Account For Payment, Withdrawals Capital Of Foreigners Who Invest Directly In Vietnam – What You Need To Know

Account For Payment, Withdrawals Capital Of Foreigners Who Invest Directly In Vietnam – What You Need To Know

Account For Payment, Withdrawals Capital Of Foreigners Who Invest Directly In Vietnam – What You Need To Know

Account For Payment, Withdrawals Capital Of Foreigners Who Invest Directly In Vietnam – What You Need To Know

Account For Payment, Withdrawals Capital Of Foreigners Who Invest Directly In Vietnam – What You Need To Know

There is only a business Law system for both local and foreign investors to do business in Vietnam, to deals with the establishment, organization, restructuring, dissolution, and relevant activities of enterprises, including limited liability companies, joint-stock companies, partnerships, invested capital, sole proprietorships, and groups of enterprises. We would like to introduce to you key topics to know about the business regulations in Vietnam:

It would be our pleasure to share with you any query or question about the terms and conditions as well as practical cases which we have been experiencing since the years 2000, where the first law on enterprise has allowed the private sector to born thrive.

ACCOUNT FOR PAYMENT, WITHDRAWALS CAPITAL OF FOREIGNERS WHO INVEST DIRECTLY IN VIETNAM – WHAT YOU NEED TO KNOW

BASED ON CIRCULAR

No.19/2014/TT-NHNN – Hanoi, August 11, 2014

Vietnam of The State Bank of Vietnam

Regarding the foreign exchange management for the foreign direct investment activities in Vietnam, including invested capital contribution, opening and use of foreign currency and Vietnamese dong accounts of direct investment, transfer of invested capital, profits, and legal revenues to foreign countries, transmission of investments in the pre-investment stage.

Residents who are enterprises receiving the direct foreign investment, Non-residents involved in the business cooperation agreement in Vietnam, Non-residents who are foreign investors of FDI enterprises, Organizations, individuals regarding the foreign direct investment in Vietnam shall follow these regulations.

GENERAL RULES

  • FDI enterprises and foreign investors must abide by investment laws, current regulations on the foreign exchange management.
  • The invested capital contribution of foreign and Vietnamese investors into an FDI enterprise must be performed in the form of money transfer to the direct investment accounts.
  • The use of foreign investors’ dividends in the territory of Vietnam must comply with current regulations on foreign exchange management and other Vietnam laws.
  • Transfer of the ownership of invested capital in foreign investment enterprises and investment projects of foreign investors must comply with the Investment Law, Enterprise Law, Personal Income Tax Law, Corporate Income Tax Law, guiding documents of these laws, current regulations on foreign exchange management and other relevant laws.
  • Payment for the ownership transfer of the value of invested capital and investment projects through the money transfer process must ensure compliance with current regulations on foreign exchange management and other relevant laws.
  • Foreign investors are entitled to use their legal revenues in Vietnamese dong or foreign currency generated from their foreign direct investment activities in Vietnam to serve the reinvestment purpose in Vietnam.

OPENING OF FOREIGN CURRENCY AND VIETNAMESE DONG ACCOUNTS OF DIRECT INVESTMENT

  • In order to perform the foreign direct investment activities in Vietnam, foreign investment entities are entitled to open their foreign currency and Vietnamese dong account of direct investment at 01 (one) authorized bank for the purpose of their receipt and expenditure transactions.
  • Foreign investment entities are eligible to open the account of chosen foreign currencies for their invested capital contribution.
  • With respect to the chosen foreign currency that serves as the invested capital, foreign investment entities are only allowed to open 01 (one) direct investment account in that foreign currency for their invested capital contribution.
  • If the currency of overseas loans does not correspond to the currency that FDI enterprises use to open their direct investment accounts, these FDI enterprises are entitled to open other direct investment accounts of the loan currency at authorized banks where they have already held direct investment accounts in order to perform their receipt and expenditure transactions regarding foreign loans and other transactions regulated.
  • In the event of an investor wishing to open the direct investment account at another authorized bank, foreign investment entities must close their existing accounts and all account balances are brought forward to new accounts.  Procedures for the opening and closing of direct investment accounts must adhere to regulations of authorized banks.  Foreign investment entities are only allowed to perform their receipt and expenditure transactions on new direct investment accounts after completing the closing, clearing, and settlement of old direct investment accounts.

INVESTED CAPITAL CONTRIBUTION

  • Foreign and Vietnamese investors in an FDI enterprise are eligible to contribute their invested capital in foreign currency or Vietnamese dong with an amount specified in the Investment Certificate.
  • Residents as Vietnamese investors in an FDI enterprise are allowed to contribute their invested capital by means of their legal sources of personal foreign currency.

