Vietnam is one of the most advanced Southeast Asian economies and thus it attracts large numbers of foreign entrepreneurs who invest a lot of capital into fully-foreign owned companies or partnerships and joint ventures with local businessmen.
The Vietnam government encourages foreign capital injections, but also allows a foreigner to remit the profits they earn here, in accordance with the tax regulations. The repatriation of profits from Vietnam, however, must be done not only in accordance with the laws imposed here but also with those imposed in the foreign investor’s home country.
Below, our company formation specialists in Vietnam have prepared a guide on how to repatriate profits to another country in accordance with the legal and tax regulations currently in place. We also offer specialized services for those interested in opening a company in Vietnam.
The main ways of repatriating profits from Vietnam
There are several ways in which a foreign investor doing business in Vietnam can remit profits to his or her home country. These ways imply:
- remitting dividend payments, which is one of the most employed profit repatriation methods;
- salary payments to the employees of the foreign company operating in Vietnam;
- refunds for various types of expenses related to doing business in Vietnam;
- through various types of agreements, such as service contracts with local companies.
Our local advisors can offer more information on the regulations related to remitting profits out of Vietnam in the case of companies and individuals living abroad.
Legislation related to the remittance of profits from Vietnam
The most important law which provides for the repatriation of profits from Vietnam is the Foreign Exchange Management Act which covers the ways in which income generated here can be sent to a foreign citizen or company’s home country.
Its main provisions are:
- it is possible to repatriate various types of capitals, such as profits, reinvestment capital, legal capital and performance capital from a company;
- it is possible to send to another country the profits earned by a foreign company after paying its taxes in Vietnam;
- the expenses incurred by a company while doing business in Vietnam can also be claimed;
- the law also provides for the transfer of foreign capital to a company in Vietnam.
In order to understand how the repatriation of profits and capital can occur, our Vietnam company formation specialists are at your disposal with information on the taxation of companies here. In addition to this, the services of our accountants in Vietnam are also at your disposal if you looking for such services for your firm. With the following scope of work, we are here to help your company set up its initial accounting in this regard: recognize the reporting guidelines, forms, and software used by the company; register the Company’s first fiscal year and accounting principles with the tax authorities (if necessary), etc. If you need any additional services, consult with our accountants.
The procedure of remitting profits from Vietnam
In order to be allowed to repatriate profits from Vietnam, a company or individual must first fulfill their tax obligations in this country. This means filing their tax returns with the Vietnam tax authorities.
In the case of companies, they are required to submit the corporate income tax declaration which must be accompanied by the audited financial accounts of the company. The documents must reflect the profits earned by the foreign company in Vietnam for the year in which the profits were earned.
The company is also required to file a declaration through which the repatriation of profits is requested. If no problem arises, the branch or subsidiary of the foreign company will be able to repatriate the profits starting with the 7th day after filing the notification.
In the case of companies making investments for limited periods in Vietnam, the capital invested can also be remitted at the end of the project.
In the case of individuals, the repatriation of profits can take the form of salaries, especially in the case of company directors. The tax to be paid in this case is the personal income tax which is levied at a flat rate of 20% in the case of foreign citizens who are not residents of Vietnam.
Remitting dividends from Vietnam
One of the most common ways of repatriating profits from Vietnam is under the way of dividend payments. These can be paid to the foreign owners of the company once all the taxes, expenses and losses due have been paid in Vietnam.
The repatriation of profits under the form of dividends will be made after the personal income tax is paid. The rate applied to this type of payments depends on the number of shareholders in the company and on their residency. In the case of foreigners, the rate is 5%.
The repatriation of profits from Vietnam is quite advantageous for foreigners working or doing business here, so if you need more information on this subject, please feel free to contact us. You can also rely on us if you need specialized company registration services in Vietnam or assistance in taxation matters.