cases where an FDI enterprise terminates its investment activities, reduces its charter capital, or transfers its investment project, foreign investors are permitted to transfer their lawful investment capital abroad.
Pursuant to Article 66 of the 2020 Law on Investment, investors may transfer investment capital abroad upon satisfying the following conditions:
- Having been granted an Offshore Investment Registration Certificate;
- The investment activity has been approved or licensed by the competent authority of the host country;
- Having an investment capital account in accordance with the regulations on foreign exchange management.
Remittance of Salaries, Bonuses, and Other Lawful Income
FDI enterprises are also permitted to transfer foreign currency abroad for the payment of lawful expenses, including:
- Salaries and bonuses for foreign experts or employees;
- Office or premises rental expenses;
- Technology transfer expenses.
Other lawful payments serving investment and business activities.
Pursuant to Article 9 of Decree No. 70/2014/ND-CP, where foreign investors wish to remit lawful revenues in Vietnamese Dong derived from direct investment activities in Vietnam abroad, they are entitled to purchase foreign currency from licensed credit institutions and transfer such amounts abroad within 30 working days from the date of purchasing the foreign currency.
Procedures for Transferring Foreign Currency Abroad by FDI Enterprises
Step 1: Prepare the Application Dossier
The dossier for transferring foreign currency abroad generally includes:
- Enterprise Registration Certificate or Investment Registration Certificate;
- Documents relating to the opening and use of the direct investment capital account;
- Audited financial statements (in cases of profit remittance);
- Written confirmation from the tax authority certifying the completion of tax obligations;
- Contracts, invoices, and supporting documents related to the remittance transaction.
Step 2: Submit the Dossier to the Bank
The enterprise shall submit the dossier to the bank where its investment capital account or foreign currency payment account is opened in order to carry out the remittance transaction. The bank will review the validity and completeness of the dossier before processing the overseas foreign currency transfer.
Step 3: Notify the Tax Authority
In cases of overseas profit remittance, the enterprise must send a notification of profit remittance to the directly managing tax authority at least 07 working days prior to the date of transfer.
Processing Time
In practice, if the dossier is complete and valid, the bank will usually process the transaction within approximately 03 to 05 working days.
Notes for FDI Enterprises When Transferring Foreign Currency Abroad
Enterprises should note:
- Fully comply with regulations on foreign exchange management and financial obligations;
- Prepare accurate and complete documentation as required;
- Select a bank licensed to conduct foreign exchange activities and experienced in handling international transactions;
- Seek advice from financial experts or lawyers in order to minimize legal risks.
- Remit after-tax profits abroad;
- Make payments under international contracts relating to goods, services, or technology;
- Repatriate investment capital or withdraw capital upon termination of the project;
- Repay foreign loans;
- Transfer lawful income of foreign investors or foreign experts abroad;
- Fulfill obligations under judgments or awards issued by courts or international arbitration tribunals.
FDI companies are required to open a direct investment capital account before transferring foreign currency. In accordance with Vietnamese law, FDI enterprises are required to open a direct investment capital account at a bank licensed to conduct foreign exchange activities in Vietnam. This account shall be used for all transactions relating to direct investment activities, including:
- Capital contribution for investment activities;
- Remittance of profits abroad;
- Repatriation or withdrawal of investment capital;
- Payment of foreign loans related to the investment project.
If you have any questions regarding the remittance of foreign currency abroad by FDI enterprises, please contact Siglaw Firm for comprehensive free consultation at the following address:
Head Office in Hanoi: No. 44/A32 – NV13, Area A Geleximco, Le Trong Tan Street, Tay Mo Ward, Hanoi, Vietnam.
Southern Branch: No. 103 – 105, Nguyen Dinh Chieu Street, Xuan Hoa Ward, Ho Chi Minh City.
Central Branch: VIFC DN – ICT Building, Software Park No. 2, Nhu Nguyet Street, Hai Chau Ward, Da Nang.
Email: vp@siglaw.com.vn
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