Conditions and procedures for transferring profits from Vietnam to overseas

4/2/2021

Transferring profits earned from business investment in Vietnam to overseas is an issue that always attracts great attention from foreign investors when investing in Vietnam. One of the investment security measures that the State commits to when foreign investors make investment in Vietnam is to secure the transfer of foreign investors' assets. The following article will guide the answers to investors: conditions for transferring profits from Vietnam to overseas, procedures for transferring profits abroad. 

Profits of foreign investors remitted from Vietnam to foreign countries are lawful profits shared or earned from direct investment activities in Vietnam under the Investment Law, after fulfilling financial obligations to the Vietnamese State according to the regulations. 

Assets are allowed to be transferred from Vietnam to foreign countries 

According to the Law on Investment 2020, after fulfilling all financial obligations towards the Vietnamese State in accordance with the law, foreign investors are entitled to transfer abroad the following assets: 

  • Investment capital, investment liquidation; 
  • Income from business investment activities; 
  • Money and other assets legally owned by the investor. 

Conditions for remittance abroad every year 

Foreign investors are entitled to annual transfer of profits when meeting the following conditions: 

Annual profit remitted abroad is the profit divided or earned by a foreign investor in a fiscal year from direct investment activities based on audited financial statements and the enterprise income tax finalization declaration form of the enterprise in which the foreign investor invested plus (+) other profits such as the unpaid profit from previous years; minus (-) the foreign investor has used or committed to re-invest in Vietnam, the profits foreign investors have used to pay the expenses of foreign investors for production and business activities or for the personal needs of foreign investors in Vietnam. 

Foreign investors are not allowed to remit abroad the profits divided or earned from direct investment activities in Vietnam in the year in which the profits are generated in the case in the enterprise's financial statements of the year in which they arise profits still have accumulated losses after losses have been carried forward in accordance with the provisions of the Law on corporate income tax. 

Time of transfer: end of fiscal year 

Completed financial obligations towards the State of Vietnam 

The audited financial statements and the fiscal year corporate income tax finalization return have been submitted to the direct tax administration. 

Reported to the tax agency directly managing the profit remittance abroad according to regulations. 

Conditions Remittance of profits abroad at the end of direct investment activities in Vietnam: 

Foreign investors may remit profits abroad upon the completion of their direct investment activities in Vietnam with the following conditions: 

Having fulfilled financial obligations towards the State of Vietnam in accordance with the law; 

Having submitted audited financial statements and corporate income tax finalization declarations to the direct tax administration and at the same time fully fulfilling obligations under the Law on Tax Administration. 

Reported to the tax agency directly managing the profit remittance abroad according to regulations. 

Types of profit transfer from Vietnam to abroad: 

Profits from Vietnam to abroad can be in cash or in kind. 

Profits remitted abroad in cash in accordance with the law on foreign exchange management are as follows: 

  • Foreign investors must remit overseas through the direct investment capital account. 
  • In case an enterprise with foreign direct investment has to close the direct investment account due to the dissolution, bankruptcy, termination of existence of the enterprise or the transfer of an investment project changes the original registered legal entity of the FDI enterprise, foreign investors are allowed to use payment accounts in foreign currencies, payment accounts in Vietnam Dong of such foreign investors opened at banks are allowed to purchase foreign currencies, remit direct investment capital and legal income overseas. 

Profits are remitted abroad in kind and converted to value in kind in accordance with the law on goods import and export and relevant laws. 

Procedures for transferring profits abroad: 

Foreign investors directly or authorize enterprises in which foreign investors participate in investment to make notices on the remittance of profits abroad and send them to the tax agency directly managing the enterprise. 

Duration of implementation: At least 07 working days before the implementation of remittance of profits abroad.