Reference Sources:

• Circular No. 186/2010/TT-BTC of the Ministry of Finance: Guidelines for the transfer of profits abroad by foreign organizations and individuals deriving profits from direct investments in Vietnam in accordance with the Investment Law.
• Circular No. 80/2021/TT-BTC dated September 29, 2021: Guidance on implementing several provisions of the Tax Administration Law and Decree No. 126/2020/ND-CP dated October 19, 2020, detailing certain articles of the Tax Administration Law.
• Official Letter No. 4480/TCT-CS concerning the transfer of profits abroad from the General Department of Taxation.

Regulations on Profit Transfers Abroad

According to Article 2 of Circular No. 186/2010/TT-BTC dated November 18, 2010, issued by the Ministry of Finance, the regulations specify:

“Article 2. Profit Transfer Abroad

1. The profits that foreign investors transfer from Vietnam abroad, as stipulated in this Circular, are the legally distributed profits derived from direct investment activities in Vietnam under the Investment Law, after fulfilling all financial obligations to the State of Vietnam as required.
2. Profits transferred from Vietnam abroad may be in cash or in kind.
   • Profits transferred abroad in cash must comply with foreign exchange management regulations;
   • Profits transferred abroad in kind must be converted to monetary value as per the regulations on the import and export of goods and related legal provisions.”

As stated in Article 2 of Circular No. 186/2010/TT-BTC dated November 18, 2010:

• Profit Transfer Abroad: This refers to the legally obtained profits that foreign investors receive from direct investment activities in Vietnam after fully complying with financial obligations to the State of Vietnam.
• Method of Profit Transfer: Profits may be transferred in cash or in kind, in accordance with foreign exchange management regulations and laws governing the import and export of goods.

Regulations on the Timing of Profit Transfers

Article 2 of Circular No. 186/2010/TT-BTC dated November 18, 2010 specifies: Foreign investors may transfer profits abroad:

• Annually: After the end of the fiscal year, upon completion of financial obligations and submission of audited financial reports along with corporate income tax finalization forms to the tax authority.
• Upon Conclusion of Investment Activities: After completing financial obligations and submitting financial reports and tax finalization forms as required.

The business in which the foreign investor has invested must fulfill all financial obligations to the State of Vietnam related to the income that forms the profit being transferred abroad.

Procedures for Profit Transfers Abroad

Notification of Profit Transfer Abroad (Article 5 of Circular No. 186/2010/TT-BTC dated November 18, 2010, which guides the transfer of profits abroad by foreign organizations and individuals): Foreign investors may directly notify or authorize the enterprise in which they invest to submit a notification of profit transfer abroad to the tax authority that directly manages the enterprise. This notification must be submitted at least 7 working days prior to the intended profit transfer.

Confirmation of Tax Obligations (Article 70 of Circular No. 80/2021/TT-BTC dated September 29, 2021, from the Ministry of Finance on tax management): Taxpayers must submit a written request for tax obligation confirmation to the tax authority using Form No. 01/DNXN. For foreign contractors that do not directly file taxes, the Vietnamese party that withholds and pays taxes on their behalf must also submit a request for confirmation to the tax authority.

Within 10 working days of receiving the tax obligation confirmation request from the taxpayer, the tax authority is responsible for issuing a notification confirming the tax obligations using Form No. 01/TB-XNNV, attached to this Circular, or for denying confirmation. Alternatively, they may issue a notification requesting additional information using Form No. 01/TB-BSTT-NNT, as attached to Decree No. 126/2020/ND-CP, for the taxpayer to explain and supplement the information.

The transfer of profits abroad is a significant activity for foreign investors in Vietnam, playing a vital role in attracting foreign investment and promoting economic development. The regulations in Circular No. 186/2010/TT-BTC and Circular No. 80/2021/TT-BTC not only safeguard the legitimate rights of investors but also enhance their responsibilities in fulfilling financial obligations to the State of Vietnam.

To ensure a smooth process for these transactions, investors need to be well-informed of the legal regulations, prepare all necessary documentation, and adhere strictly to the prescribed procedures. This approach not only minimizes legal risks but also fosters a transparent and sustainable investment environment, contributing to the economic growth of the country.

Ngân Hồ