Foreign direct investment (FDI) enterprise means an organization whose members or shareholders are foreign investors, established and operating in accordance with Vietnam’s laws that carry out business investment activities. Foreign investor means an individual holding a foreign nationality or an organization established under foreign laws and carrying out business investment activities in Vietnam.
Profits 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.
CIRCULAR
No. 186/2010/TT-BTC – Hanoi , November 18, 2010
From the The Governor of the State Bank of Vietnam
PROFITS WHICH ARE REMITTED ABROAD
- Profits from Vietnam are remitted abroad by foreign investors are legal profits that they are shared or earn from direct investment activities in Vietnam under the Investment Law after finished 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 OF 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 are 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 have be used for reinvestment, the profit items were remitted abroad during foreign investors’ operation period in Vietnam and the items 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 araised profit year, in case the year financial statements of enterprises in which they make investment and raise profits still contain accumulated losses after such losses have been carried forward under the law on enterprise income tax.
TIME FOR PROFITS REMITTED ABROAD
Annual profits remittance abroad
Foreign investors can annually remit abroad profits they are shared or earn 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 finished 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 REMITTED ABROAD
Foreign investors may directly make, or authorize enterprises in which they joint investment to make notices on the profits remittance abroad according to the adopted forms attaching this Circular send to direct managing tax offices of the enterprise in which foreign investors join investment at least 7 working days before the profit remitted abroad.
Important notes: The investors not only required to comply with all the local business regulations, pay for corporate income tax, but the investors shall also 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 incomes 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 contribution 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 contribution to securities investment fund and other investment funds that are established and operated within the law.
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