Fines for not registering foreign loans in Vietnam

Loan registration is a mandatory administrative procedure for economic organizations that are enterprises, cooperatives, unions of cooperatives, credit organizations when borrowing money from abroad to return to Vietnam. Enterprises are responsible for registering loans, opening and using loan accounts, repaying foreign debts, withdrawing capital and transferring money for debt repayment, reporting on the loan performance according to regulations of the State Bank of Vietnam.

Legal basis

• Ordinance on Foreign Exchange No. 28/2005/PL-UBTVQH11 of the Standing Committee of the National Assembly dated December 13^th, 2005 as amended and supplemented by Ordinance No. 06/2013/PL-UBTVQH13;
• Decree No. 219/2013/ND-CP dated December 26^th, 2013 of the Government on management of loan, repayment foreign debts of enterprises not guaranteed by the Government;
• Decree No. 88/2019/ND-CP stipulated on sanctioning of administrative violations in the field of currency and banking;
• Circular No. 12/2022/TT-NHNN dated September 30^th, 2022 guiding the management of foreign exchange for borrowing, repaying foreign debts of enterprises.

Obligation to register for the initial foreign loan in Vietnam

Borrowers are subject to registration for foreign loans under Article 14 of Circular 12/2022/TT-NHNN which must be obliged to register loans with the State Bank.

Obligation to register for changing foreign loans in Vietnam

When there is a change in any content related to the loan as stated in the written confirmation of loan registration of the State Bank, the borrower is responsible for registering the change of foreign loans with the State Bank.

Responsibility to notify the State Bank when there is one of the following changes:

• Change the time of capital withdrawal and principal repayment within 10 working days compared with the plan confirmed by the State Bank;
• Change the borrower’s address but not change the province or city where the borrower’s head office is located, the borrower sends a notice of change of address to the competent authority to confirm registration, register the change of foreign loans of the borrower;
• Change of the lender, information related to the lender in the syndicated loan with the appointment of representatives of lenders, except for the lender is concurrently the representative of lenders in the syndicated loan and the change of the lender make change the role of the representative of lenders;
• Change the name of the commercial transaction of the bank providing account services, the bank serving secured transactions;
• Change the plan for payment of interest, fees of foreign loans compared to the plan confirmed by the State Bank in the written confirmation of registration, registration for change of foreign loans but the method of determination interest and fees specified in the foreign loan agreement remains unchanged. The borrower is responsible for making a table to calculate the interest, fees to be paid so that the bank providing account services has a basis for checking and monitoring when performing the money transfer;
• Change (increase or decrease) the amount of capital withdrawal, repayment of principal, interest, fees within 100 currency units of the foreign loan currency compared with the amount stated in the registration confirmation written, the registration confirmation written for changes in foreign loans;
• Change in the actual amount of capital withdrawal, principal repayment of a specific period less than the amount stated in the plan for capital withdrawal, debt repayment in the written confirmation of registration or written confirmation of registration for change of foreign loans.

With regard to the content change at point g, Clause 2 of this Article, before withdrawing and repaying the remaining amount of that period, the borrower is responsible for registering changes to the plan for capital withdrawal, debt repayment for the remaining amount has not been implemented according to the provisions of Circular No. 12/2022/TT-NHNN.

Foreign loans must be registered unedr Vietnamese law

Loans are subject to registration with the State Bank include:

• Foreign medium and long-term loans.
• Short-term loans are extended the principal repayment period, the total term of which is over 01 year.
• Short-term loans with no extension agreement but with outstanding principal balance (including principally entered interest) at the full date of 01 year from the date of first capital withdrawal, except for the borrower completes the above-mentioned outstanding principal balance payment within 30 working days from the date of full 01 year from the date of first capital withdrawal. Enterprises having the above loans are responsible for registering loans with the State Bank.

Fines for not registering foreign loans in Vietnam with the State Bank

Fines for not registering loans with the State Bank

According to Decree No. 88/2019/ND-CP on administrative sanctions in the monetary field, the sanctions are as follows:

A fine ranging from 20,000,000 VND to 30,000,000 VND shall be imposed for one of the following violations:

Failing to comply with the provisions of law on administrative procedures for: registration, registration for changes in foreign loans, international bond issuance; registration, registration for changes in offshore loans, the guaranteed debt recovery for non-residents…

Thus, for individuals, the fine is 20 million to 30 million VND. For organizations, the fine for organizations with the same act of administrative violation is equal to 02 times the fine for individuals. The fine for organizations will be 40 million to 60 million VND.

Fines for withdrawing capital and repaying debts for foreign loans in contravention of regulations

If the enterprise uses a loan without a loan account opened at a bank providing account services to withdraw capital, repay foreign loans and other money transfer transactions related to borrowing, repaying foreign debts, guaranting for foreign loans, but used through another account, violating the implementation of capital withdrawal, debt repayment for foreign loans, the specific fines are as follows:

A fine ranging from 30.000.000 VND to 50.000.000 VND shall be imposed for one of the following violations:

Performing the capital withdrawal, repayment foreign loans in contravention of regulations.

The fine for individuals is from 30 million to 50 million VND, the fine for organizations with the same violations is equal to 02 times the fine for individuals. The fine will be from 60 million to 100 million VND.

Some questions about fines for not registering foreign loans in Vietnam

Does the loan less than 01 year need to register for loans?

Loans under 01 year do not need to be registered. Self-borrowing and self-repaying foreign short-term loans (hereinafter referred to as short-term foreign loans) are foreign loans not guaranteed by the Government for a term of up to one (01) year. Except for you can’t repay the loan after 01 year, you must extend the loan term and register for a loan.

However, the law also allows that if the borrower completes the loan debt repayment within 10 days from the full date 01 year from the date of the first capital withdrawal of the short-term loan, registeration of the loan is not required.

Only foreign medium, long-term loans and short-term loans that are extended for a total of the loan term is more than one year, must be registered.

What is the maximum fine in sanctioning foreign loan violations?

The maximum fine for violations in the monetary and banking sectors for violating organizations is 2.000.000.000 VND and for violating individuals is 1.000.000.000 VND;

Can you use another account to withdraw money?

For foreign loans must register with the State Bank, the borrower may only withdraw capital, repay the principal and interest of the foreign loan after the loan is certified the registration by the State Bank.

If an enterprise needs urgent capital that using money from an account not registered with the State Bank, it is a violation of regulations on cash flow transparency.

In addition to registering for a loan, enterprises also have reporting obligations. Quarterly, no later than the date 5th of the following month after the reporting period, the borrower must send the Branch a report written on the performance of short, medium and long-term loans. If you do not report, you will violate the reporting regulations and be fined.

Services of the foreign loan registration of Viet An Law Firm

• Consulting on procedures for the foreign loan registration;
• Consulting on foreign loan contracts;
• Consulting, drafting dossiers for registration of foreign loans;
• Consulting on converting foreign loans into contributed capital of enterprises;
• Consulting on converting foreign loans for enterprises;
• Representative of enterprises to submit dossiers, monitor and complete procedures for the foreign loan registration;
• Consulting on procedures for statistical reporting on foreign loans;
• Comprehensive consulting on arising issues related to foreign loans of enterprises.

Viet An Law Firm will support in drafting dossiers, clients signing, we will submit dossiers on behalf of clients, explain, carry out all procedures and receive results, send results to clients. Clients please contact us for the best support.