| STATE BANK VIETNAM |
SOCIAL REPUBLIC OF VIETNAM Independence - Freedom - Happiness |
| Number: 19/2014/TT-NHNN | Hanoi, date 11 month 08 year 2014 |
CIRCULARS
GUIDELINES ON FOREIGN EXCHANGE MANAGEMENT FOR FOREIGN DIRECT INVESTMENT IN VIETNAM
Based on the Law on the State Bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;
Based on the Law on Credit Institutions No. 47/2010/QH12 dated June 16, 2010;
Based on the Foreign Exchange Ordinance No. 28/2005/PL-UBTVQH11 dated December 13, 2005; and Ordinance No. 06/2013/UBTVQH13 dated March 18, 2013 amending and supplementing a number of articles of the Foreign Exchange Ordinance No. 28/2005/PL-UBTVQH11 dated December 13, 2005;
Based on Decree No. 70/2014/ND-CP dated July 17, 2014 of the Government detailing the implementation of a number of articles of the Foreign Exchange Ordinance and the Ordinance amending and supplementing a number of articles of the Foreign Exchange Ordinance;
Based on Decree No. 156/2013/ND-CP dated November 11, 2013 of the Government stipulating the functions, tasks, powers and organizational structure of the State Bank of Vietnam (hereinafter referred to as the State Bank);
As requested by the Director of the Foreign Exchange Management Department;
The Governor of the State Bank of Vietnam issued a Circular providing guidance on foreign exchange management for foreign direct investment activities in Vietnam.
Chapter I
GENERAL RULES
Article 1. Scope
This Circular provides guidance on foreign exchange management for foreign direct investment activities in Vietnam, including: capital contributions; opening and using foreign currency and Vietnamese Dong direct investment capital accounts; transferring capital, profits, and legitimate income abroad; and transferring investment capital for the investment preparation phase.
Article 2. Subject of application
This circular applies to the following subjects:
1. Residents who are businesses with foreign direct investment;
2. Non-residents participating in business cooperation contracts in Vietnam;
3. Non-residents who are foreign investors in enterprises with foreign direct investment;
4. Organizations and individuals involved in foreign direct investment activities in Vietnam.
Article 3. Explain words
In this Circular, the following terms are understood as follows:
1. "Foreign investor" includes: Non-resident organizations and individuals carrying out foreign direct investment activities in Vietnam in the forms of direct investment as prescribed by current investment laws.
2. "Foreign direct investment enterprise" refers to an enterprise established and managed by a foreign investor who contributes capital to carry out investment activities in Vietnam.
3. “Authorized banks” include commercial banks and branches of foreign banks that are permitted to conduct foreign exchange business and provide foreign exchange services in accordance with the law.
4. "Authorized credit institutions" include authorized banks and non-bank credit institutions that are permitted to conduct foreign exchange business and provide foreign exchange services in accordance with the law.
5. “Direct investment capital account” is a payment account in foreign currency or Vietnamese Dong opened by enterprises with foreign direct investment capital or foreign investors participating in business cooperation contracts at an authorized bank to carry out transactions related to foreign direct investment activities in Vietnam as prescribed in Articles 6, 7, and 8 of this Circular.
Article 4. General Principles
1. Enterprises with foreign direct investment and foreign investors must comply with the provisions of the law on investment, current regulations on foreign exchange management, and this Circular.
2. Capital contributions in cash by foreign and Vietnamese investors in enterprises with foreign direct investment must be made through bank transfers to the foreign direct investment capital account.
3. The use of distributed profits by foreign investors in Vietnam must comply with current regulations on foreign exchange management and other relevant provisions of Vietnamese law.
4. The transfer of investment capital in enterprises with foreign investment capital and investment projects of foreign investors must ensure compliance with the provisions of the Investment Law, the Enterprise Law, the Personal Income Tax Law, the Corporate Income Tax Law, guiding documents for these Laws, current regulations on foreign exchange management, and other relevant legal provisions.
