Individuals who have spent time in Vietnam appreciate that sending money into Vietnam is relatively easy (although, caution must be taken to ensure that inflows are correctly documented, otherwise those inflows may be taxed as revenue/income), but getting money out of Vietnam is constantly a challenge for foreign individuals and companies operating in Vietnam.
The reality is, however, that it is possible to send money abroad in many legal ways from Vietnam, and below we highlight the most common legal methods for foreign individuals and companies in getting their cash out of Vietnam.
Individuals
Amounts held by foreign individuals in Vietnamese bank accounts, upon which tax has been paid, can be freely remitted abroad (see Decree 70/2014/ND-CP dated 7 July 2014, Article 7, Clause 3). Foreign individuals are also permitted to convert VND to USD, or other foreign currencies, for remitting where the funds were earned and retained in VND.
Funds can also be remitted abroad freely where they were transferred directly into a Vietnamese bank account from an individuals’ personal bank account held abroad.
Therefore, the sources of funds that can be easily remitted abroad via bank transfer are:
- Salaries earned in Vietnam and held in a Vietnamese bank account (where it can be shown tax has been paid),
- Funds from other tax-paid sources in Vietnam held in a Vietnamese bank account, and
- Personal funds held in a Vietnamese bank account and originally transferred in from abroad.
If a personal bank account in Vietnam has received funds from sources not in the above list (ie, a bank has permitted a foreign individual to make cash deposits into their Vietnamese bank account without sufficient evidence of the source of funds), then it is likely that the Vietnamese bank account is “tainted” and the holder will face difficulties in satisfying the above criteria to enable funds to be repatriated from Vietnam. The co-mingling of tax paid and other domestically deposited funds make it difficult for a bank to provide sufficient evidence that an individual is only transferring funds that meet the detailed source criteria.
If the criteria are satisfied, then funds can be transferred abroad to an individual’s own foreign bank account, or can be used to pay expenses abroad (which will usually require an invoice or other commercial documentation where a payment is being made to someone that is not the account holder).
Another option that works for foreign individuals, albeit in a more limited fashion, is a Vietnamese credit card. A Vietnamese issued credit card allows for foreign expenditure to be made abroad, and also allows limited cash withdrawals whilst abroad. Although credit cards can be somewhat difficult some foreign individuals to obtain, they are generally available for those with valid work permits and/or those willing to deposit funds as a security against their credit limit. The positive element is that payments made at the bank against the cards expenditure can often be made in cash VND without reference to the source of the funds (subject to individual bank requirements, of course). This can often allow domestically held money to be used for foreign expenditure despite not meeting the “tax paid” bank transfer requirements referred to above.
Individuals also report some success through certain Vietnamese banks with PayPal for sending (and receiving) money abroad, and depending on the bank and individual’s setup, this may be an option for those prepared to spend time to get their accounts in order. There is always a risk in using 3rd party money services, and the larger the funds being transferred or received then the larger the risk.
Companies
Foreign investors are permitted to own companies in Vietnam, with most sectors being unrestricted and therefore permitting 100% foreign ownership. However, regulations in sending funds abroad from Vietnam cause concerns for some foreign investors.
For companies, the primary methods for sending funds out of Vietnam include:
- For payments for validly imported products, where appropriate documentation (including customs procedures and tax payment confirmations) is obtained, and the company has the specified ability in their license to import the products.
- To pay foreign companies or individuals abroad for services provided abroad. These will usually require Withholding Taxes to be paid (generally at a total rate of 10% for corporate payments and 20% for payments to individuals) on top of the amount remitted. This approach is often used to pay fees to related companies for valid services as a method to repatriate funds outside of Vietnam but within the same group.
- For repayment of loans or interest on loans. Loans (and interest on the loans) can be repaid quite easily, provided appropriate documentation is prepared when the loans are initially received from abroad.
- To pay dividends. Foreign invested companies can pay and remit dividends abroad once per year from out-of-tax profits, after the finalisation of the company’s annual taxation obligations (which are usually due by 31 March in relation to the previous financial year).
- Disposal of capital. Where a foreign individual or company owns part of a Vietnamese company, and they sell part or all of the ownership, then the proceeds can be repatriated to them once capital gains tax (if any) has been finalised. This needs to be paid through the company’s capital (bank) account to ensure full compliance.