Circular 06/2019/TT-NHNN guiding foreign exchange management for foreign direct investment activities in Vietnam

CIRCULARS

GUIDELINES ON FOREIGN EXCHANGE MANAGEMENT FOR FOREIGN DIRECT INVESTMENT ACTIVITIES INTO VIETNAM

Pursuant to the Law on the State Bank of Vietnam dated June 16, 6;

Pursuant to the Law on Credit Institutions dated June 16, 6 and the Law amending and supplementing a number of articles of the Law on Credit Institutions dated November 2010, 20;

Pursuant to the Ordinance on Foreign Exchange dated December 13, 12 and the Ordinance amending and supplementing a number of articles of the Ordinance on Foreign Exchange dated March 2005, 18;

Pursuant to the Government's Decree No. 70/2014/ND-CP dated July 17, 7 detailing the implementation of a number of articles of the Ordinance on Foreign Exchange and the Ordinance amending and supplementing a number of articles of the Ordinance on Foreign Exchange. repent;

Pursuant to Decree No. 16/2017/ND-CP dated November 17, 02 of the Government defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

At the proposal of the Director of the Foreign Exchange Management Department;

The Governor of the State Bank of Vietnam promulgates a Circular guiding foreign exchange management for foreign direct investment activities in Vietnam.

Chapter I

GENERAL RULES

Article 1. Scope

1. This Circular provides guidance on foreign exchange management for foreign direct investment activities in Vietnam, including: Investment capital contribution; open and use direct investment capital accounts in foreign currencies and in Vietnam dong; transfer money for pre-investment activities; transferring capital, profits and lawful revenue abroad; transfer of investment capital, transfer of investment projects.

2. Contents related to foreign exchange management for foreign direct investment enterprises which are public companies whose shares are listed or registered for trading on the Stock Exchange shall comply with regulations. on foreign exchange management for foreign indirect investment activities in Vietnam.

Article 2. Subject of application

This Circular applies to the following subjects:

1. Enterprises with foreign direct investment capital as prescribed in Clause 2, Article 3 of this Circular.

2. Foreign investors, Vietnamese investors in foreign direct investment enterprises.

3. Foreign investors enter into business cooperation contracts (hereinafter referred to as BCC contracts).

4. Foreign investors enter into investment contracts in the form of public-private partnership (hereinafter referred to as PPP).

5. Organizations and individuals involved in foreign direct investment activities in Vietnam.

Article 3. Explain words

In this Circular, the terms below are construed as follows:

1. “Foreign investor” includes: individuals with foreign nationality, organizations established under foreign laws that conduct foreign direct investment activities in Vietnam.

2. “Foreign direct investment enterprise” includes:

a) Enterprises established under the form of investment in establishment of economic organizations, including foreign investors being members or shareholders, and must carry out procedures for the grant of investment registration certificates according to regulations. of the law on investment;

b) Enterprises other than those prescribed in Point a of this Clause with foreign investors owning 51% or more of charter capital of the enterprise, including:

(i) Enterprises with foreign investors contributing capital, buying shares, or buying capital contributions (operating in business lines subject to conditions or without conditions applied to investors. foreign investors) leading to foreign investors owning 51% or more of charter capital of the enterprise;

(ii) Enterprises established after splitting, merger or consolidation result in foreign ownership of 51% or more of the charter capital of the enterprise;

(iii) Newly established enterprises in accordance with specialized laws;

c) Project enterprises established by foreign investors to implement PPP projects in accordance with the law on investment.

3. “Authorized bank” includes commercial banks, branches of foreign banks that are permitted to do business in and provide foreign exchange services in accordance with the provisions of law.

4. “Authorized credit institution” includes an authorized bank, a non-banking credit institution that is permitted to conduct business and provide foreign exchange services in accordance with law.

5. “Direct investment capital account” means a payment account in foreign currency or in Vietnam dong opened by a foreign direct investment enterprise or foreign investor at an authorized bank for implementation. transactions related to foreign direct investment activities in Vietnam according to the provisions of Articles 5, 6 and 7 of this Circular.

