The transfer of funds between foreign companies and Vietnamese companies is a common practice in commercial transactions, investments, and business cooperation. However, to ensure legality and avoid legal risks, enterprises must comply with regulations on foreign exchange, taxation, contracts, and capital flow management.

So, what legal provisions should a foreign company take into account when transferring money to Vietnam? The following article by NPLaw provides legal guidance and explanations for clients.

I. Understanding the transfer of funds from foreign companies to Vietnamese companies

1. Forms of fund transfer

Foreign companies may transfer funds to Vietnamese companies through the following forms:

  • Investment in Vietnam:
    + Contributing capital to establish a foreign-invested enterprise.
    + Purchasing shares or capital contributions in a Vietnamese company.
    + Contributing capital to a licensed investment project.
  • Commercial contract payments:
    + Payments for goods and services under import–export contracts.
    + Payments of franchise or royalty fees (franchise, license, etc.).
    + Payments for consultancy, technology, or outsourcing service contracts.

  • Loans between foreign and Vietnamese companies:
    + A foreign company may lend capital to a Vietnamese company under a foreign loan agreement.
    ​​​​​​​    + The loan must be approved by the State Bank of Vietnam if it is a medium- or long-term loan.
  • Non-commercial transfers, grants, or donations:
    + Sponsorships for non-profit or charitable activities.
    + Non-refundable aid for enterprises or non-government organizations. 

2. Competent authorities supervising the transfer of funds

Fund transfers from foreign companies into Vietnam must comply with foreign exchange, tax, investment, and anti–money laundering regulations. Accordingly, several State authorities are involved in monitoring and managing these activities, including:

  • State Bank of Vietnam: Supervising and licensing foreign exchange transactions; controlling foreign loans of Vietnamese enterprises; managing direct and indirect investment capital accounts; and enforcing anti–money laundering regulations for large financial transactions.
  • General Department of Taxation – Ministry of Finance: Overseeing tax obligations for fund transfers from foreign companies; monitoring foreign contractor tax if payments relate to commercial or service contracts; and supervises tax declarationing for investment and capital transfer activities.
  • Ministry of Planning and Investment: Licensing and regulating foreign investment activities in Vietnam; overseeing capital contribution and share acquisition from foreign investors; and requiring periodic reporting on foreign investment inflows.

II. Legal regulations on fund transfers from foreign companies to Vietnamese companies

1. Conditions for fund transfer

Under Article 8 of Circular No. 06/2019/TT-NHNN:

  • Before being granted an Investment Registration Certificate, a Notification on satisfaction of conditions for capital contribution, share or capital acquisition, or an establishment and operation license under specialized laws, or before signing a PPP contract, foreign investors may transfer fund from overseas or from their foreign currency or Vietnamese dong payment accounts opened at licensed banks in Vietnam to pay lawful expenses during the investment preparation stage.

Accordingly, a foreign investor transferring funds for investment preparation must satisfy the following conditions:

  • The transfer must be made from overseas into Vietnam; or
  • From a foreign currency or Vietnamese dong payment account opened in the investor’s name at a licensed bank in Vietnam.

Additionally, for transfers made under a loan agreement between a foreign company and a Vietnamese company, according to Circular No. 12/2022/TT-NHNN, the loan agreement must be in writing and specify the amount, interest rate, and loan term. Medium- or long-term loans (over one year) must be registered with the State Bank of Vietnam, and the loan proceeds must be transferred through a legitimate foreign loan account in Vietnam.

2. Principles for fund transfers

  • Transfers must be made through licensed banks: Transactions must be conducted via commercial banks authorized to perform foreign exchange operations in Vietnam. Enterprises are prohibited from receiving cash directly from abroad; transfers must go through lawful bank accounts.
  • Use of appropriate bank accounts:
    + For investment capital: A direct or indirect investment capital account must be used.
    + For commercial contracts: An ordinary payment account may be used.
    + For foreign loans: The enterprise must register the loan with the State Bank of Vietnam and use a lawful foreign loan account.

III. Questions regarding fund transfers

1. Must all cross-border transactions be conducted through licensed credit institutions?

Clause 1, Article 2 of Circular No. 02/2021/TT-NHNN stipulates that licensed credit institutions include banks, non-bank credit institutions, and branches of foreign banks permitted to conduct foreign exchange business. Licensed institutions and customers must enter into legally compliant agreements that meet minimum statutory requirements.

Accordingly, all transactions from abroad must be conducted through credit institutions licensed to perform fund transfer operations.

2. What are the regulations on one-way transfers from overseas into Vietnam?

Pursuant to Article 6 of Decree No. 70/2014/NĐ-CP:

  • For resident organizations: Foreign currency received from one-way transfers must be deposited into a foreign currency account at a licensed credit institution or sold to such institution.
  • For resident individuals: Foreign currency from one-way transfers may be deposited into a foreign currency account or withdrawn in cash for lawful purposes.

3. When is the transfer from the foreign company to the Vietnamese company considered unlawful?

The transfer may be deemed illegal in the following cases:

  • Transfers not conducted through lawful banks: Transfers made in cash, through intermediaries, informal systems (black market, cryptocurrency, hawala, etc.), or through personal rather than corporate accounts.
  • Transfers for money laundering or terrorism financing: Transactions with no clear purpose, unusually large amounts, no valid contracts, structuring payments to avoid banking oversight, or using virtual companies to receive and disperse illicit funds.
  • Transfers for tax evasion: Transfers not declared to tax authorities, receipt of funds without tax declaration or invoicing, or use of fake contracts to legitimize non-existent transactions.

IV. Legal advisory services for foreign fund transfers

The above information provided by NPLaw aims to support clients in understanding legal regulations on foreign companies transferring funds to Vietnamese companies. For any further inquiries or related legal issues, please contact NPLaw for direct consultation and guidance.