REGULATIONS ON PROFIT TRANSFER FROM VIETNAM TO FOREIGN COUNTRIES

The transfer of profits from Vietnam to abroad is subject to many legal regulations in Vietnam, especially those on tax and foreign exchange management. Below are the main regulations related to the transfer of profits from Vietnam to foreign countries:

1. Reguations on CIT (Corporate income tax)
When a business operates in Vietnam and wants to transfer profits abroad, these profits must be subject to corporate income tax according to Vietnamese law. The current corporate income tax in Vietnam is 20% on profits after tax.

Enterprises need to fulfill their tax obligations fully before transferring profits abroad.

2. Reguations on profit transfer abroad
Remittance of profits abroad is usually done in the form of remittance or dividend. This process must comply with the following requirements:
• Foreign-invested companies (FDI): To remit profits abroad, the company must carry out profit transfer procedures in accordance with the provisions of the law on investment and foreign exchange. After fully paying taxes and completing domestic financial obligations, FDI companies can remit profits abroad.
• Dividend transfer: Dividends are allowed to be transferred abroad to foreign investors after fulfilling tax obligations. The transfer of dividends must be carried out by the company through a foreign currency account at a bank and must be notified to the relevant state management agency.

3. Regulations on Foreign Exchange Management
Money transfers from Vietnam to foreign countries must also comply with the regulations of the State Bank of Vietnam (SBV) on foreign exchange management. Specifically:
• The company must have a foreign currency account: To transfer money abroad, the company must open a foreign currency account at a bank and conduct transactions through this account.
• Proof of profit origin: The company must have full documents proving the origin of profit (such as financial statements, tax receipts) to ensure the legality of the money transfer.

4. Necessary procedures
Procedures for transferring profits abroad include:
• Tax confirmation: Enterprises must have a certificate from the tax authority that they have fully paid corporate income tax.
• Official letter requesting permission to transfer money: In some cases, enterprises need to request permission from the State Bank or competent authorities when transferring profits abroad.
• Documents proving the purpose of the transfer: The company needs to provide legal documents to prove the purpose of the transfer, such as contracts, minutes of shareholders’ meetings if it is a dividend transfer, or minutes of financial statements.

5. Restrictions and conditions
• Remittance of profits not exceeding the permitted level: In some cases, depending on the financial situation and the actual situation of the company, the management agency may apply restrictions on the transfer of profits abroad.
• Legal contracts: Only legal profits generated from official business activities are allowed to be transferred abroad.

6. Regulations on reporting and supervision
The State Bank of Vietnam and competent authorities may request periodic reports from FDI companies on the transfer of profits abroad. Failure to comply with this regulation may result in suspension or administrative penalties.

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