Article 4. General principles

1. Foreign investors and Vietnamese investors may contribute investment capital in foreign currencies or Vietnam dong according to the level of capital contributed by investors in the Certificate of Investment Registration, License for Establishment and Operation Act in accordance with specialized laws (for foreign direct investment enterprises established and operating under specialized laws), Notification of satisfaction of conditions for capital contribution, share purchase, purchase return the capital contribution of the foreign investor, the PPP contract signed with the competent state agency, and other documents proving that the foreign investor's capital contribution is in accordance with the provisions of law.

2. Residents being Vietnamese investors may contribute investment capital with their own foreign currency.

3. The contribution of investment capital in money of foreign investors, Vietnamese investors must be done through the form of transfer to the direct investment capital account.

4. Contents related to short, medium and long-term foreign loans of enterprises with foreign direct investment capital (transactions for collection of capital withdrawals, payment of principal, interest and fees; loan accounts , foreign debt payment) comply with the law on borrowing and paying foreign debts of enterprises.

5. The use of distributed profits by foreign investors in the Vietnamese territory must comply with regulations on foreign exchange management and relevant laws.

Chapter II

SPECIFIED

Article 5. Opening and use of direct investment capital accounts

1. Subjects eligible for opening and use of direct investment capital accounts include:

a) Enterprises with foreign direct investment capital specified in Clause 2, Article 3 of this Circular;

b) Foreign investors participating in BCC contracts, foreign investors directly implementing PPP projects in the absence of project enterprises (hereinafter referred to as foreign investors directly implementing projects); PPP project).

2. The subjects specified in Clause 1 of this Article open direct investment capital accounts according to the following provisions:

a) Must open an account of foreign direct investment capital in 01 (one) licensed bank to conduct legal collection and payment transactions in foreign currencies related to foreign direct investment activities in Vietnam Male;

b) Corresponding to the type of foreign currency contributing investment capital, only 01 (one) account of direct investment capital in that foreign currency may be opened at only 01 (one) licensed bank;

c) In case of making investment in Vietnam dong, it is allowed to open 01 (one) account of direct investment capital in Vietnam dong at an authorized bank where the foreign direct investment account is opened in foreign currency for realizing current legal collection and payment transactions in Vietnam Dong related to foreign direct investment activities in Vietnam;

d) In case a foreign investor participates in many BCC contracts or directly implements many PPP projects, the foreign investor must open a separate direct investment capital account corresponding to each BCC contract, project. PPP project.

3. In case of making foreign loans where the borrowed currency does not correspond to the currency used by foreign-invested enterprises to open accounts of direct investment capital, enterprises with invested capital foreign direct investment is allowed to open more accounts for borrowing, repaying foreign debts in the currency of the loan at the authorized bank where the direct investment capital account is opened to perform relevant lawful revenue and expenditure transactions to foreign loans in accordance with the law on foreign borrowing and repayment by enterprises.

4. In case of changing the authorized bank where the direct investment capital account is opened, the entities specified in Clause 1 of this Article shall take the following steps:

a) Open a direct investment capital account at another licensed bank;

b) Transfer the entire balance on the previously opened direct investment capital account to the new direct investment capital account, then close the previously opened direct investment capital account;

c) The direct investment capital account at another licensed bank may only be used to conduct revenue and expenditure transactions specified in Articles 6 and 7 of this Circular after completing the steps mentioned at Point a, b this clause.

5. Procedures for opening and closing direct investment capital accounts comply with regulations of the State Bank of Vietnam (hereinafter referred to as the State Bank) on opening and using payment accounts at payment institutions. payment service application.

6. Enterprises specified at Points b and c, Clause 2, Article 3 of this Circular must close the opened direct investment capital account; Foreign investors being non-residents who own shares or contributed capital in this enterprise shall open an indirect investment capital account to conduct revenue and expenditure transactions in accordance with regulations on foreign exchange management. for foreign indirect investment activities in Vietnam in the following cases:

a) After carrying out the transaction of transferring shares or contributed capital or issuing additional shares to increase charter capital in a foreign-invested enterprise, the percentage of share ownership and contributed capital of the enterprise shall be determined. foreign investors in this enterprise down below 51%;

b) After the foreign direct investment enterprise is a public company whose shares are listed or registered for trading on the Stock Exchange.

