When are FDI Companies allowed to transfer foreign currency?

In the context of global economic integration, Vietnam has been attracting a significant number of foreign direct investment (FDI) projects. As a result, the transfer of foreign currency abroad for purposes such as payment, profit remittance, or business operations has become a critical issue for FDI companies. However, Vietnamese law imposes strict and specific conditions on such transfers. In this article, Viet An Law will clarify: When are FDI Companies allowed to transfer foreign currency?

Forms of foreign currency remittance abroad by FDI Companies

According to Article 2 of Circular No. 186/2010/TT-BTC, the Ministry of Finance provides specific guidance on the remittance of profits abroad by foreign organizations and individuals earning profits from direct investment activities in Vietnam, in accordance with the Law on Investment. There are two forms of profit remittance as follows:

• Profits remitted abroad in monetary form, in compliance with foreign exchange management laws;
• Profits remitted abroad in the form of in-kind assets, with the value converted by the laws on import and export of goods and other relevant legal provisions.

Based on these regulations, in addition to monetary profit remittance, enterprises in Vietnam may also choose to remit profits in the form of in-kind assets. This requires a clear determination of the value of the in-kind assets to be converted into an equivalent profit amount. Enterprises may independently decide the form of profit remittance and must specify it in the profit remittance notification as stipulated in Article 5 of Circular 186/2010/TT-BTC.

The profit remittance notification must be prepared using the form attached to Circular 186/2010/TT-BTC and submitted to the tax authority directly managing the foreign-invested enterprise. The notification must be submitted at least 07 working days prior to the actual profit remittance. It must clearly state the details of the profits being remitted abroad, including the values remitted in both monetary form and in-kind form.

So, when are FDI Companies allowed to transfer foreign currency? The answer lies in the conditions and timing set by law, ensuring that all transfers are legitimate and transparent.

When are FDI Companies allowed to transfer foreign currency?

According to legal regulations, FDI companies are permitted to remit foreign currency abroad in the following cases:

Foreign Currency Remittance for Commercial Transactions

According to Clause 1, Article 6 of Decree No. 70/2014/ND-CP, FDI enterprises are allowed to remit foreign currency abroad to pay for imported goods and services. Such payments must be made through foreign currency accounts in Vietnam.

However, these transactions must satisfy the following conditions:

• Through a foreign currency account in Vietnam: FDI enterprises must open a foreign currency account at a licensed bank operating in Vietnam. All foreign currency transactions must be conducted through this account to ensure transparency and compliance with procedures.
• Following commercial contracts: The remittance must be based on legally valid commercial contracts signed between the FDI enterprise and its foreign partners.

Remittance of Profits and Lawful Incomes

FDI enterprises are permitted to remit remaining profits abroad after fulfilling all tax obligations. This applies only when the enterprise has fully paid all taxes and other financial obligations in Vietnam, per Circular 186/2010/TT-BTC issued by the Ministry of Finance and other relevant legal documents.

Repatriation of Investment Capital

In cases where an FDI enterprise terminates its investment activities or transfers its project, the invested capital may be remitted abroad.

According to Article 66 of the 2020 Law on Investment, investors are allowed to transfer investment capital abroad to conduct investment activities if the following conditions are met:

• The investor has been granted an Offshore Investment Registration Certificate.
• The investment activity has been approved or licensed by the competent authority of the host country. In cases where the host country’s laws do not require investment approval or licensing, the investor must provide documents proving the lawful right to conduct investment activities in the host country.
• The investor has an investment capital account.

Remittance of Salaries, Bonuses, and Lawful Incomes

FDI enterprises are allowed to remit foreign currency abroad to cover other legitimate expenses such as salaries for foreign experts, premises costs, or technology transfer fees.

According to Article 9 of Decree No. 70/2014/ND-CP, in cases where there is a need to transfer lawful incomes in Vietnamese dong derived from direct investment activities in Vietnam, foreign investors are permitted to purchase foreign currency from licensed credit institutions and remit it abroad within 30 (thirty) working days from the date of purchasing the foreign currency.

Procedures for Foreign Currency Remittance Abroad in Vietnam

Step 1: Preparation of the Foreign Currency Remittance Dossier

The dossier includes:

• Enterprise Registration Certificate or Investment Registration Certificate;
• License for the operation of the investment capital account;
• Audited financial statements (in case of profit remittance);
• Confirmation from the tax authority regarding the fulfillment of tax obligations.

Step 2: Submit the Dossier to the Bank

Submit the complete dossier to the bank where the enterprise maintains its investment capital account or payment account to execute the transaction. The bank will verify the validity of the dossier before processing the remittance.

Step 3: Notify the Tax Authority

In case of profit remittance abroad, the enterprise must submit a Profit Remittance Notification to the directly managing tax authority at least 07 working days prior to the transaction.

Processing Time: The processing time depends on the completeness and validity of the dossier. If the dossier is complete, banks typically process the transaction within 3–5 working days.

Frequently Asked Questions About Foreign Currency Remittance by FDI Companies

How to Minimize Risks When Remitting Foreign Currency Abroad?

• Strictly comply with regulations on foreign exchange management and financial obligations;
• Ensure the dossier is accurate and complete as required.
• Choose a licensed bank experienced in foreign exchange and international transactions;
• Seek advice from financial experts or legal professionals at Viet An Law.

In What Cases Are FDI Companies Allowed to Remit Foreign Currency Abroad?

FDI companies are permitted to remit foreign currency abroad in the following cases:

• Remittance of post-tax profits to the home country;
• Payment under international contracts (for the purchase of goods, services, technology, etc.);
• Repatriation of investment capital or charter capital when reducing capital or terminating a project;
• Repayment of foreign loans (principal, interest, and related fees);
• Transfer of lawful income of investors or foreign experts;
• Execution of judgments or arbitral awards by courts or international arbitration bodies.

Is It Mandatory for FDI Companies to Register a Direct Investment Capital Account Before Remitting Foreign Currency?

Yes. FDI companies are required to open a direct investment capital account at a bank licensed to conduct foreign exchange operations in Vietnam. This account must be used for all transactions related to direct investment capital, including:

• Capital contributions;
• Profit remittance abroad;
• Repatriation or withdrawal of investment capital;
• Payment of foreign loans related to the investment project.

Can Profits Be Remitted Abroad Annually or Only Upon Project Termination?

Profits can be remitted abroad annually or at any time deemed appropriate by the foreign investor, provided that:

• The company has completed tax finalization and fulfilled all financial obligations in Vietnam.
• There is a clear, audited financial statement confirming the profits;
• The tax authority has been notified before the remittance.

Is the Company Required to Pay Tax When Remitting Profits Abroad?

No. Corporate income tax is calculated and paid in Vietnam before profits are remitted. Once all tax obligations in Vietnam are fulfilled, the remitted profits are not subject to additional taxation under the amended Law on Corporate Income Tax 2013 (as amended in the following year).

The above is the legal advice for the question: When are FDI companies allowed to transfer foreign currency? If you need legal consultation, please contact Viet An Law for the best support!