Foreign Currency Use in Vietnam Business Operations

Foreign currency refers to the currency of other countries or territories, or common currencies such as the euro, used in international and regional payments. In the context of international economic integration and the strong development of global markets, the use of foreign currency and foreign exchange in business operations has become an important factor. What should be considered when having foreign currency use in Vietnam business operations? Below, Viet An Law will provide answers to your questions.

Cases of foreign currency use in Vietnam business operations

Based on article 4 of Circular No. 32/2013/TT-NHNN, amended and supplemented by Circular No. 16/2015/TT-NHNN and Circular No. 03/2019/TT-NHNN, the cases of using foreign currency in business operations within the territory of Vietnam include:

Internal capital transfer within the enterprise

Enterprises are allowed to transfer internal capital in foreign currency via bank transfer between the accounts of the organization and the accounts of its dependent units without legal status, and vice versa.

Capital contribution in foreign currency

Enterprises are allowed to contribute capital in foreign currency via bank transfer to implement foreign investment projects in Vietnam through direct investment capital accounts.

Transactions in bidding

Residents who are domestic contractors or foreign contractors shall comply with the following regulations:

• For overseas expenses related to the implementation of bidding packages through international bidding as prescribed by the law on bidding: contractors are allowed to bid in foreign currency and receive payment in foreign currency via bank transfer from the investor or main contractor for payment, settlement, and transfer abroad.
• For the implementation of bidding packages as prescribed by the law on petroleum: contractors are allowed to bid in foreign currency and receive payment in foreign currency via bank transfer from the investor or main contractor for payment, settlement, and transfer abroad.

For insurance companies

Residents who are insurance companies shall comply with the following regulations:

• Allowed to quote, price, and record insurance service fees in contracts in foreign currency and receive payment in foreign currency via bank transfer from the insurance buyer for goods and services that must be reinsured abroad.
• In case of loss related to the reinsurance abroad, residents who are insurance buyers shall receive compensation in foreign currency via bank transfer from the foreign reinsurance company through the insurance company to cover the costs of loss recovery abroad.

For export processing enterprises

Foreign currency use in export processing enterprises shall comply with the following regulations:

• Allowed to record prices in contracts in foreign currency and make payments in foreign currency via bank transfer when purchasing goods from the domestic market for production, processing, recycling, assembling export goods, or for export, except for goods prohibited from export. Domestic enterprises are allowed to quote, price, and receive payment in foreign currency via bank transfer when selling goods to export processing enterprises.
• Allowed to quote, price, record prices in contracts in foreign currency, and make payments and receive payments in foreign currency via bank transfer with other export processing enterprises.

For businesses operating in the fields of air transportation, hotels, tourism

Businesses operating in the fields of air transportation, hotels, and tourism are allowed to list and advertise prices of goods and services in Vietnamese Dong and equivalent foreign currency on electronic information pages and specialized publications (excluding menus and service price lists) using only foreign languages.

Paying wages to employees

Enterprises are allowed to agree and pay wages, bonuses, and allowances in labor contracts in foreign currency via bank transfer or cash to non-residents and residents who are foreigners working for the organization.

Implementing import-export entrustment contracts

Enterprises implementing import-export entrustment contracts shall comply with the following regulations:

• Residents entrusted with import are allowed to record prices in import entrustment contracts in foreign currency and receive payment in foreign currency via bank transfer for the value of the import contract from the import entrustor.
• Residents entrusted with export are allowed to record prices in export entrustment contracts in foreign currency and make payments in foreign currency via bank transfer for the value of the export contract to the export entrustor.

Note on regulations restricting foreign currency use in Vietnam business operations

Based on article 3 of Circular no. 32/2013/TT-NHNN, amended and supplemented by Circular no. 16/2015/TT-NHNN and Circular no. 03/2019/TT-NHNN, except for the cases of foreign exchange use as analyzed above, all transactions, payments, listings, advertisements, quotations, pricing, recording prices in contracts, agreements, and other similar forms (including conversion or adjustment of prices of goods, services, contract values, agreements) by enterprises shall not be conducted in foreign currency.

Note on the foreign currency use in the operations of FDI enterprises

Opening and using direct investment capital accounts

FDI enterprises must open direct investment capital accounts. A direct investment capital account is a payment account in foreign currency or Vietnamese dong opened by foreign direct investment enterprises or foreign investors at authorized banks to conduct transactions related to foreign direct investment activities in Vietnam as prescribed in articles 5, 6, and 7 of Circular no. 06/2019/TT-NHNN.

According to article 5 of Circular No. 06/2019/TT-NHNN, FDI enterprises opening direct investment capital accounts must note the following foreign currency usage:

• Must open a direct investment capital account in foreign currency at one authorized bank to conduct lawful foreign currency transactions related to foreign direct investment activities in Vietnam.
• Corresponding to the type of foreign currency used for capital contribution, only one direct investment capital account in that foreign currency may be opened at one authorized bank.

Transactions on direct investment capital accounts in foreign currency

Transactions on direct investment capital accounts in foreign currency of FDI enterprises are conducted according to the guidelines in Article 6 of Circular no. 06/2019/TT-NHNN, specifically:

Receipts include:

• Receiving foreign currency contributions via bank transfer from foreign investors and Vietnamese investors in foreign direct investment enterprises.
• Receiving payment via bank transfer for the value of investment capital transfers and investment projects.
• Receiving foreign currency purchased from authorized credit institutions to transfer capital, profits, and lawful revenues abroad.
• Receiving transfers from foreign currency payment accounts opened at authorized banks by the foreign direct investment enterprise itself to transfer capital, profits, and lawful revenues abroad to foreign investors.
• Receiving foreign currency conversions to make investment contributions in cases where the investment currency differs from the currency of the already opened direct investment capital account.

Disbursements include:

• Transferring to foreign currency payment accounts opened at authorized banks by the foreign direct investment enterprise itself.
• Selling foreign currency to authorized credit institutions to transfer to the Vietnamese dong payment account of the foreign direct investment enterprise itself.
• Transferring payment for the value of investment capital transfers and investment projects to the transferor abroad or selling foreign currency to pay for the value of investment capital transfers and investment projects to the transferor in Vietnam in Vietnamese dong.
• Transferring profits and lawful revenues in foreign currency from foreign direct investment activities in Vietnam abroad to foreign investors.

Note on foreign currency in investment capital and project transfers

The currency for pricing and payment of investment capital and project transfer values in foreign direct investment activities in Vietnam:

• Pricing and payment of investment capital and project transfer values between two non-residents are allowed to be conducted in foreign currency.
• Pricing and payment of investment capital and project transfer values between residents and non-residents, and between residents, must be conducted in Vietnamese dong.

The above is the advice of Viet An Law on the foreign currency use in Vietnam business operations. If you have any related questions, please contact Viet An Law for the best advice and support!