Article 6. Revenue and expenditure transactions on the foreign currency direct investment capital account

1. Collection transactions:

a) Collecting remittances of foreign currency direct investment capital contributions from foreign investors, Vietnamese investors in foreign direct investment enterprises, foreign investors participating in BCC contracts, foreign investors directly implementing PPP projects;

b) Collecting the transfer of payment for the transfer value of investment capital or investment projects as prescribed in Article 10 of this Circular;

c) Collecting foreign currency transfers purchased from authorized credit institutions to transfer capital, profits and lawful revenue sources abroad according to the provisions of this Circular;

d) Remittances from payment accounts in foreign currencies opened at authorized banks of foreign direct investment enterprises, foreign investors participating in BCC contracts, direct foreign investors implementing PPP projects to transfer capital, profits and lawful revenues abroad to foreign investors;

d) Revenue from foreign currency conversion to make investment capital contribution in case the capital contribution currency is different from the currency of the opened direct investment capital account;

e) Remittance of share capital surplus from the issuance of new shares to increase charter capital in foreign-invested enterprises;

g) Collecting foreign currency transfers from sales of domestic petroleum products (after fulfilling financial obligations and deducting expenses in Vietnam dong) in accordance with the law on oil and gas. Gas and Government Guarantee and Commitment Agreement (if any);

h) Remittances related to foreign loans of enterprises with foreign direct investment capital in accordance with the law on foreign loans and repayment of enterprises, except for the case specified in Clause 3 Article 5 of this Circular;

i) Other lawful receipts in foreign currencies related to foreign direct investment activities in Vietnam.

2. Payment transactions:

a) Expenses for transfer to a foreign currency payment account opened at an authorized bank of the foreign direct investment enterprise, foreign investor participating in BCC contract, foreign direct investor; implementing PPP projects, the operator of the oil and gas project in accordance with the law on oil and gas to carry out foreign direct investment activities in Vietnam;

b) Spending on selling foreign currency to authorized organizations to transfer into the current account in Vietnam dong of the foreign direct investment enterprise, foreign investor participating in BCC contract, investor foreign investors directly implement PPP projects;

c) Expenses for the payment of the transfer value of investment capital or investment projects to the overseas transferor or the sale of foreign currencies to pay the transfer value of investment capital or investment projects to the transferor; transfer in Vietnam in Vietnam dong according to the provisions of Article 10 of this Circular;

d) Spending on the transfer of profits and lawful revenue sources in foreign currencies from foreign direct investment activities to Vietnam of foreign investors to foreign countries;

dd) Expenses for transferring foreign currency direct investment capital abroad of foreign investors in case of reduction of investment capital, termination, liquidation or termination of operation of investment projects, BCC contracts, PPP contract in accordance with the law on investment;

e) Expenditure on foreign currency conversion to carry out the transfer of capital, profits and lawful revenue sources from foreign direct investment activities in cases where the money remittance capital, profits and other lawful revenue sources abroad are different from the currency of the direct investment capital account opened;

g) Transfer payments related to foreign loans in foreign currencies of enterprises with foreign direct investment capital according to the provisions of the law on foreign loans and repayment of enterprises, unless otherwise prescribed. in Clause 3, Article 5 of this Circular;

h) Other lawful payments in foreign currencies related to foreign direct investment activities in Vietnam.

Article 7. Revenue and expenditure transactions on direct investment capital accounts in Vietnam dong