5. The transfer of funds for the transfer of investment capital and investment projects must comply with current regulations on foreign exchange management and other relevant laws.
6. Foreign investors may use legitimate earnings in Vietnamese Dong or foreign currency from foreign direct investment activities in Vietnam to reinvest in Vietnam.
Chapter II
SPECIFIED
Article 5. Capital Contribution
1. Foreign investors and Vietnamese investors in enterprises with foreign direct investment capital may contribute investment capital in foreign currency or in Vietnamese Dong up to the investment capital amount specified in the Investment Certificate.
2. Residents who are Vietnamese investors in enterprises with foreign direct investment capital may contribute investment capital from their legally owned foreign currency sources.
Article 6. Opening direct investment capital accounts in foreign currency and Vietnamese Dong
1. To carry out foreign direct investment activities in Vietnam, enterprises with foreign direct investment capital and foreign investors participating in business cooperation contracts may open foreign direct investment capital accounts in foreign currency and Vietnamese Dong at one authorized bank to carry out the receipt and disbursement transactions stipulated in Articles 7 and 8 of this Circular.
2. Enterprises with foreign direct investment capital and foreign investors participating in business cooperation contracts may open direct investment capital accounts in their chosen foreign currency to make investment contributions.
Corresponding to the type of foreign currency chosen for capital contribution, enterprises with foreign direct investment capital and foreign investors participating in business cooperation contracts are only allowed to open 01 (one) direct investment capital account in that foreign currency to make capital contributions.
3. 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 direct investment account in the borrowed currency at the same authorized bank where the original direct investment account was opened. This account will be used to conduct legitimate transactions related to the foreign loan and other transactions stipulated in Article 7 of this Circular.
4. In cases where there is a need to open a direct investment capital account at another authorized bank, foreign direct investment enterprises and foreign investors participating in business cooperation contracts must close the opened direct investment capital account and transfer the entire balance to the new account. The procedures for opening and closing direct investment capital accounts shall be carried out according to the regulations of the authorized bank.
Foreign-invested enterprises and foreign investors participating in business cooperation contracts are only permitted to conduct transactions on newly opened direct investment capital accounts after closing and settling previously opened direct investment capital accounts.
Article 7. Use of foreign currency direct investment capital accounts
Foreign currency direct investment capital accounts are used to carry out the following receipts and disbursements related to direct investment activities:
1. Receipt transactions:
a) Collecting foreign currency capital contributions from foreign investors and Vietnamese investors in enterprises with foreign direct investment;
b) Collecting foreign currency withdrawals from short-term, medium-term, and long-term domestic and foreign loans of enterprises with foreign direct investment;
c) Collect payments for the transfer of investment capital and investment projects;
d) Receiving foreign currency from foreign currency payment accounts opened at authorized banks by enterprises with foreign direct investment and foreign investors;
d) Other legitimate receipts in foreign currency related to foreign direct investment activities in Vietnam.
2. Expense transactions:
a) Payment of principal, interest, and fees on short-term, medium-term, and long-term domestic and foreign loans in foreign currency by enterprises with foreign direct investment;
b) Transferring foreign currency to a foreign currency payment account opened at an authorized bank by enterprises with foreign direct investment and foreign investors;
c) Selling foreign currency to authorized credit institutions for transfer into Vietnamese Dong payment accounts of foreign-invested enterprises and foreign investors;
d) Transfer of funds to pay for the value of transferred investment capital and investment projects;
d) Transferring profits and other legitimate foreign currency earnings from foreign direct investment activities in Vietnam by foreign investors out of Vietnam;
e) Transfer of foreign direct investment capital by foreign investors out of Vietnam in cases of dissolution, termination of operations of foreign direct investment enterprises, transfer of investment capital and investment projects, reduction of investment capital, or termination, liquidation, or cessation of operations of investment projects in accordance with the law on investment;
g) Other legitimate expenses in foreign currency related to foreign direct investment activities in Vietnam.
