Remitting profits abroad is a crucial issue for FDI enterprises in Vietnam. However, the remittance of profits must comply with the regulations of Vietnamese law. How can compliance and safety be ensured when transferring profits abroad? DNP Law Firm will help you understand the procedures, conditions, and important considerations when remitting profits abroad, ensuring optimal investment activities and compliance with Vietnamese law.
1. Regulations on Remitting Profits Abroad for FDI Enterprises
According to Article 12 of the Investment Law 2020, investors have the right to transfer assets abroad provided that they have fully met their financial obligations to the Vietnamese State as prescribed. Specifically, the assets that investors can transfer abroad include:
- Investment capital and proceeds from liquidation of its investment;
- Their income obtained from business investment activities;
- Money and other assets under the lawful ownership of the investors.
Article 2 of Circular 186/2010/TT/BTC stipulates that if the profit transferred from Vietnam to abroad is in cash, then it must comply with the regulations of the foreign exchange management law. On the other hand, if it involves other assets, their value must be converted in accordance with the regulations on the import and export of goods as well as related legal provisions.
However, if the financial report of the enterprise in which the foreign investor has invested shows a cumulative loss after tax loss carryforward as per corporate income tax law, the investor is not allowed to transfer the profits earned or distributed abroad (according to clause 3 of Article 3 of Circular 186/2010/TT/BT).
2. Classification of Profits and Timing of Profit Remittance Abroad
Based on clause 1 and clause 2 of Article 4 of Circular 186/2010/TT/BTC, investors may transfer abroad:
- Profits shared or earned from direct investment activities in Vietnam at the end of the fiscal year; or
- Profits upon the termination of direct investment activities in Vietnam.
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3. Conditions for Remitting Profits Abroad for FDI Investors
Based on clause 1 and clause 2 of Article 4 of Circular 186/2010/TT/BTC, investors may transfer abroad:
- Profits shared or earned from direct investment activities in Vietnam at the end of the fiscal year; or
- Profits upon the termination of direct investment activities in Vietnam.
Conditions for Remitting Profits Abroad for FDI Investors: According to clause 1 of Article 4 of Circular 186/2010/TT/BTC, investors are allowed to transfer profits only after two key conditions are met. First, the enterprise in which the foreign investor has invested must have completed its financial obligations to the Vietnamese State as per legal regulations. Second, the enterprise must have submitted audited financial statements as well as the corporate income tax return for the fiscal year to the direct tax authority.
4. Procedures for Remitting Profits Abroad for FDI Enterprises
According to official guidelines from the General Department of Taxation – Ministry of Finance at the National Public Service Portal, the process for remitting profits abroad is as follows:
Step 1:
- Preparation of notification: The foreign investor or the authorized enterprise prepares a notification about the profit remittance abroad according to the prescribed form.
- Submission of notification: Send this notification to the tax authority directly managing the enterprise in which the foreign investor has invested.
- Timing of submission: The notification must be sent at least 7 working days before the profit remittance abroad is executed.
Step 2: Tax authority reception
If submitting documents directly at the tax authority:
- The tax official receives the documents.
- Stamps confirmation of receipt.
- Records the time of receipt.
- Checks and records the number of documents in the file.
- Records in the logbook of the tax authority.
If submitting documents via postal service:
- When the documents are received, the tax official stamps the date received.
- Records the documents in the logbook of the tax authority.
Transferring profits abroad is a crucial process for FDI enterprises, as it requires strict compliance with investment, tax, and foreign exchange management regulations. To support this need, through this article from DNP Vietnam Law Firm, individuals and organizations can clearly understand the conditions, procedures, and timing of profit remittance. As a result, this knowledge helps enterprises optimize financial operations while also avoiding unnecessary legal risks.
The information above is for reference only. If you require further details, please contact us using the information below.
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