1. Collection transactions:

a) Collection of remittances for direct investment capital contribution in Vietnam Dong from foreign investors, Vietnamese investors in foreign direct investment enterprises, foreign investors participating in BCC contracts , foreign investors directly implement PPP projects;

b) Collecting the transfer of payment for the transfer value of investment capital or investment projects as prescribed in Article 10 of this Circular;

c) Remittance of profits distributed in Vietnam dong of foreign investors, Vietnamese investors in foreign direct investment enterprises, foreign investors participating in BCC contracts, investors foreign investors directly implement PPP projects to increase capital and expand investment activities in Vietnam;

d) Remittances from payment accounts in Vietnamese Dong of foreign direct investment enterprises, foreign investors participating in BCC contracts, foreign investors directly implementing PPP projects to transfer capital, profits and lawful revenues abroad to foreign investors;

d) Revenues transferred from the surplus of share capital from the issuance of new shares to increase the charter capital of enterprises with foreign direct investment;

e) Revenues transferred from foreign loans in Vietnam Dong by foreign-invested enterprises permitted to borrow from foreign currencies in Vietnam dong according to the provisions of the law on borrowing and repayment of foreign debts outside of the business;

g) Other lawful revenues in Vietnam dong related to foreign direct investment activities in Vietnam.

2. Payment transactions:

a) Expenses for transfer to a current account in Vietnam dong opened at an authorized bank of the foreign direct investment enterprise, foreign investor participating in BCC contract, direct foreign investor; continue to implement PPP projects, the operator of the oil and gas project in accordance with the law on oil and gas to carry out foreign direct investment activities in Vietnam;

b) Expenses for transferring the payment of the transfer value of investment capital or investment projects to the transferor in Vietnam or paying for the purchase of foreign currency to pay the transfer value of investment capital or investment projects to the transferor; overseas concessions according to the provisions of Article 10 of this Circular;

c) Spending to purchase foreign currency by transfer to transfer profits and lawful revenue sources in Vietnam dong to foreign investors abroad;

d) Spending on transferring direct investment capital in Vietnam dong to Vietnamese investors or buying foreign currency to transfer direct investment capital to foreign investors abroad in case of reduction of investment capital, result of investment capital reduction. terminate, liquidate or terminate the operation of investment projects, BCC contracts, PPP contracts in accordance with the law on investment;

dd) Transfer expenses related to foreign loans denominated in Vietnam dong by foreign-invested enterprises permitted to borrow foreign currencies in Vietnam dong according to the provisions of law on water borrowing and repayment out;

e) Other lawful expenditures in Vietnam dong related to foreign direct investment activities in Vietnam.

Article 8. Transfer of money for pre-investment activities

1. Before being granted an Investment Registration Certificate by a competent authority, a notice of satisfaction of conditions for capital contribution, share purchase, or redemption of capital contributions from foreign investors, establishment license and operating under specialized laws, signing PPP contracts, foreign investors are allowed to transfer money from abroad or from foreign currency or Vietnamese dong payment accounts of that foreign investor opened at a bank. authorized goods in Vietnam to pay legal expenses during the stage of pre-investment activities in Vietnam.

2. After being granted the Investment Registration Certificate by the competent authority, the Notice of satisfaction of the conditions for capital contribution, share purchase, redemption of capital contributions from foreign investors, and establishment license. and operating under specialized laws, signing PPP contracts, the money that foreign investors have transferred into Vietnam to carry out investment preparation activities is used to:

a) Converting a part or the whole into contributed capital;

b) Convert part or the whole into foreign loans of enterprises with foreign direct investment capital. In case of conversion into foreign loans, enterprises with foreign direct investment capital shall comply with the provisions of law on borrowing and repaying foreign loans of enterprises. The term of a foreign loan is counted from the date the project is granted an Investment Registration Certificate, a License for establishment and operation under specialized laws by a competent authority, or the date on which the parties sign a PPP contract. sign a foreign loan agreement (whichever is later) to the final repayment date;

c) Return to foreign investors in foreign currency or Vietnam dong the amount transferred into Vietnam for investment preparation activities after deducting legal expenses related to the preparation activities. investment in Vietnam.

3. In case the investment registration certificate is not granted by a competent authority, notice of satisfaction of conditions for capital contribution, share purchase, or redemption of contributed capital from foreign investors, license for If the foreign investor establishes and operates under specialized laws, signs a PPP contract or stops implementing a direct investment project in Vietnam, the foreign investor may remit the remaining amount in foreign currency or be entitled purchase foreign currency to remit overseas for the amount already transferred into Vietnam and the resulting interest (if any) after deducting legal expenses related to investment preparation activities in Vietnam.