Article 8. Use of direct investment capital accounts in Vietnamese Dong
The Vietnamese Dong direct investment capital account is used to carry out the following transactions related to direct investment activities:
1. Receipt transactions:
a) Collecting direct investment capital contributions in Vietnamese Dong from foreign investors and Vietnamese investors in enterprises with foreign direct investment;
b) Profits after tax distributed in Vietnamese Dong for reinvestment in Vietnam by foreign investors and Vietnamese investors in enterprises with foreign direct investment;
c) Collecting funds withdrawn from short-term, medium-term, and long-term domestic loans in Vietnamese Dong by foreign-invested enterprises to carry out investment activities in Vietnam;
d) Collecting funds withdrawn from foreign loans denominated in Vietnamese Dong by foreign-invested enterprises permitted to borrow foreign loans in Vietnamese Dong according to current regulations on foreign borrowing and debt repayment by enterprises not guaranteed by the Government;
d) Collect payments for the transfer value of investment capital and investment projects;
e) Receiving transfers from Vietnamese Dong payment accounts of foreign-invested enterprises and foreign investors opened at authorized banks.
2. Expense transactions:
a) Transferring funds to the Vietnamese Dong payment account of a foreign-invested enterprise and foreign investor opened at an authorized bank;
b) Transferring profits in Vietnamese Dong to foreign investors and Vietnamese investors in enterprises with foreign direct investment;
c) Payment of principal, interest, and fees on short-term, medium-term, and long-term domestic loans in Vietnamese Dong for the implementation of investment projects by enterprises with foreign direct investment;
d) Payment of principal, interest, and fees on foreign loans in Vietnamese Dong by enterprises with foreign direct investment capital that are permitted to borrow foreign loans in Vietnamese Dong according to current regulations of the law on foreign borrowing and debt repayment by enterprises not guaranteed by the Government;
d) Transferring funds to pay for the value of transferred investment capital and investment projects;
e) Transferring investment capital in Vietnamese Dong to foreign investors and Vietnamese investors in foreign-invested enterprises in cases of dissolution, termination of operations of foreign-invested enterprises, transfer of investment capital and investment projects, reduction of investment capital, or termination, liquidation and cessation of operations of investment projects in accordance with the law on investment.
Article 9. Transfer of capital, profits and lawful income abroad.
1. Foreign investors may transfer foreign direct investment capital abroad upon dissolution, termination of operations of foreign direct investment enterprises, reduction of investment capital, or completion, liquidation, or termination of investment projects and business cooperation contracts in accordance with the law on investment, including principal, interest and foreign loan costs, profits and other legitimate sources of income related to direct investment activities in Vietnam, through a direct investment capital account, except for certain cases specified in Clause 2 of this Article and Clauses 2 and 3 of Article 10 of this Circular.
2. In cases where a foreign direct investment enterprise is required to close its direct investment capital account due to dissolution, cessation of operations, or the transfer of investment capital that changes the original 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.
3. Foreign investors may use legitimate Vietnamese Dong earnings from direct investment activities in Vietnam to purchase foreign currency at authorized credit institutions and transfer it abroad within 30 working days from the date of purchase.
Article 10. Transfer of capital for the investment preparation phase
1. Transferring investment capital into Vietnam before obtaining an Investment Certificate:
a) Before being granted an Investment Certificate, foreign investors are permitted to transfer investment capital into Vietnam to cover legitimate expenses for the investment preparation phase in Vietnam, in accordance with written agreements between the relevant parties and through their foreign currency payment accounts opened at authorized banks;
b) Foreign investors may use the investment capital transferred into Vietnam as stipulated in point a of this clause to cover legitimate expenses for the investment preparation phase in Vietnam, provided they comply with current laws on the use of foreign exchange in Vietnam and other relevant provisions of Vietnamese law.
