Regulations on foreign direct investment in Vietnam

Open and use a direct investment capital account.

1. Eligible individuals and entities for opening and using direct investment capital accounts.

Foreign direct investment enterprises In addition to the provisions in Clause 2, Article 3 of this Circular, including:

a) Enterprises established through the form of investment in the establishment of economic organizations, in which foreign investors are members or shareholders, must follow the procedures for obtaining an Investment Registration Certificate as prescribed by investment law;

b) Enterprises not falling under the cases specified in point a of this clause that have foreign investors owning 51% or more of the enterprise's charter capital, including:

• Businesses in which foreign investors contribute capital, purchase shares, or acquire equity stakes (operating in industries or business sectors subject to or without conditions applicable to foreign investors), resulting in foreign investors owning 51% or more of the business's charter capital;
• Businesses established after a split, merger, or consolidation resulting in foreign investors owning 51% or more of the company's charter capital;

c) Newly established enterprises in accordance with the provisions of specialized laws;

2. Regulations regarding opening direct investment capital accounts are as follows:

a) A foreign currency direct investment capital account must be opened at one (01) authorized bank to carry out legitimate foreign currency receipts and disbursements related to foreign direct investment activities in Vietnam;

b) Corresponding to the type of foreign currency used for capital contribution, only one (01) direct investment capital account in that foreign currency may be opened at one (01) authorized bank;

c) In the case of investment made in Vietnamese Dong, one (01) direct investment capital account in Vietnamese Dong may be opened at the same authorized bank where the direct investment capital account in foreign currency has been opened, in order to carry out legitimate receipts and disbursements in Vietnamese Dong related to foreign direct investment activities in Vietnam;

d) In cases where foreign loans are taken out in a currency different from the currency used by the foreign direct investment enterprise to open its direct investment account, the foreign direct investment enterprise may open an additional foreign loan and debt repayment account in the same currency as the borrowed loan at the same authorized bank where the direct investment account was opened. This account will be used to conduct legitimate receipts and disbursements related to the foreign loan, in accordance with the law on foreign borrowing and debt repayment by enterprises.

Receipts and disbursements on direct investment capital accounts in foreign currency.

1. Receipt transactions

a) Receiving transfers of foreign currency capital contributions from foreign investors and Vietnamese investors in enterprises with foreign direct investment;

b) Receiving bank transfers for payment of the value of investment capital transfers and investment projects;

c) Receiving foreign currency transfers purchased from authorized credit institutions to transfer capital, profits, and legitimate income abroad;

e) Receiving foreign currency conversion fees to make investment contributions in cases where the currency of the investment contribution is different from the currency of the direct investment account already opened;

f) Receiving the transfer of surplus capital from the issuance of new shares to increase the charter capital of enterprises with foreign direct investment;

2. Expense transactions

a) Transfer funds to a foreign currency payment account opened at an authorized bank by the foreign-invested enterprise itself;

b) Selling foreign currency to authorized payment institutions for transfer into the Vietnamese Dong payment account of the foreign-invested enterprise itself;

d) Transfer of profits and other legitimate foreign currency earnings from foreign direct investment activities in Vietnam by foreign investors to overseas countries;

e) Transfer of foreign currency direct investment capital by foreign investors abroad in cases of capital reduction, termination, liquidation, or cessation of investment project operations;

f) Expenses for converting foreign currency to facilitate the transfer of capital, profits, and legitimate income from direct investment activities abroad in cases where the currency for transferring capital, profits, and legitimate income abroad differs from the currency of the opened direct investment capital account;

g) Transfer payments related to foreign currency loans of enterprises with foreign direct investment capital as prescribed by the law on foreign borrowing and debt repayment by enterprises;

Receipts and disbursements on direct investment capital accounts in Vietnamese Dong.

1. Receipt transactions

a) Receiving transfers of direct investment capital contributions in Vietnamese Dong from foreign investors and Vietnamese investors in enterprises with foreign direct investment;

b) Receiving bank transfers for payment of the value of investment capital transfers and investment projects;

c) Receiving transferred profits distributed in Vietnamese Dong to foreign investors and Vietnamese investors in enterprises with foreign direct investment;

d) Receiving transfers from the Vietnamese Dong payment account of the foreign-invested enterprise itself to transfer capital, profits, and legitimate income abroad for the foreign investor;

e) Receiving the transfer of surplus capital from the issuance of new shares to increase the charter capital of enterprises with foreign direct investment;

f) Transfer receipts related to foreign loans denominated in Vietnamese Dong of enterprises with foreign direct investment capital that are permitted to borrow foreign loans in Vietnamese Dong according to the law on foreign borrowing and debt repayment by enterprises;

2. Expense transactions

a) Transferring funds to a Vietnamese Dong payment account opened at an authorized bank by the foreign-invested enterprise itself to carry out foreign direct investment activities in Vietnam;

b) Transferring funds to pay the value of investment capital transfers and investment projects to the transferor in Vietnam, or purchasing foreign currency to pay the value of investment capital transfers and investment projects to the transferor abroad;

c) Expenses for purchasing foreign currency for transfer to send profits and other legitimate income in Vietnamese Dong to foreign investors abroad;

d) Transfer of direct investment capital in Vietnamese Dong to Vietnamese investors or purchase of foreign currency to transfer direct investment capital from foreign investors abroad in cases of investment capital reduction, termination, liquidation, or cessation of investment project operations;

e) Transfer payments related to foreign loans denominated in Vietnamese Dong of enterprises with foreign direct investment capital that are permitted to borrow foreign loans in Vietnamese Dong according to the law on foreign borrowing and debt repayment;

Transfer funds for investment preparation activities.

