Issues related to transferring profits abroad: Legal advice on regulations and procedures for international payments for FDI enterprises

Issues related to transferring profits abroad: Legal advice on regulations and procedures for international payments for FDI enterprises. The issue of transferring profits abroad is one of the key concerns for foreign-invested enterprises (FDI) in Vietnam. This requires strict adherence to legal regulations on foreign exchange management and international payment procedures. Below is basic information and legal advice related to this issue that HTC Vietnam Law Firm will share with you in the following article.

1. Legal basis

Regulations related to the repatriation of profits include:

- The Investment Law 2020, the Enterprise Law 2020, the Tax Administration Law 2019, and the Law on the State Bank of Vietnam 2015: These laws regulate the right of investors to transfer profits abroad.

- Circular guiding foreign exchange management for overseas investment activities: Regulating activities related to foreign currency and money transfers abroad.

- Circular 186/2010/TT-BTC: Regulations on the repatriation of profits by FDI enterprises.

Other relevant legal documents include the Corporate Income Tax Law and Double Taxation Avoidance Agreements between Vietnam and the investor's country.

2. Conditions for transferring profits abroad

Foreign direct investment (FDI) enterprises are only allowed to transfer profits abroad if they meet the following conditions:

- The company has fulfilled its tax obligations in Vietnam.

- There were no accumulated losses during the profit-carrying period.

- Audited financial statements and related documents are available.

- Ensure compliance with foreign exchange management regulations and other legal regulations.

3. Processes and procedures

a) Prepare the documents

Documents required for transferring profits abroad include:

- Audited financial statements.

- Corporate income tax return form .

- Certificate confirming that tax obligations have been fulfilled.

- Minutes of meetings and decisions of the Board of Directors or owner regarding profit distribution.

- A written request for the bank to transfer the profits.

b) Performed at the bank

Businesses need to open an investment capital account at a commercial bank in Vietnam. Profit transfers will be conducted through this account as per regulations.

c) Profit transfer time

Profits can be transferred overseas annually or upon completion of the investment project.

The transfer usually takes place after the tax settlement is completed.

4. Important notes

Compliance with international tax agreements: Check whether the investor's country has a double taxation avoidance agreement with Vietnam.

Develop a sound tax plan: Ensure optimal tax cost management while remaining compliant with the law.

Meet deadlines: Avoid delays that could impact business operations or result in penalties.

5. Legal advice from a lawyer

A lawyer specializing in investment law and foreign exchange management can assist businesses in:

- Prepare complete and accurate legal documents.

- Verify and assess the legality of profit-sharing transactions.

- Providing advice on international tax matters and investor rights.

Commitment to service quality:

HTC Vietnam Law Firm operates with the motto of dedication – efficiency – credibility, and is committed to ensuring the quality of its services, specifically as follows:

- Ensure that work is completed according to the agreed schedule, in compliance with legal regulations, and in accordance with the code of ethics and conduct for Vietnamese lawyers.

- We prioritize customer interests and strive to provide our customers with the best possible service quality.

- Protect the information provided by customers and information related to customers.

We look forward to a long-term partnership and mutual growth with our valued customers.

Best regards!

(Author: Vu Nam; Translator: Nguyen Phuong Anh; Date: December 11, 2024)

For detailed advice, please contact:

HTC Vietnam Law Firm

Address: 4th Floor, Multi-purpose Building, 169 Nguyen Ngoc Vu Street, Trung Hoa Ward, Cau Giay District, Hanoi City.

Phone: 0989.386.729

Email: hotmail@htcvn.vn

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