Procedures for Foreign Investors to Withdraw Capital from FDI Enterprises

In the context of deep international economic integration, Vietnam continues to be one of the most attractive investment destinations in Southeast Asia. Along with the strong wave of investment from foreign investors, FDI enterprises (enterprises with foreign direct investment capital) are increasingly growing in both number and scale. However, during the course of investment activities, capital withdrawal — meaning the partial or complete termination of capital contribution in an enterprise — is an inevitable step in the investment strategy, especially when investors wish to restructure their portfolios, change business strategies, or divest after reaching their expected returns.

This article provides a comprehensive and in-depth analysis of the current legal regulations in Vietnam related to foreign investors’ FDI capital withdrawal from FDI enterprises, thereby offering a clear and complete legal basis for enterprises and foreign investors.

Legal Basis Governing FDI Capital Withdrawal

The FDI capital withdrawal activities of foreign investors from FDI enterprises are governed by a multi-sectoral legal framework, including:

• Investment Law 2020

• Enterprise Law 2020

• Decree No. 31/2021/ND-CP guiding the Investment Law

• Law on Tax Administration, Corporate Income Tax Law, Personal Income Tax Law

• Circular No. 06/2019/TT-NHNN on foreign exchange control for foreign direct investment

• Free trade agreements and double taxation avoidance agreements to which Vietnam is a party

Capital withdrawal must strictly comply not only with investment and enterprise regulations but also with tax and foreign exchange regulations to ensure legality, safety, and transparency of capital flows.

Legal Forms of FDI Capital Withdrawal by Foreign Investors

Vietnamese law does not define “capital withdrawal” as a specific legal term, but recognizes it through various lawful forms, including:

(i) Transfer of capital or shares
This is the most common method. Investors may transfer their contributed capital to another party, either domestic or foreign. The process includes registration of shareholder/member changes and may require investment registration if the transferee is a foreign investor and the business operates in a conditional sector.

(ii) Reduction of charter capital
Investors may withdraw capital through reducing the enterprise’s charter capital, allowed under certain conditions such as after two years of operation, repurchase of member shares, or restructuring (e.g., split or dissolution).

(iii) Dissolution or transfer of the entire enterprise
In case of full withdrawal, the investor can either sell all capital or dissolve the business. The company must fulfill all financial and legal obligations to complete this process.

Procedures for FDI Capital Withdrawal

Each form of capital withdrawal has its own legal procedures. The most common include:

A. Transfer of capital or shares

• Sign capital transfer agreement

• Determine whether investment registration is required under Article 26 of the 2020 Investment Law

• Complete investment registration (if required), and update business registration

• Fulfill tax obligations from capital gains

• Conduct fund transfer through a foreign investment capital account

B. Charter capital reduction

• Prepare and approve a resolution on capital reduction

• Submit financial reports and tax clearance

• Notify changes to business registration

• Process capital return via the investment capital account

Tax Obligations Related to FDI Capital Withdrawal

Capital withdrawal may generate tax liabilities:

• For individuals: 0.1% on total transfer value or 20% on net capital gains

• For organizations: 20% corporate income tax on capital gains

• Investors from countries with tax treaties may be eligible for exemption or reduction upon submission of valid documents to the Vietnamese tax authority

Foreign Exchange Regulations for FDI Capital Withdrawal

Funds repatriated from capital withdrawal must comply with the foreign exchange laws of the State Bank of Vietnam. Investors must use a designated foreign investment account and submit proper documents proving the source and legality of funds, including proof of completed financial obligations.

Non-compliance may result in administrative penalties or blockage of fund transfers abroad.

Legal Recommendations for FDI Capital Withdrawal

Due to the complexity of legal procedures, foreign investors should:

• Review internal agreements and the company charter to verify rights

• Conduct fair valuation of contributed capital

• Seek advice from professional legal or consulting firms to ensure compliance with Vietnamese laws and international agreements

Note: Upon completion of the FDI capital withdrawal, foreign investors must:

• Complete procedures to terminate the investment project if capital is fully transferred to domestic parties

• Declare and pay personal income tax (if applicable)

BKC Law’s Support Services for FDI Capital Withdrawal

BKC Law provides comprehensive legal services for foreign investors in the FDI capital withdrawal process in Vietnam. With a team of experienced lawyers specializing in investment law, we assist clients with all related procedures — from capital transfer and project termination to asset liquidation, tax settlement, and post-withdrawal compliance.

Contact us for a free consultation on foreign investment and FDI legal matters:

Phone: 0901 3333 41

Email: info@bkclaw.vn

Head Office (District 1): 9th Floor, Diamond Plaza, 34 Lê Duẩn, District 1, HCMC

Branch Office (Bình Tân): 41 Tên Lửa, Bình Tân District, HCMC

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