Transfer of foreign direct investment capital into Vietnam
Vietnam is always highly appreciated for political stability, abundant human resources, potential markets, competitive costs, favorable geographical location, and broader integration of the economy. The free trade agreements that Vietnam has signed and comes into force – the latest agreement with the EU is EVFTA – also contribute to the attractiveness of Vietnam’s business and investment environment. Therefore, Viet An Law would like to send customers articles related to the transfer of foreign direct investment capital into Vietnam to provide customers with the necessary information based on the provisions of law.
Legal basis:
Law on Investment 2020;
Circular No.06/2019/TT-NHNN guiding foreign exchange management for foreign direct investment activities in Vietnam;
Circular No.23/2014/TT-NHNN guiding the opening and use of payment accounts at payment service providers;
Circular No.02/2019/TT-NHNN amending and supplementing the provisions of Circular No.23/2014/TT-NHNN dated August 19, 2014, of the State Bank of Vietnam guiding the opening and use of payment at the payment service supplier.
Form of direct investment in Vietnam:
If 4 investment forms are stipulated in the Law on Investment 2014 including investment in the establishment of economic organizations, investment in the form of capital contribution, share purchase, capital contribution to economic organizations, investment according to the form of PPP contract, the Law on Investment 2020 shall add new forms of investment and a new type of economic organization according to the government’s regulations on the form of investment at Article 21. Thus, forms of direct investment in Vietnam by foreign investors from January 1, 2021, include:
Investment in establishing economic organizations;
Capital contribution, share purchases, capital contribution purchase;
Investment project implementation;
Investment in the form of BBC contract;
New forms of investment, new types of economic organizations under the government’s regulations.
Open a direct investment account:
Subjects open direct investment capital account including:
Foreign direct investment enterprises include:
Enterprises established under the form of investment to establish economic organizations in which there are foreign investors as members or shareholders and must carry out the procedures for granting the Investment Registration Certificate under the Law on Investment;
Enterprises are not above cases and have foreign investors holding 51% or more of the charter capital of the enterprise including:
Enterprises with foreign investors contributing capital, buying shares or capital contributions to enterprises (operating in conditional business lines or trades that are not subject to conditions applicable to foreign investors) leading to foreign investors owning 51% or more of the charter capital of the enterprise;
Enterprises are established after the split, merger, or consolidation results in foreign investors owning 51% or more of the charter capital of the enterprise;
Newly established enterprises according to the provisions of specialized law;
Foreign investors participate in BBC contracts, foreign investors directly implementing PPP projects in case of not establishing a project enterprise (hereinafter referred to as foreign investors directly implementing PPP projects).
Requirements for opening a direct investment account
A direct investment capital account in foreign currencies must be opened at 01 authorized banks to conduct legal receipt and expenditure transactions in foreign currencies related to foreign direct investment activities in Vietnam;
Corresponding to the type of foreign currency for capital contribution, only 01 direct investment capital account in that foreign currency can be opened at 01 authorized banks;
In case of making an investment in VND, to open 01 direct investment account in VND at an authorized bank where the direct investment capital account in foreign currency has been opened for implementation transactions of legal receipts and payments in VND relating to foreign direct investment activities in Vietnam;
In case a foreign investor participates in many BBC contracts or directly performs multiple PPP projects, the foreign investor must open a separate direct investment account corresponding to each BBC contract or PPP project.
Opening a direct investment account dossier:
Application form for opening a payment account, enclosed with the registration of seal sample, signature sample (according to Appendix 01 and Appendix 02 to the Circular), signed by the legal representative of the account opening organization;
Documents proving that the organization opening a payment account is legally established and operating including charter, establishment decision, operation license, business registration certificate or business registration certificate or investment certificate;
Documents proving that the legal representative status of the legal representative of the organization opening a payment account and certain citizen’s identity card or valid passport;
Documents or decisions on appointment and citizen identification card or valid identity card or passport of the chief accountant or person in charge of accounting, the controller for transactions with the State Bank.
Notices: The documents in the dossier to open the payment account (ii), (iii), (iv) are the originals or copies. If the documents in the application for opening a payment account are in a foreign language, they must be translated into Vietnamese and notarized under law.
The above documents will be sent to the State Bank (the State Bank’s Transaction Center or the State Bank branch in a province or city) where the application for opening a payment account will be submitted and processed within 01 working days.
Transfer money for investment preparation:
Upon issuance of the Investment Registration Certificate by the competent authority, the Notice of satisfaction of conditions for capital contribution, share purchase, capital contribution redemption of foreign investors, the Establishment and Operation License according to specialized laws, signing PPP contracts, foreign investors are allowed to transfer money from abroad or from foreign investors’ payment accounts in foreign currency or VND opened at authorized banks in Vietnam before to pay legal taxes during the stage of implementing investment preparation activities in Vietnam such as:
Transfer a part or whole to a capital contribution;
Transfer a part or whole into the foreign loan of a foreign direct investment enterprise. In case of transfer into a foreign loan, the enterprises with foreign direct investment capital shall comply with the provisions of the law on foreign borrowing and foreign debt payment of the enterprise. The term of a foreign loan is counted from the date the project is issued with the Investment Registration Certificate, License of Establishment and Operation by a competent authority under specialized law, the signing of a PPP contract, or the date on which the parties sign a foreign loan agreement (whichever comes later) to the final repayment date;
Transfer to foreign investors in a foreign currency or VND the money transferred to VND for the implementation of investment preparation activities after deducting legal taxes related to investment preparation activities in Vietnam.
In case the certificate of investment registration is not issued by a competent authority, a notice of the satisfaction of the conditions for capital contribution, share purchase, capital contribution redemption of a foreign investor, or establishment license and operating under specialized laws, signing PPP contracts or discontinuing direct investment projects in Vietnam, foreign investors are allowed to transfer the remaining money in foreign currency or to buy foreign currency for transfer abroad for the money transferred into Vietnam and interest arising (if any) after deducting legal taxes related to the investment preparation in Vietnam.
Above are some guidelines on the transfer of foreign direct investment capital into Vietnam by foreign investors, if customers have any related difficulties, please contact Viet An Law for the fastest support!
Viet An Law provide legal proffesional service to register foreign company in Vietnam with fastest and cost-effective way, which helps your business enter Vietnam market successfully.
Company setting up in Vietnam is one of the Viet An Law's advantage, with more than 15 years in professional legal practice. This procedure includes 3 main steps...
Schedule of specific commitment in services for CONSTRUCTION AND RELATED ENGINEERING SERVICES, According WTO: Mode of delivery: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural…
Vietnam officially joined a member of the World Trade Organization (WTO) on January 11, 2007. After Vietnam became an official member of the WTO, this is a valuable opportunity for…