2. Transferring investment capital abroad after obtaining an Investment Certificate:
a) After receiving the Investment Certificate from the competent authority, foreign investors, Vietnamese investors in enterprises with foreign direct investment, and foreign investors participating in business cooperation contracts must settle the portion of investment capital transferred into Vietnam before the Investment Certificate was issued;
b) The conversion of foreign investor capital already transferred to Vietnam to cover the costs of the investment preparation phase in Vietnam into foreign equity or loans shall be carried out on the basis of agreement between the relevant parties, ensuring compliance with current regulations of investment law, accounting regulations, and other relevant provisions of Vietnamese law.
In cases where foreign investor capital transferred to Vietnam has been used to cover investment preparation costs and is converted into a medium- or long-term foreign loan for a foreign direct investment (FDI) enterprise, the FDI enterprise shall register the medium- or long-term foreign loan in accordance with the current regulations of the State Bank of Vietnam;
c) In cases where a foreign investor does not fully utilize the investment capital transferred into Vietnam to cover investment preparation costs, the foreign investor may transfer the remaining investment capital abroad in foreign currency or purchase foreign currency to transfer abroad the remaining investment capital that was transferred in Vietnamese Dong but not fully spent in Vietnam, provided that the investor submits documents proving the amount of investment capital transferred and the expenses incurred for the investment project in Vietnam. The transfer of capital abroad must be completed within 30 working days from the date of purchase of foreign currency.
3. Transfer of investment capital abroad due to the refusal to issue an Investment Certificate or the discontinuation of the direct investment project in Vietnam:
a) In cases where a foreign investor has transferred investment capital into Vietnam to cover legitimate expenses for the investment preparation phase in Vietnam but is not granted an Investment Certificate by the competent authority or does not continue to implement the direct investment project in Vietnam, the foreign investor may transfer abroad the investment capital already transferred into Vietnam and any accrued interest (if any) after deducting expenses incurred related to the direct investment preparation activities in Vietnam, provided that valid documents proving the investment capital transferred into Vietnam and legitimate expenses incurred related to the preparation of the investment project in Vietnam are presented;
b) Foreign investors are allowed to purchase foreign currency and transfer it abroad for investment capital that has been converted into Vietnamese Dong but not fully spent in Vietnam, provided they present documents proving the amount of investment capital transferred and the expenses incurred for the investment project in Vietnam; the transfer of capital abroad must be completed within 30 working days from the date of purchase of foreign currency.
4. The transfer of the remaining investment capital abroad as stipulated in Clauses 2 and 3 of this Article shall be carried out through a foreign currency payment account opened at an authorized bank of the foreign investor that was used to transfer investment capital into Vietnam as stipulated in point a, Clause 1 of this Article.
Article 11. Direct investment in the form of capital contribution and share purchase.
Foreign investors who invest directly in Vietnam in the form of purchasing shares or contributing capital to participate in the management of investment activities in Vietnam must comply with the following regulations on opening accounts:
1. In cases where a Vietnamese enterprise is granted an Investment Certificate by a competent authority in accordance with current investment laws, that enterprise must open a direct investment capital account and comply with the regulations in this Circular.
2. For cases other than those stipulated in point a of this clause, the provisions of Circular No. 05/2014/TT-NHNN dated March 12, 2014 of the State Bank of Vietnam guiding the opening and use of indirect investment capital accounts for carrying out indirect foreign investment activities in Vietnam and any amendments or supplements (if any) shall apply.
Chapter III
RIGHTS AND OBLIGATIONS OF LICENSED CREDIT INSTITUTIONS, FOREIGN DIRECT INVESTMENT ENTERPRISES, AND FOREIGN INVESTORS
Article 12. Rights and obligations of authorized credit institutions
1. When opening direct investment capital accounts and conducting transactions related to foreign direct investment activities in Vietnam for foreign-invested enterprises and foreign investors, authorized credit institutions have the right to request foreign-invested enterprises and foreign investors to present documents and certificates related to direct investment activities in Vietnam.