USE OF FOREIGN CURRENCY ACCOUNTS OF DIRECT INVESTMENT

Foreign currency accounts of direct investment are used to perform receipt and expenditure transactions regarding the following direct investment activities:

Receipt:

  • An amount of directly invested capital in foreign currency from foreign and Vietnamese investors contributed into FDI enterprises.
  • Direct investment withdrawals in foreign currency from domestic and overseas term loan of an FDI enterprise.
  • The payment amount for the ownership transfer of the value of invested capital and investment projects.
  • An amount of foreign currency from foreign currency demand accounts of FDI enterprises and foreign investors opened at authorized banks.
  • Other legal receipts in foreign currency generated from the foreign direct investment activities in Vietnam.

Expenditure:

  • Payment of principals, interests, and charges for FDI enterprises’ term loans in foreign currency,
  • Transmission of foreign currency amounts to foreign currency demand accounts of FDI enterprises and foreign investors, opened at authorized banks,
  • Sale of foreign currency amounts to authorized credit institutions which are used to deposit into Vietnamese dong demand accounts of FDI enterprises and foreign investors,
  • Payment for the ownership transfer of the value of invested capital and investment projects,
  • Payment for the transfer of profits and other legal receipts in foreign currency, generated from their foreign direct investment activities, out of Vietnam,
  • Payment for the transfer of foreign investors’ direct invested capital in foreign currency out of Vietnam in case of FDI enterprises’ dissolution or termination, transfer of the ownership of invested capital and investment projects, reduction in invested capital or completion, liquidation, and termination of investment projects as stipulated by investment laws,
  • Other legal receipts paid in foreign currency regarding the foreign direct investment activities in Vietnam.

USE OF VIETNAMESE DONG ACCOUNTS OF DIRECT INVESTMENT

Vietnamese dong accounts of direct investment are used to perform receipt and expenditure transactions regarding the following direct investment activities:

Receipt:

  • An amount of directly invested capital in Vietnamese dong from foreign and Vietnamese investors of FDI enterprises,
  • Vietnamese dong after-tax profits distributed to foreign and Vietnamese investors of FDI enterprises in order to perform their reinvestment activities in Vietnam,
  • Principal withdrawal on domestic term loans of FDI enterprises in Vietnamese dong to perform their investment activities in Vietnam,
  • Principal withdrawal on overseas Vietnamese dong loans of FDI enterprises who are entitled to receive foreign loans in Vietnamese dong according to current laws on the receipt and repayment of foreign loans of enterprises that are not pledged by the Government,
  • Payment amounts on the ownership transfer of the value of invested capital and investment projects,
  • An amount transferred from Vietnamese dong demand accounts of FDI enterprises and foreign investors opened at authorized banks.

Expenditure:

  • An amount transferred from Vietnamese dong demand accounts of FDI enterprises and foreign investors opened at authorized banks.
  • Vietnamese dong profits distributed to foreign and Vietnamese investors of FDI enterprises,
  • Payment of principals, interests and charges on domestic term loan of FDI enterprises in Vietnamese dong to develop their investment projects,
  • Payment of principals, interests and charges on overseas term loan of FDI enterprises in Vietnamese dong, who are eligible to be granted overseas loans in Vietnamese dong according to current laws on overseas loan receipt and repayment of enterprises that are pledged by the Government,
  • An amount paid for the monetary value received from the transfer of the ownership of invested capital and investment projects,
  • Repayment of invested capital in Vietnamese dong to foreign and Vietnamese investors of FDI enterprises in case of FDI enterprises’ dissolution or termination, transfer of their ownership of invested capital and investment projects, reduction in invested capital or completion, liquidation, and termination of investment projects as stipulated by investment laws,

TRANSFER OF INVESTED CAPITAL, PROFITS AND LEGAL RECEIPTS TO FOREIGN COUNTRIES

  • Foreign investors are allowed to move their direct investments overseas in case of dissolution, termination of FDI enterprises, reduction in invested capital or completion, liquidation, and termination of investment projects and business cooperation agreement according to legal regulations on investment, principles, interests and expenses of overseas loans, profits and relevant legal receipts regarding the direct investment activities in Vietnam through their direct investment accounts.
  • If FDI enterprises must close their direct investment accounts due to dissolution or termination, transfer of the ownership of invested capital which results in the change in the initial legal status of these FDI enterprises, foreign investors have the right to use their foreign currency and Vietnamese dong accounts opened at authorized banks to purchase foreign currency, transfer their direct investments and legal earnings overseas.
  • Foreign investors are entitled to use their legal revenues in Vietnamese dong generated from their foreign direct investment activities in Vietnam to purchase foreign currency at authorized credit institutions and move this foreign currency amount overseas within a period of 30 working days from the date on which foreign currency procurement is completed.

