Procedures for the Remittance of Profits by Foreign Investors and Points to Note at the Time of Implementation
2025/06/26
- Le Thi Hang
Introduction
Attracting foreign investment and accelerating economic development have become one of the most important annual tasks in Vietnam’s economic policies. In recent years, Vietnam has achieved remarkable success in attracting foreign investment, and FDI is gradually establishing itself as a pillar supporting economic development. Among the economic components, foreign-invested enterprises have become key players driving growth. One of the main objectives for foreign investors entering Vietnam is to earn profits from their investments. When companies can operate steadily and continuously generate profits each year, they reach the stage of recovering the investment funds themselves. This article explains the general procedures for foreign investors to remit profits earned in Vietnam to their home country, and the points to note when implementing this.
1. Definition of Corporate Profit and Overseas Remittance
In economics, “profit” refers to the net increase in assets obtained after deducting costs associated with investment, namely the difference between total revenue and total costs. In a company, profit is the remainder obtained by subtracting the expenses incurred from the revenue earned through business activities over a certain period.
Article 2 of the Circular No. 186/2010/TT-BTC dated November 18, 2010, issued by the Ministry of Finance of Vietnam, defines the amount of profit that foreign investors can remit abroad as the amount of lawful profit earned from direct investment activities in Vietnam under the Investment Law, after fulfilling all financial obligations to the state.
2. Conditions for remittance of profits abroad
In order for foreign investors to remit profits abroad annually or upon the termination of investment activities, all of the following conditions must be met.
- After the end of the fiscal year, the company has fulfilled all financial obligations in accordance with Vietnamese law.
- Audited financial statements and corporate tax final returns have been submitted to the relevant tax authorities.
- No tax loss carryforwards have occurred.
3. Determination of profit remittance amount abroad
According to Article 3 of Ministry of Finance Circular 186/2010/TT-BTC, the amount that can be remitted is considered the retained earnings carried forward in the balance sheet, and the following formula is stipulated.
Profit Remittance Amount (Retained Earnings Carried Forward) = Cumulative Profit (*) – (Reinvestment + Amount Already Remitted + Domestic Usage)
(*) Cumulative profit is calculated based on audited financial statements and corporate tax final return to date. At the end of the project, it is calculated based on the actual results after audit or inspection.
4. Procedures for Remitting Profits Overseas
When the distribution and remittance of profits are decided, foreign investors and the invested enterprises must prepare and submit the prescribed documents to the tax authorities and the transaction bank.
① Documents to be submitted to the Tax Department
・Profit Remittance Notification (in the prescribed form according to Circular 186/2010/TT-BTC)
・Power of Attorney from the Foreign Investor (if tax procedures are entrusted to the enterprise)
・Documents supporting the amount of profit remittance:
⚪︎ Limited Liability Company: Original Profit Distribution Resolution of the General Meeting of Members, Original Resolution of Investors
⚪︎ Joint-stock Company: Original Resolution of Profit Distribution by the General Meeting of Shareholders
⚪︎ Detailed numerical explanation documents requested by the tax officer, if necessary
⚪︎ Audited financial statements for the relevant fiscal year or period (copy)
⚪︎ Corporate tax return for the relevant fiscal year or period (copy) and notification of approval of the return
② Documents to be submitted to the bank
・The remittance of profits approval notice approved by the tax office (copy)
・Documents supporting the remittance amount:
⚪︎ Limited liability company: Profit distribution resolution of the general meeting of members, resolution of investors (original or copy, based on the bank’s judgment)
⚪︎ Joint-stock company: Resolution on profit distribution by the general meeting of shareholders (original or copy, based on the bank’s judgment)
⚪︎ Audited financial statements for the target fiscal year or period (copy, notarization may be required by some banks)
⚪︎ Certified copy of the corporate tax return for the relevant fiscal year or period and notification of acceptance of the declaration
After submitting the profit remittance notification to the tax office, a tax officer will contact the company within seven business days to verify information regarding the figures on the profit remittance notification, the figures in the audited financial statements, any outstanding tax amounts in the tax system (if any), and past remittance profits. If the requirements are met, no special notification will be issued by the tax office, and the bank will be allowed to proceed with the remittance process after seven business days have passed.
On the other hand, if there is an application for remittance amount exceeding accumulated profits, unpaid status in the tax system, or document deficiencies, a written notice will be sent from the tax bureau to the company and the bank, requesting the company to take corrective actions or submit additional documents.
5. Points to Note
I. Preparatory Measures for Prompt Remittance
In order to smoothly carry out profit remittance, it is advisable to first obtain a “Notification of Fulfillment of Tax Payment Obligations to the National Budget” and promptly resolve any outstanding tax amounts. The acquisition of this confirmation and related procedures are conducted based on Article 70 of Ministry of Finance Circular 80/2021/TT-BTC. After completing the processing of any unpaid taxes, it is recommended to submit the profit remittance application documents to the tax office.
II. Points to Note Regarding the Power of Attorney
When a foreign investor delegates the remittance notification procedure to the investing enterprise, the enterprise needs to prepare a power of attorney. Traditionally, consular authentication was not required for the power of attorney, but in recent years, some enterprises have been pointed out the need for consular authentication during the procedure based on Article 4, Clause 2 of Decree 111/2011/ND-CP. According to the decree, powers of attorney from foreign investors are not exempt from consular authentication, so it is advisable to confirm with the tax officer in advance.
III. Specification of the Currency for Remittance and the Exchange Rate
Profits sent abroad can be remitted in the form of cash or goods, but generally, remittance in foreign currency is the mainstream. In this case, it is recommended to clearly state the exchange rate used for converting the remittance amount in the profit allocation decision document.
IV. Possibility of Requesting Additional Documents
Tax offices and banks may request additional relevant documents depending on the situation during the application process (which may include documents not listed in Section 4 of this article). Therefore, it is important to consult in advance with the respective representatives of the tax offices and banks to confirm the necessary documents before submission.
Conclusion
Sending profits overseas is not a complicated procedure, but since it is conducted under the supervision of national agencies, certain operational measures are required. To ensure smooth remittances, it is effective to correctly understand the relevant laws and regulations, prepare the necessary documents in advance, consult with the persons in charge at the tax bureau and banks, and receive advice and guidance regarding specific procedures and documents.
References
– Corporate Law 2020
– Tax Administration Law 2019
– Decree 111/2011/ND-CP
– Circular 186/2010/TT-BTC
– Notification 80/2021/TT-BTC
This article was translated by Yarakuzen.