2. When conducting transactions related to foreign direct investment activities in Vietnam by foreign-invested enterprises and foreign investors, authorized credit institutions are responsible for:
a) Providing guidance to foreign direct investment enterprises and foreign investors on procedures related to opening and closing foreign direct investment accounts;
b) To regulate, inspect, and maintain appropriate documentation for transactions related to receipts and disbursements in the foreign investor's direct investment capital account to ensure that these transactions are conducted in accordance with the provisions of this Circular and relevant provisions of Vietnamese law;
c) Selling foreign currency to foreign investors for transfer abroad, based on the self-balancing of foreign currency sources of authorized credit institutions and in accordance with the provisions of the law.
Article 13. Rights and obligations of enterprises with foreign direct investment and foreign investors
1. Enterprises with foreign direct investment and foreign investors are permitted to conduct direct investment activities in Vietnam on the basis of complying with the regulations in this Circular and other relevant provisions of Vietnamese law.
2. When conducting transactions related to receipts and payments concerning foreign direct investment activities in Vietnam, foreign-invested enterprises and foreign investors are responsible for:
a) Declare the details of transactions related to foreign direct investment in Vietnam as required and guided by authorized credit institutions;
b) Submit and supplement the required documents and records as requested by the authorized credit institution.
Chapter IV
REPORTING SYSTEM
Article 14. Reporting requirements for authorized credit institutions
Credit institutions are permitted to report to the State Bank of Vietnam on the status of foreign direct investment activities in Vietnam by foreign investors in accordance with the current regulations of the State Bank of Vietnam on statistical reporting.
Article 15. Requirements for ad hoc reporting
In exceptional circumstances or when necessary, foreign-invested enterprises and credit institutions are permitted to report relevant information as required by the State Bank of Vietnam.
Chapter V
INSPECTION, EXAMINATION, AND VIOLATION HANDLING WORK
Article 16. Inspection, auditing, and supervision work
1. The State Bank of Vietnam and its provincial and centrally-administered city branches shall conduct inspections, examinations, and supervision of compliance with regulations on foreign exchange management related to foreign direct investment activities in Vietnam by enterprises with foreign direct investment capital, foreign investors, and authorized credit institutions as stipulated in this Circular and other relevant legal regulations.
Relevant organizations and individuals are responsible for providing all necessary records and documents to ensure that inspections, examinations, and supervision are carried out promptly and effectively.
Article 17. Handling of violations
In case of violations of the regulations in this Circular, depending on the severity of the violation, foreign-invested enterprises, foreign investors, and authorized credit institutions will be handled according to the provisions of the law.
Chapter VI
ORGANIZATION OF IMPLEMENTATION
Article 18. Enforcement
1. This Circular shall take effect from January 1, 2014.
2. Article 9 of Circular No. 05/2014/TT-NHNN dated March 12, 2014 of the State Bank of Vietnam guiding the opening and use of indirect investment capital accounts for carrying out foreign indirect investment activities in Vietnam is hereby repealed.
Article 19. Transitional provisions
1. From the effective date of this Circular, enterprises with foreign direct investment capital and foreign investors participating in business cooperation contracts are responsible for converting their specialized foreign currency capital deposit accounts to foreign currency direct investment capital accounts.
The conversion of foreign direct investment capital accounts to foreign currency by enterprises with foreign direct investment and foreign investors participating in business cooperation contracts shall be carried out within 06 months from the effective date of this Circular.
2. Authorized credit institutions are responsible for converting foreign currency direct investment capital accounts as stipulated in Clause 1 of this Article for enterprises with foreign direct investment and foreign investors participating in business cooperation contracts.
3. Six months after the effective date of this Circular, enterprises with foreign direct investment and foreign investors participating in business cooperation contracts are not allowed to use specialized foreign currency deposit accounts to carry out direct investment activities in Vietnam.
Article 20. Implementation
The Chief of Office, Director of the Foreign Exchange Management Department, heads of relevant units under the State Bank of Vietnam, Directors of State Bank of Vietnam branches in provinces and centrally-administered cities, Chairmen of the Board of Directors, Chairmen of the Board of Members, and General Directors (Directors) of credit institutions and branches of foreign banks are responsible for organizing the implementation of this Circular.