1. Before being granted an Investment Registration Certificate or a Notice of Meeting the Conditions for Capital Contribution, Share Purchase, or Acquisition of Capital Contribution by a competent authority, foreign investors are permitted to transfer funds from abroad or from their foreign currency or Vietnamese Dong payment accounts opened at authorized banks in Vietnam to pay for legitimate expenses during the investment preparation phase in Vietnam.

2. After the competent authority issues the Investment Registration Certificate and the Notice of Meeting the Conditions for Capital Contribution, Share Purchase, or Acquisition of Capital Contributions by Foreign Investors, the amount of money transferred by foreign investors to Vietnam for investment preparation activities shall be used for:

a) Convert part or all of it into equity;

b) Converting part or all of the foreign-invested enterprise's foreign loan capital into foreign capital. In the case of conversion into a foreign loan, the foreign-invested enterprise shall comply with the regulations of the law on foreign borrowing and debt repayment by enterprises. The term of the foreign loan is calculated from the date the project is granted the Investment Registration Certificate by the competent authority, or the date the parties sign the foreign loan agreement (whichever comes later) to the final repayment date;

c) Reimburse the foreign investor in foreign currency or Vietnamese Dong the amount transferred into Vietnam for investment preparation activities, after deducting legitimate expenses related to investment preparation activities in Vietnam.

3. In cases where the competent authority does not issue an Investment Registration Certificate, a Notice of fulfillment of conditions for capital contribution, share purchase, or acquisition of capital contributions by foreign investors, or the foreign investor does not continue to implement the direct investment project in Vietnam, the foreign investor may transfer the remaining amount in foreign currency abroad or purchase foreign currency to transfer abroad the amount already transferred into Vietnam and accrued interest (if any) after deducting legitimate expenses related to investment preparation activities in Vietnam.

4. Transactions stipulated in Clauses 1, 2, and 3 of this Article shall be conducted on the basis of agreement between the relevant parties, with the presentation of valid documents and certificates proving the amount of money transferred into Vietnam and legitimate expenses related to investment preparation activities in Vietnam, ensuring compliance with regulations on foreign exchange management, investment law, accounting law, and other relevant legal regulations.

Transferring capital, profits, and legitimate income abroad.

1. Foreign investors must transfer funds abroad through a direct investment capital account:

a) Direct investment capital when investment capital is reduced; when an investment project is terminated, liquidated, or ceases operation;

b) Principal, interest, and expenses of foreign loans (except as stipulated in Clause 3, Article 5 of this Circular), profits, and other legitimate sources of income related to direct investment activities in Vietnam.

2. In cases where a foreign direct investment enterprise is required to close its direct investment capital account due to dissolution, bankruptcy, termination of the enterprise's existence, or the transfer of an investment project resulting in a change to the initially registered legal entity of the foreign direct investment enterprise, the foreign investor may use its foreign currency payment account or Vietnamese Dong payment account opened at an authorized bank to conduct transactions for purchasing foreign currency, transferring direct investment capital, and legitimate income abroad.

The regulations apply to cases that were previously handled according to the old regulations.

1. No later than 12 months from the effective date of this Circular (this Circular takes effect from September 6, 2019), enterprises and foreign investors who are non-residents and own shares or capital contributions in those enterprises must convert their accounts in accordance with Clauses 2 and 3 of this Article.

2. In cases where a business has foreign investors who have opened and used indirect investment capital accounts to contribute capital, purchase shares, or acquire equity in the business, leading to the foreign investor owning 51% or more of the charter capital, a direct investment capital account must be opened in accordance with the provisions of this Circular.

3. In the following cases, enterprises that have opened direct investment capital accounts must close these accounts, and the foreign investor who is a non-resident and owns shares or capital contributions in that enterprise must open an indirect investment capital account in accordance with foreign exchange management regulations:

a) Enterprises in which foreign investors own less than 51% of the enterprise's charter capital, except for the cases specified in point a, clause 2, Article 3 of this Circular;

b) Enterprises that are not required to go through the procedure of obtaining an Investment Registration Certificate but have a need for one and have already been granted an Investment Registration Certificate by the competent authority in accordance with the law on investment;

c) Enterprises with foreign direct investment whose shares are listed on a stock exchange or registered for trading on a stock exchange;

d) In cases where enterprises specified in points a, b, and c of this clause are currently borrowing and repaying foreign debt through a direct investment capital account, they may continue to maintain this account for the purpose of borrowing and repaying foreign debt in accordance with the law on borrowing and repaying foreign debt of enterprises.

4. During the transition period, foreign enterprises and investors who are non-residents and own shares or capital contributions in those enterprises may continue to use their existing capital accounts to conduct transactions related to foreign investment activities in Vietnam.

This Circular takes effect from September 6, 2019. This Circular replaces Circular 19/2014/TT-NHNN dated August 11, 2014 of the Governor of the State Bank of Vietnam guiding foreign exchange management for foreign direct investment activities in Vietnam.