CIRCULAR

GUIDING THE REMITTANCE ABROAD OF PROFITS EARNED BY FOREIGN ORGANIZATIONS AND INDIVIDUALS FROM THEIR DIRECT INVESTMENT IN VIETNAM UNDER THE INVESTMENT LAW

Pursuant to the November 29, 2005 Investment Law No. 59/2005/QH11 and documents guiding the implementation;
Pursuant to the November 29, 2006 Law on Tax Administration No. 78/ 2006/QH11 and documents guiding the implementation;
Pursuant to the June 3, 2008 Law on Enterprise Income Tax No. 14/2008/ QH12 and documents guiding the implementation;
Pursuant to the Government's Decree No. 160/2006/ND-CP of December 28, 2006, regulating in detail a number of articles of the Ordinance on Foreign Exchange;
Pursuant to the Government's Decree No. 118/2008/ND-CP of November 27, 2008, regulating the functions, tasks, powers and organizational structure of the Ministry of Finance;
The Ministry of Finance guides the remittance abroad of profits earned by foreign organizations and individuals from their direct investment in Vietnam under the Investment Law as follows:

Article 1. Subjects of application

Foreign organizations and individuals that make direct investment in Vietnam under Article 21, Article 22, Article 23, Article 24, Article 25 of the Investment Law (hereinafter general called as foreign investors) and remit abroad of profits from result of investment in Vietnam under Article 2 of this Circular.

Foreign organizations and individuals that make indirect investment in Vietnam under Article 26 of the Investment Law, and remit abroad their profits under relevant laws.

Article 2. Profits which are remitted abroad

1. Profits from Vietnam are remitted abroad by foreign investors under this Circular are legal profits that they are shared or earn from direct investment activities in Vietnam under the Investment Law after finished fully financial obligations with the Vietnam State under regulations.

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- Profits are remitted abroad in cash in accordance with the law on foreign exchange management;

- Profits are remitted abroad in kind and converted of objects’value in accordance with the law on goods import and export and the provisions of relevant laws.

Article 3. Determination the number of profits remitted abroad

1. Annual profits remitted abroad mean profits foreign investors are shared or earn in a financial year from their direct investment based on audited financial statements, enterprise income tax balance sheets in which fioreign investors join investment plus (+) other profit items example as profit items have not remitted yet from previous years adding this year; minus (-) profit items foreign investors have used or committed using in order to reinvest in Vietnam, the profit items foreign investors have used to pay for expenditure items of foreign investors for production and business activities or for foreign investors’ personal demands in Vietnam.

2. Profits are remitted abroad when investment activities in Vietnam are over shall be the total profits earned by foreign investors in the process of direct investment in Vietnam, minus (-) profit items have be used for reinvestment, the profit items were remitted abroad during foreign investors’ operation period in Vietnam and the items been used for other expenditures of foreign investors in Vietnam

3. Foreign investors shall not allowed to remit abroad profits they are shared or earned from their direct investment in Vietnam in araised profit year in case that the year financial statements of enterprises in which they make investment and araise profits still contain accumulated losses after such losses have been carried forward under the law on enterprise income tax.

For example: Foreign investor A contributes capital to establish a company in Vietnam. In 2009, the company araised a loss of VND 4 billion.

Assuming in 2010, the company has a pre-tax income of VND 3 billion. So that, after balancing the loss amount have been carried forward from 2009 under the provisions, in 2010 the company has a loss amount of VND 1 billion. The company are strictly prohibited from sharing its profits for capital contributors and foreign investor A shall not remit his shared profits in 2010 to A’s home country.

Assuming in 2010. the company has a pre-tax income of VND 5 billion.So that, balancing the loss amount have been carried forward from 2009 under the provisions, in 2010 the company has the rest of income of VND 1 billion which obligated enterprise income tax. If the enterprise income tax rate applicable to the company is 25%, the company shall implement payment an enterprise income tax amount of VND 250 million (= VND 1 billion x 25%). The company can share after-tax profits to capital contributors and foreign investor A can remit profits shared in 2010 to A’s home country.

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1. Annual profits remittance abroad

Foreign investors can annually remit abroad profits they are shared or earn from their direct investment in Vietnam when fiscal year is over after enterprises in which foreign investors join investment have completed financial obligations to the State of Vietnam under the provisions of law and submitted audited financial statements and enterprise income tax finalization declarations of that year to direct managing tax offices.

2. Profits remittance abroad when finished direct investment activities in Vietnam

Foreign investors can remit abroad profits when finished direct investment activities in Vietnam after enterprises in which foreign investors join investment have accomplished financial obligations towards the Vietnam State under law, submitted audited financial statements and enterprise income tax finalization declarations to direct managing tax offices and implement fully all the obligations under the Law on Tax Administration.

3. Responsibilities of enterprises in which foreign investors joint capital investment

Enterprises in which foreign investors joint capital investment have the responsibilities for implementing fully all financial obligations towards the Vietnam State under laws regarded to incomes make profits foreign investors remit abroad.

Article 5. Notification of profits remittance abroad

Foreign investors may directly make, or authorize enterprises in which they joint investment to make notices on the profits remittance abroad according to the adopted forms attaching this Circular send to direct managing tax offices of the enterprise in which foreign investors join investment at least 7 working days before the profit remitted abroad.

Article 6. Organization of implementation

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In the process of implementation, if have any problem, suggest the organizations and individuals reflect for the Ministry of Finance to be supplementary guidanced.

SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
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NONTIFICATION

ON THE OFFSHORE REMITTANCE OF PROFITS

Year...........

To: .....................................

1. Name of foreign investor: ...........

Nationality:..

Individual                       Organization     

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Investment License No: ............................................ ........ Date: .............................

Head office address of the business: ......................................... ......................

Tax Code: .............................................. ...................

3. The registration of profits remitted abroad by foreign investors:

number

Target

Amount of profit

I

Amount of profits are shared or earned in the period

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1

profits shared or earned from investment activities

2

Other profits earned

II

Amounts of profit to be used

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reinvestment

2

Used for other purposes

III

The profit is remitted in this period

4. Amount of profit suggested remitting abroad this time:

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- In-kind (goods name, quantity, weight and value):...............................

If you transfer money, drawn from the account at the Bank no:........ The name of bank .........

I assure that all information is correct and that we take full responsibility before law for the information reported. /.

FOREIGN INVESTORS
Signed, sealed (full name, job title)
(In cases authorization for enterprise is not required to sign.)

Date
LEGAL REPRESENTATIVE OF THE BUSINESS
Signed, sealed (full name, title)

Thông tư 186/2010/TT-BTC hướng dẫn việc chuyển lợi nhuận ra nước ngoài của tổ chức, cá nhân nước ngoài có lợi nhuận từ việc đầu tư trực tiếp tại Việt Nam theo quy định của Luật Đầu tư do Bộ Tài chính ban hành