Profits allowed to be transferred abroad are profits that foreign-invested enterprises have from lawful profits divided or earned from direct investment activities in Vietnam according to the Investment Law, after fulfilling financial obligations to the State of Vietnam. A company’s profit may only be distributed to its members after its tax liabilities and other financial obligations have been fulfilled as prescribed by law and it is able to fully pay its due debts and other liabilities after profit is distributed.

PROFITS WHICH ARE REMITTED ABROAD

• Profits from Vietnam remitted abroad by foreign investors are legal profits that are shared or earned from direct investment activities in Vietnam under the Investment Law after finishing fully financial obligations with the Vietnam State under regulations.
• Profits from Vietnam may be remitted abroad in cash or in kind.
• Profits are remitted abroad in cash in accordance with the law on foreign exchange management. The investors shall use foreign currency accounts of direct investment for the transfer of profits and other legal receipts in foreign currency out of Vietnam;  
• Profits are remitted abroad in kind and converted of objects’ value in accordance with the law on goods import and export and the provisions of relevant laws.

DETERMINATION THE NUMBER OF PROFITS REMITTED ABROAD

• Annual profits remitted abroad mean profits foreign investors are shared or earn in a financial year from their direct investment based on audited financial statements, enterprise income tax balance sheets in which foreign investors join investment plus (+) other profit items example as profit items have not remitted yet from previous years adding this year; minus (-) profit items foreign investors have used or committed using in order to reinvest in Vietnam, the profit items foreign investors have used to pay for expenditure items of foreign investors for production and business activities or for foreign investors’ personal demands in Vietnam.
• Profits remitted abroad when investment activities in Vietnam are over shall be the total profits earned by foreign investors in the process of direct investment in Vietnam, minus (-) profit items that have been used for reinvestment, the profit items were remitted abroad during foreign investors’ operation period in Vietnam and the items have been used for other expenditures of foreign investors in Vietnam
• Foreign investors shall not be allowed to remit abroad profits they are shared or earned from their direct investment in Vietnam in a raised profit year in case the year financial statements of enterprises in which they make investments and raise profits still contain accumulated losses after such losses have been carried forward under the law on enterprise income tax.

TIME FOR PROFITS REMITTANCE ABROAD

Annual profits remittance abroad

Foreign investors can annually remit abroad profits they shared or earned from their direct investment in Vietnam when fiscal year is over after enterprises in which foreign investors join investment have completed financial obligations to the State of Vietnam under the provisions of law and submitted audited financial statements and enterprise income tax finalization declarations of that year to direct managing tax offices.

Profits remittance abroad when finished direct investment activities in Vietnam

Foreign investors can remit abroad profits when finish direct investment activities in Vietnam after enterprises in which foreign investors join investment have accomplished financial obligations towards the Vietnam State under law, submitted audited financial statements and enterprise income tax finalization declarations to direct managing tax offices and implement fully all the obligations under the Law on Tax Administration.

NOTIFICATION OF PROFITS REMITTANCE ABROAD

At least 7 working days before the profit is remitted abroad, foreign investors may directly make or authorize enterprises in which they joined investment to make notices on the profits remittance abroad according to the adopted forms and send them to direct managing tax offices of the enterprise in which foreign investors join investment. 

The content of the notification form to transfer profits abroad must provide complete, accurate, and detailed information as follows:

• Foreign investor (name, nationality)
• Enterprises with foreign investors participating in capital investment;
• Register investors’ profits transferred abroad;
• Amount of profit proposed to be transferred abroad;
• The investor’s commitment that the information in the notification form is completely true. If it is untrue, you will be responsible in accordance with the law.

TAX ON INVESTMENT CAPITAL PRIOR PROFITS REMITTANCE ABROAD

Important notes: The investors are not only required to comply with all the local business regulations, and pay corporate income tax, but the investors shall pay tax for incomes from capital investment, the tax rate on the income from capital investment is 5% according to the whole income tax table.

Incomes from capital investment are personal income in the form of:

• Interest on the loans given to other organizations, enterprises, business households, business individuals and groups of business individuals according to loan contracts or agreements, except for the interests paid by credit institutions and branches of foreign banks. 
• The dividends earned from capital contribution to purchase of shares.
• Profits from capital contributions to limited liability companies (including single-member limited liability companies), partnerships, cooperatives, joint ventures, business cooperation contracts, and other forms of business according to the Law on Enterprises and the Law on Cooperatives; profits from capital contribution in the establishment of credit institutions according to the Law on credit institutions, capital contributions to securities investment fund and other investment funds that are established and operated within the law. 

Read more:

• Doing business in Vietnam – manage your capital and money
• Account for payment, withdrawals capital of foreigners who invest directly in Vietnam – what you need to know
• How to remit profits earned by foreign investors who are doing business in Vietnam to their home country
• How to manage a company’s compliance procedures in Vietnam
• Doing business in Vietnam – Statutory audit of financial statements
• Capital contribution for establishment of a company – What you need to know
• Doing business in Vietnam – Direct investment capital account
• Requirements for taking foreign loans applied to FDI companies – Foreign loans subject to registration with the state bank
• Tax management – tax planning in Vietnam – properly comply to optimize your long term business
• FDI companies in Vietnam – managing the required compliance procedures
• Internal Audit – What you need to know