Condition for offshore investment in Vietnam

In the current globalization trend, the need for offshore investment of Vietnamese businesses is increasing. In order for an enterprise’s offshore investment activities to be carried out effectively and legally, the enterprise needs to meet certain conditions according to the law. In the following article, Viet An Law provides preliminary advice on the condition for offshore investment in Vietnam according to current legal regulations in Vietnam.

Legal basis

• Law on Enterprise 2020;
• Law on Investment 2020;
• Decree 01/2021/ND-CP on business registration;
• Decree 31/2021/ND-CP details and guides the implementation of several articles of the Investment Law.
• Decree 122/2021/ND-CP regulates sanctions for administrative violations in the field of planning and investment;
• Circular 03/2021/TT-BKHDT regulates sample documents and reports related to investment activities in Vietnam, investment from Vietnam to foreign countries, and investment promotion issued by the Minister of Planning and Investment issued, amended, and supplemented by Circular 25/2023/TT-BKHDT.

What is offshore investment?

According to Clause 13, Article 3 of the Investment Law 2020, offshore investment activities are the transfer of investment capital from Vietnam to foreign countries by investors, using profits earned from this investment capital to carry out investment abroad.

Forms of offshore investment

According to the provisions of Article 52 of the Investment Law 2020, enterprises can carry out investment activities abroad in the following forms:

• Establish an economic organization according to the laws of the investment receiving country;
• Investment in the form of contracts abroad, expressed by agreements, contracts with foreign partners, or other documents of equivalent value accompanied by documents on the legal status of the foreign partner;
• Contributing capital, purchasing shares, purchasing capital contributions from an economic organization in a foreign country to participate in the management of that economic organization, expressed by an agreement, contract, or document determining the capital contribution or stock purchase shares, purchase of capital contributions, accompanied by documents on the legal status of the overseas economic organization to which the investor contributes capital, purchases shares, or purchases capital contributions;
• Purchase securities and other valuable papers or invest through securities investment funds and other intermediary financial institutions abroad;
• Other forms of investment according to the laws of the receiving country. Confirmation of these forms is shown through documents determining the form of investment that the investor submits following the laws of the country or territory receiving the investment.

Condition for offshore investment in Vietnam

When Vietnamese enterprises need to invest abroad, they need to meet the following conditions:

Decided to invest abroad

Deciding to invest abroad is a condition for granting an Outward Investment Registration Certificate. This decision is issued by the National Assembly and the Prime Minister in case the investment project is subject to the approval of investment policy abroad or is issued by the investor in the remaining cases.

Except for cases where an enterprise establishes a representative office abroad, all forms of investment that fall under the provisions of Article 52 of the Investment Law 2020 must apply for an Investment Registration Certificate before transferring investment capital abroad following Vietnamese law.

To meet the conditions for issuance of the Certificate, investors need a document from the tax authority confirming the fulfillment of the investor’s tax payment obligations and meeting the conditions according to Article 60 of the Investment Law 2020.

Note: The tax authority’s confirmation time is no more than 03 months from the date of submitting the investment project dossier.

Investment activities abroad must comply with the principles

• Purpose: exploit, develop, and expand the market; increase the ability to export goods and services and earn foreign currency; access modern technology, improve management capacity, and supplement the country’s socio-economic development resources;
• Investors investing in offshore investment activities must comply with Vietnam’s legal regulations; laws of countries and territories receiving investment; and relevant international treaties;
• Investors are solely responsible for the effectiveness of their investment activities abroad.

Investment industry

Investment industries and occupations do not belong to industries and occupations prohibited from investing abroad and meet the conditions for investing abroad for conditional investment industries and occupations;

Financial commitment

• Investors commit to arrange foreign currency themselves or commit to arrange foreign currency to carry out investment activities abroad through licensed credit institutions;
• When transferring investment capital abroad, investors must comply with regulations related to foreign exchange management, including procedures for registering foreign exchange transactions with the State Bank before transferring money abroad to invest.

Some issues related to offshore investment activities of Vietnamese enterprises

Industries and professions that are prohibited from investing abroad

• Prohibited business investment sectors and industries specified in Article 6 of the Investment Law 2020 and relevant international treaties;
• Industries and professions that have technologies and products that are banned from export according to the provisions of the law on foreign trade management;
• Business and investment sectors are prohibited according to the laws of the receiving country.

Sectors and professions for investment abroad are conditional

• Industries and professions subject to conditional investment abroad include Banking; Insurance; Stock; Press, radio and television; and Real estate business.
• For banking, insurance, and securities industries, investors must meet the conditions prescribed by law in the banking, insurance, and securities fields and be approved in writing by a competent authority;
• For journalism, radio, and television industries and professions, the investor must be an organization licensed to operate press, radio, and television activities in Vietnam and approved by the Ministry of Information and Communications in writing;
• For real estate businesses and industries, investors must be enterprises established under the Enterprise Law.

Sources of investment capital abroad

• Enterprises are responsible for contributing capital and mobilizing capital to carry out investment activities abroad;
• All money transfer transactions from Vietnam to abroad and from abroad to Vietnam related to offshore investment activities must be done through an investment capital account opened based on the Offshore Investment Registration Certificate granted for each separate project.
• After the investment activity has been approved or licensed by the competent authority of the investment-receiving country, the enterprise can borrow capital in foreign currency and transfer investment capital in foreign currency based on compliance with the conditions and conditions procedures according to the provisions of the law on banks, credit institutions, and foreign exchange management (including the obligation to register foreign exchange transactions).

Reporting regime for offshore investment

• Vietnamese investors or capital sources from Vietnam must periodically report to competent state agencies to evaluate the actual investment efficiency of Vietnamese investors, enhance the transparency of the project, and supervise management agencies for offshore investment activities.
• According to Article 73 of the Investment Law 2020, the periodic reporting regime is carried out by investors quarterly and annually in writing through the National Investment Information System. Report forms are specified in Circular 03/2021/TT-BKHDT.
• In non-compliance, investors may be fined up to 30,000,000 VND according to the provisions of Decree 122/2021/ND-CP.

Offshore investment consulting services of Viet An Law

• Consulting on conditions, documents, and procedures for investing abroad for organizations and individuals in Vietnam;
• Drafting application documents for offshore investment certificates for customers, opening foreign investment capital accounts, and registering foreign exchange transactions;
• Representing clients to carry out investment registration procedures abroad with competent state agencies;
• Representing clients to perform offshore investment reporting obligations according to current regulations;
• Regularly advise customers during the process of implementing investment activities abroad.

If you have any questions about the conditions and procedures for investing abroad for Vietnamese enterprises, please contact Viet An Law Legal Consulting Services to receive the fastest and most accurate support!

Disclaimer: This article was last updated in April 2024. Laws may have changed since then. Please contact Viet An Law to confirm the information in this article is current and for any legal assistance.