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Regulations on Transferring Profits from Vietnam Abroad for Foreign Investors

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In the context of deepening global economic integration, remitting profits from Vietnam abroad by foreign investors has become increasingly important. Vietnam has established a legal framework to facilitate investors while ensuring transparency and compliance with financial regulations. These provisions not only reflect Vietnam’s open-door policy toward foreign investment but also demonstrate its commitment to protecting the legitimate rights of investors. In this article, we will examine in detail the regulations on profit remittance, as well as the necessary conditions to carry out this process efficiently.

Legal Regulations on Profit Remittance by FDI Enterprises from Vietnam Abroad

Regulations on Transferring Profits from Vietnam Abroad for Foreign Investors

Timing for Remitting Profits Abroad

There are two timing options for remitting profits from Vietnam abroad:

  • Annual profit remittance.
  • Profit remittance upon termination of direct investment activities in Vietnam.

Determination of Remittable Profits

Pursuant to Circular No. 186/2010/TT-BTC, the amount of remittable profits is determined as follows:

– **Annual remittable profits** are profits distributed to or earned by the foreign investor in the fiscal year from direct investment activities, based on audited financial statements and corporate income tax finalization declarations of the enterprise in which the foreign investor participates, plus (+) any other profits such as unremitted profits carried forward from previous years; minus (−) amounts the foreign investor has used or committed to use for reinvestment in Vietnam, or amounts used to cover expenses of the foreign investor for production and business activities or personal needs in Vietnam.

– **Profits remittable upon termination of direct investment activities in Vietnam** are the total profits earned by the foreign investor during the investment period in Vietnam, minus (−) amounts already used for reinvestment, amounts already remitted abroad during the investment period, and amounts used for other expenses of the foreign investor in Vietnam.

Forms of Profit Remittance Abroad

Profits remitted from Vietnam abroad may be in cash or in kind.

Pursuant to foreign exchange management regulations, cash profit remittance is carried out as follows:

  • The foreign investor must remit profits abroad through the direct investment capital account.
  • In cases where the foreign-invested enterprise must close its direct investment capital account due to dissolution, bankruptcy, termination of existence, or transfer of the investment project resulting in a change of the originally registered legal entity of the foreign-invested enterprise, the foreign investor may use its foreign currency payment account or Vietnamese dong payment account opened at an authorized bank to carry out foreign currency purchase transactions and remit direct investment capital and other lawful income abroad.

Remittance of profits in kind shall be carried out and valued in accordance with regulations on import and export of goods and other relevant laws.

Conditions for Foreign Investors to Remit Profits from Vietnam Abroad

**General Conditions**

The enterprise may decide the amount of profits to be remitted abroad, provided that after offsetting losses from previous years, the audited financial statements show no accumulated losses (or as confirmed by the tax authority upon inspection), and all financial obligations to the State have been fulfilled.

**Conditions for Annual Profit Remittance**

Foreign investors are permitted to remit profits abroad annually when the following conditions are met:

  • Annual remittable profits are profits distributed to or earned by the foreign investor in the fiscal year from direct investment activities, based on audited financial statements and corporate income tax finalization declarations of the enterprise in which the foreign investor participates, plus (+) unremitted profits carried forward from previous years; minus (−) amounts used or committed to be used for reinvestment in Vietnam or to cover the foreign investor’s expenses for production and business activities or personal needs in Vietnam.
  • Foreign investors are not permitted to remit abroad profits distributed or earned from direct investment activities in Vietnam in the year the profits arise if the enterprise’s financial statements for that year still show accumulated losses after offsetting losses in accordance with corporate income tax regulations.

**Conditions for Profit Remittance Upon Termination of Direct Investment Activities**

Pursuant to Articles 2 and 3 of Circular 186/2010/TT-BTC, foreign investors are permitted to remit lawful profits abroad when the following conditions are satisfied:

  • All financial obligations to the Vietnamese State have been fulfilled in accordance with the law.
  • Audited financial statements and corporate income tax finalization declarations have been submitted to the direct tax management authority, and all obligations under the Law on Tax Administration have been fully performed.
  • Written notice of profit remittance abroad has been sent to the direct tax management authority as prescribed.
  • There are no accumulated losses after offsetting losses in accordance with regulations.