4. Transactions stipulated in clauses 1, 2 and 3 of this article shall be conducted on the basis of an agreement between the parties concerned, and present valid documents proving the amount transferred to Vietnam. and legal expenses related to investment preparation activities in Vietnam, ensuring compliance with the regulations on foreign exchange control, the law on investment, the law on accounting and legal regulations. relevant laws.

Article 9. Remittance of capital, profits and lawful revenue sources abroad

1. Foreign investors must transfer abroad via direct investment capital accounts:

a) Direct investment capital when reducing investment capital; transfer of investment projects (except for the case specified at Point a, Clause 1, Article 10 of this Circular); terminate, liquidate or terminate the operation of investment projects, BCC contracts, PPP contracts in accordance with the law on investment;

b) Principals, interests and expenses of foreign loans (except for the case specified in Clause 3, Article 5 of this Circular), profits and lawful revenues related to activities of direct investment in Vietnam.

2. In cases where an enterprise with foreign direct investment capital must close its account of direct investment capital due to the dissolution, bankruptcy, termination of the enterprise's existence or due to transfer of an investment project that changes a legal entity. initial registration of foreign-invested enterprises, foreign investors may use payment accounts in foreign currencies and Vietnamese-dong payment accounts of such foreign investors opened at banks. goods allowed to carry out foreign currency purchase transactions, transfer of direct investment capital and lawful revenue sources to foreign countries.

Article 10. Transfer of investment capital and investment projects

1. The payment of the transfer value of shares or contributed capital in a foreign-invested enterprise specified in Clause 2, Article 3 of this Circular shall be made as follows:

a) Between non-resident investors or between resident investors not through the direct investment capital account;

b) Between a non-resident investor and a resident investor must be done through a direct investment capital account.

2. The payment of investment project transfer value between investors in the BCC contract and between investors directly implementing PPP projects is done as follows:

a) Between non-resident investors or between non-resident investors and resident investors in the BCC contract must be done through the direct investment capital account;

b) Between investors who are non-residents or between investors who are non-residents and investors who are residents who directly implement PPP projects, which must be done through the direct investment capital account.

3. Currency for valuation and payment of transfer value of investment capital and investment projects in foreign direct investment activities in Vietnam:

a) The valuation and payment of the transfer value of investment capital or investment projects between two non-residents may be made in foreign currency;

b) The valuation and payment of the transfer value of investment capital and investment projects between residents and non-residents and between residents must be made in Vietnam dong.

Chapter III

RESPONSIBILITIES OF RELATED PARTIES

Article 11. Responsibilities of authorized credit institutions

1. To guide foreign direct investment enterprises and foreign investors to present valid documents and vouchers in accordance with current laws on foreign exchange management.

2. Open and close direct investment capital accounts at the request of foreign direct investment enterprises or foreign investors in accordance with the provisions of this Circular.

3. Review, examine and keep documents and vouchers suitable to actual transactions to ensure the provision of foreign exchange services for foreign direct investment enterprises and investors. foreign countries are carried out for the right purposes and in accordance with the provisions of law.

4. To request foreign direct investment enterprises and foreign investors to provide documents and vouchers related to foreign direct investment activities in Vietnam.

5. Selling foreign currency to foreign investors, foreign direct investment enterprises to transfer abroad to foreign investors on the basis of self-balancing foreign currency sources of authorized credit institutions and in accordance with the provisions of the law.

6. To certify in writing at the request of the account holder about the account balance, information on transactions on the current account, direct investment capital account of the foreign direct investment enterprise, foreign investor.

Article 12. Responsibilities of FDI enterprises and foreign investors

1. Comply with regulations on foreign direct investment in Vietnam as prescribed in this Circular and relevant laws.

2. To honestly and fully declare transactions related to foreign direct investment activities in Vietnam; provide documents and vouchers related to foreign direct investment activities in Vietnam at the request and guidance of authorized credit institutions; take responsibility before law for the authenticity of documents and vouchers provided to authorized credit institutions.

3. Buy foreign currency at an authorized credit institution to transfer capital, profits and lawful revenue abroad to foreign investors according to the provisions of this Circular.