INVESTED CAPITAL TRANSFER FOR THE PRE-INVESTMENT STAGE

  • Transfer invested capital to Vietnam before obtaining the investment certificate:
  • Before obtaining the investment certificate, foreign investors are allowed to move their investments to Vietnam to meet the legal expenses of pre-investment activities in Vietnam according to a written agreement between concerned parties and through their foreign currency demand accounts opened at authorized banks,
  • Foreign investors are allowed to use accounts of invested capital transferred to Vietnam as regulated to meet the legal expenses for the pre-investment stage in Vietnam on the basis of compliance with current legislation on the use of foreign exchange in the territory of Vietnam and other relevant Vietnam laws.

INVESTED CAPITAL TRANSFER TO FOREIGN COUNTRIES AFTER OBTAINING THE INVESTMENT CERTIFICATE

  • After obtaining the Investment certificate issued by competent agencies, foreign and Vietnamese investors of foreign investment enterprises must complete all clearing and settlement activities on an amount of invested capital that has been transferred to Vietnam prior to the issuance of the investment certificate,
  • Transforming an amount of investment which that foreign investors have transferred to Vietnam to meet the relevant expenses for the pre-investment stage into foreign contributed or loan capital must be performed on the basis of mutual agreement amongst concerned parties and compliance with current legislation on investment, bookkeeping, accounting, and other relevant Vietnam laws. If the amount of investment that foreign investors have transferred to Vietnam and used to meet the expenses for the pre-investment stage is transformed into FDI enterprises’ foreign medium and long-term loans, these FDI enterprises must follow required procedures for the registration of such loans in accordance with current regulations of the State Bank,
  • If the amount of invested capital of foreign investors that have been transferred to Vietnam to meet the expenses for the pre-investment stage has not been used up, they are allowed to move the remaining amount in foreign currency overseas or to purchase foreign currency to send abroad the number of Vietnamese dong investments that have not been used up in Vietnam after providing legal records and proofs of their original amount and all expenses incurred by investment projects in Vietnam. Transferring invested capital overseas must be done within a period of 30 working days from the date on which the foreign currency procurement is complete.

TRANSFERRING INVESTED CAPITAL OVERSEAS DUE TO FAILURE TO OBTAIN THE INVESTMENT CERTIFICATE OR TERMINATION OF INVESTMENT PROJECTS IN VIETNAM

  • If foreign investors, after transferring their invested capital to Vietnam to meet the legal expenses for the pre-investment stage, have not been granted the Investment certificate by competent agencies or choose to terminate their investment projects in Vietnam, they are permitted to send abroad the amount that has been transferred to Vietnam and any interest on their demand deposit accounts (if any) after deducting relevant expenses incurred in the pre-investment stage, which must be endorsed by relevant records of the aforesaid investment amount and expenses,
  • Foreign investors are eligible to purchase foreign currency and send abroad the amount of Vietnamese dong investment that has not been used up provided that they can provide relevant records of their investment amount and expenses incurred by the investment projects in Vietnam. Transferring invested capital overseas must be done within a period of 30 working days from the date on which foreign currency procurement is complete.

DIRECT INVESTMENT IN THE FORM OF CAPITAL CONTRIBUTION AND SHAREHOLDING

Foreign investors who directly invest in Vietnam in the form of shareholding or capital contribution to get involved in the management of investment projects in Vietnam must observe the regulations on the opening of accounts as follows:

  • If Vietnamese enterprises are granted the Investment certificate by competent agencies under current legislation on investment, they must open the direct investment account and comply with regulations specified in this Circular.
  • Cases other than those regulated in the point above shall opening and use of indirectly invested capital to implement the indirect investment activities in Vietnam.

 

VIVA has been an in-depth consultant on business compliance procedures in Vietnam since 2006, based on our professional - integrated background in Business laws - Accounting and corporate finance - Tax management - Labor relation and payroll – Business administration procedures. VIVA offers exclusive services in an integrated tailor-made, consist of 5 specialized-expertise platforms and the inheritance experience up to hundreds of years for every job.

Our extensive expertise and management system that facilitates us to connect local resources and be ready to deliver exclusive solutions that exceed all standard limits and satisfy all expectations of our clients.

 

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Read more:

Manage your capital and money

Enterprise establishment procedures.

Manage company’s compliance procedures.

Doing Business in Vietnam: Company’s Charter

How to set up a company/enterprise in Vietnam?

Capital contribution for establishment a company

Form of enterpises – advantages and disadvantages.

Restructuring, dissolution, and bankruptcy of enterprises.

Doing business in Vietnam – General terms and conditions.

Requirements for taking foreign loans applied to FDI companies

Last Updated on April 23, 2021