**Cases Where Profit Remittance Abroad Is Not Permitted**

Foreign investors are not permitted to remit profits abroad when profits earned from investment activities result in the enterprise’s financial statements still showing accumulated losses in accordance with corporate income tax regulations. In such cases, the enterprise must first settle all tax debts before the foreign investor’s profits may be remitted abroad.

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Sequence and Procedure for Remitting Profits Abroad

Preparation of Dossier

After fully satisfying the conditions for profit remittance abroad, the investor must provide documents proving the amount of remittable profits, including:

– Documents proving lawful source of funds: Minutes of the Board of Directors or Members’ Council approving profit distribution, or capital transfer contracts.
– Documents proving fulfillment of financial obligations to the Vietnamese State: Audited financial statements, corporate income tax finalization declarations, personal income tax finalization, etc.

Prior to remitting profits abroad, the investor must send written notice of the profit remittance to the direct tax management authority at least 7 working days in advance.

Procedure for Remitting Profits Abroad

Pursuant to Article 5 of Circular No. 186/2010/TT-BTC, the procedure for notifying profit remittance abroad includes the following steps:

  • Step 1: At least 7 working days before remitting profits abroad, the foreign investor directly or through authorization to the enterprise in which the foreign investor participates shall notify the profit remittance using the prescribed form under Circular 186/2010/TT-BTC and submit it to the direct tax management authority of the enterprise in which the foreign investor participates.
  • Step 2: The tax authority receives the profit remittance notification, stamps the dossier as received, records the receipt date and number of documents, and logs it in the tax authority’s incoming document register.

Tax on Profit Remittance Abroad

In addition to fulfilling general business compliance obligations and corporate income tax obligations, individual investors are subject to a 5% personal income tax on income from capital investment before remitting profits abroad.

Income from capital investment includes income received by individuals in the following forms:

  • Interest income from lending to organizations, enterprises, business households, individual business households, or business groups under loan contracts or agreements, excluding interest from deposits at credit institutions and bank branches.
  • Dividends received from contributing capital to purchase shares.
  • Profit shares received from contributing capital to limited liability companies (including one-member limited liability companies), partnerships, cooperatives, joint ventures, business cooperation contracts, and other forms of business as prescribed by the Enterprise Law and Cooperative Law; profit shares from contributing capital to establish credit institutions as prescribed by the Law on Credit Institutions; profit shares from contributing capital to securities investment funds and other investment funds established and operating in accordance with the law.

Which Authority Must Be Notified When Remitting Profits from Vietnam Abroad?

Regulations on Transferring Profits from Vietnam Abroad for Foreign Investors

Pursuant to Circular No. 186/2010/TT-BTC, at least 7 working days before remitting profits abroad, the foreign investor directly or through authorization to the enterprise in which the foreign investor participates shall notify the profit remittance using the prescribed form and submit it to the direct tax management authority of the enterprise in which the foreign investor participates.

The profit remittance notification form must fully, accurately, and clearly provide the following information:

• Foreign investor (name, nationality)
• Enterprise in which the foreign investor participates
• Registered profit remittance amount
• Amount of profits proposed to be remitted abroad
• Commitment by the investor that all information in the notification is completely true. The investor shall bear full responsibility for any inaccuracies in accordance with the law.

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Investment Consultation Services Provided by BKC Law

The comprehensive investment law consultation service at BKC Law provides an all-in-one solution for investors, including advice on legal regulations, support for enterprise establishment, optimal investment structuring, and contract drafting. We also assist in completing necessary legal procedures, resolving disputes if they arise, and ensuring compliance with legal regulations throughout the investment process, helping investors save time and effort in managing and developing investment projects.

With a team of senior lawyers with many years of experience, solid legal knowledge, and strong bilingual consultation capabilities, BKC LAW is confident in being one of the best legal partners on the market to support foreign investors in carrying out investment activities in Vietnam.

To receive free legal consultation at BKC Law, please contact our lawyers using the following information:

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