4. Transfer of payments of transfer value of investment capital or investment projects to foreign investors or Vietnamese investors in case of payment of transfer value of investment capital or investment projects specified at Point b, Clause 1, Article 10 of this Circular.

5. Make reports on relevant contents at the request of the State Bank.

Chapter IV

TERMS ENFORCEMENT

Article 13. Transitional provisions

1. Within 12 months from the effective date of this Circular, enterprises and foreign investors who are non-residents who own shares or contributed capital in such enterprises must convert their assets. clauses specified in Clauses 2 and 3 of this Article.

2. In cases where an enterprise with a foreign investor has opened and used an indirect investment capital account to contribute capital, purchase shares or contributed capital portions from a private enterprise to foreign investors, the ownership of 51% Charter capital or more must open a direct investment account in accordance with the provisions of this Circular.

3. In case the following enterprises have opened accounts of direct investment capital, they must close this account and at the same time, foreign investors who are non-residents own shares or contributed capital portions in such enterprises. opening accounts of indirect investment in accordance with regulations on foreign exchange management:

a) Enterprises with foreign investors own less than 51% of charter capital of the enterprise, except for the case specified at Point a, Clause 2, Article 3 of this Circular;

b) The enterprise is not required to carry out procedures for issuance of an Investment Registration Certificate but has a need and has been granted an Investment Registration Certificate by a competent authority in accordance with regulations of law on investment. ;

c) Foreign-invested enterprises whose stocks are listed on a stock exchange or registered for trading on the Stock Exchange;

d) If the enterprise specified in Points a, b and c of this Clause is borrowing and repaying foreign debts via a direct investment capital account, it may continue to maintain this account for borrowing purposes, repaying foreign debts in accordance with the law on enterprises' borrowing and repaying foreign debts.

4. During the conversion, foreign-invested enterprises and investors who are non-residents owning shares or capital contributions at such enterprises may continue using the existing capital accounts to make transactions. revenue and expenditure related to investment activities in Vietnam.

Article 14. Enforcement

1. This Circular takes effect from September 06, 9. This Circular replaces Circular 2019/19/TT-NHNN dated August 2014, 11 of the Governor of the State Bank guiding the management of the State Bank. foreign exchange management for foreign direct investment activities in Vietnam.

2. This Circular amends Clauses 1, 2 and 6, Article 5 of Circular 05/2014/TT-NHNN dated March 12, 3 of the Governor of the State Bank guiding the opening and use of investment capital accounts. indirect investment to carry out foreign indirect investment activities in Vietnam as follows:

"first. Capital contribution, purchase and sale of shares and capital contributions of foreign investors in enterprises that do not fall into the cases specified in Clause 1, Article 2 of the Governor's Circular 3/06/TT-NHNN dated June 2019, 26 The State Bank provides guidance on foreign exchange management for foreign direct investment activities in Vietnam and amendments and supplements (if any) that have not been listed or registered for transactions on the Exchange. stock."

"2. Contributing capital, buying and selling shares and capital contributions of foreign investors in enterprises whose shares are listed or registered for trading on the Stock Exchange.

“6. Capital contribution, transfer of contributed capital by foreign investors in securities investment funds and fund management companies in accordance with the law on securities.

3. This Circular adds a fourth bullet point to point d, Clause 1, Article 3 of Circular 16/2014/TT-NHNN dated August 01, 8 of the Governor of the State Bank guiding the use of foreign currency accounts, Vietnamese dong accounts of residents, non-residents at authorized banks (amended and supplemented by Circular 2014/49/TT-NHNN dated December 2018, 31 of the Governor of the State Bank of Vietnam) regulations on term deposits) as follows:

“- Collecting foreign currency transfers from direct investment capital accounts of foreign investors in oil and gas projects.”

Article 15. Implementation organization

Chief of Office, Director of Foreign Exchange Management Department, Heads of units under the State Bank of Vietnam, Directors of State Bank branches in provinces and centrally run cities, Chairman of the Board of Directors, Chairman Chairman of the Members' Council, General Directors (Directors) of credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular./.