Transferring profits from a foreign-invested enterprise (FDI) in Vietnam to its parent company is a fundamental and legal right, but it comes with strict legal requirements. Enterprises must fulfill tax obligations, ensure audited financial statements are complete, and carry out foreign exchange procedures at banks according to regulations. Understanding the legal framework, required documentation, and practical limitations helps enterprises avoid tax reassessments, administrative penalties, or liquidity issues.
This article, prepared by DNP Viet Nam Law Firm and updated according to 2025 regulations, provides FDI enterprises with a practical guide to safely and efficiently repatriate profits abroad.
1. Legal conditions for profit repatriation
Legal basis: Article 3, Circular 186/2010/TT-BTC.
Foreign investors can only transfer profits abroad if certain conditions are met.
- Profits eligible for repatriation are calculated as: (Profits in the financial year from investment activities in Vietnam + Undistributed profits from previous years) − Amounts committed for reinvestment or used for business operations or personal expenses in Vietnam.
- If the enterprise still has accumulated losses after tax offsetting according to regulations, profits for that period cannot be distributed, and the foreign investor is not permitted to transfer them abroad.
Example: A foreign investor A contributes capital to establish a company in Vietnam, which incurred a loss of VND 4 billion in 2009.
- Scenario 1: In 2010, the company has a pre-tax income of VND 3 billion. After offsetting the 2009 loss, there is still a VND 1 billion loss. Thus, the company cannot distribute profits, and investor A cannot transfer profits abroad.
- Scenario 2: In 2010, the company has a pre-tax income of VND 5 billion. After offsetting the 2009 loss, the taxable income is VND 1 billion. With a corporate income tax rate of 25%, the company pays VND 250 million in CIT. The remaining profit can be distributed, and investor A is allowed to transfer profits abroad.
2. Timing of profit repatriation
Legal basis: Article 4, Circular 186/2010/TT-BTC.
Profit repatriation can occur annually or upon the termination of direct investment activities in Vietnam. To repatriate profits, foreign investors must ensure that:
- All financial obligations to the Vietnamese state have been fulfilled;
- Audited financial statements and corporate income tax finalization declarations have been submitted;
- The local tax authority has been notified in advance of the intended profit repatriation;
- All obligations under the law on tax administration have been met (especially when ending investment activities in Vietnam).
3. Form of profit repatriation
Legal basis: Article 2, Circular 186/2010/TT-BTC; Clause 5, Article 3 and Clause 2, Article 9, Circular 02/2019/TT-BTC.
Profits may be repatriated either in cash (VND or foreign currency) or in kind.
- In-kind transfer: The value of in-kind profits must be converted according to relevant import-export and other applicable regulations.
- Cash transfer: Profits must be transferred through the enterprise’s direct investment capital account at an authorized bank. If the company ceases operations and the direct investment capital account is closed, the foreign investor may use a VND or foreign currency payment account at an authorized bank to carry out transactions.
4. Procedures for profit repatriation
Legal basis: Articles 4 and 5, Circular 186/2010/TT-BTC.
- Before transferring profits, the foreign investor or an authorized enterprise must submit a profit repatriation notice to the managing tax authority at least seven working days before the transfer.
- Required documentation includes: Audited financial statements; Corporate income tax finalization declaration; Profit distribution decision (or shareholders’/investors’ resolution); Supporting documents if requested by the tax authority.
- After tax verification, the bank will use the submitted documents to confirm the legality of the profits before executing the transfer.
“The above content is provided by DNP Viet Nam Law Firm for reference purposes only. For detailed, accurate, and tailored legal advice that meets your specific needs, please contact us using the information provided below.”
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