Circular 186/2010/TT-BTC guiding the transfer of profits abroad

CIRCULARS

GUIDELINES FOR IMPLEMENTATION OF PROFIT OUTSIDE OF FOREIGN ORGANIZATIONS AND INDIVIDUAL PROFITS FROM DIRECT INVESTMENT IN VIETNAM AS PROVISIONS OF INVESTMENT LAW

Pursuant to the Investment Law No. 59/2005/QH11 dated November 29, 11 and guiding documents;
Pursuant to the Law on Tax Administration No. 78/2006/QH11 dated November 29, 11 and guiding documents;
Pursuant to the Law on Corporate Income Tax No. 14/2008/QH12 dated June 03, 6 and guiding documents;
Pursuant to the Government's Decree No. 160/2006/ND-CP dated December 28, 12 detailing the implementation of a number of articles of the Ordinance on Foreign Exchange;
Pursuant to the Decree No. 118 / 2008 / ND-CP dated 27 / 11 / 2008 of the Government defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

The Ministry of Finance guides the transfer of profits abroad by foreign organizations and individuals that have profits from direct investment in Vietnam in accordance with the Law on Investment as follows:

Article 1. Subject of application

Foreign organizations and individuals making direct investments in Vietnam according to the provisions of Articles 21, 22, 23, 24, and 25 of the Law on Investment (hereinafter referred to as foreign investors), transfer profits from investment results in Vietnam abroad according to the provisions of Article 2 of this Circular.

Foreign organizations and individuals making indirect investments in Vietnam according to the provisions of Article 26 of the Law on Investment, the remittance of profits abroad shall comply with the provisions of relevant laws.

Article 2. Profits remitted abroad

1. Profits transferred by foreign investors from Vietnam to abroad under the guidance in this Circular are profits lawfully divided or earned from direct investment activities in Vietnam under the Investment Law, after when fully fulfilling financial obligations to the State of Vietnam as prescribed.

2. Profits transferred from Vietnam to foreign countries can be in cash or in kind.

- Profits remitted abroad in cash in accordance with the law on foreign exchange management;

- Profits are remitted abroad in kind and converted into in-kind values ​​according to the provisions of the law on import and export of goods and relevant laws.

Article 3. Determination of profits to be remitted abroad

1. Profit remitted abroad annually is the profit shared or earned by foreign investors in the fiscal year from direct investment activities based on audited financial statements, decision declarations corporate income tax of enterprises in which foreign investors participate plus (+) other profits such as profits that have not yet been carried over from previous years; minus (-) the amounts foreign investors have used or committed to use to reinvest in Vietnam, the profits foreign investors have used to cover the investor's expenses foreign investors for production and business activities or for personal needs of foreign investors in Vietnam.

2. Profits remitted abroad at the end of investment activities in Vietnam is the total profit earned by foreign investors during the process of direct investment in Vietnam, minus (-) profits profits have been used for reinvestment, profits have been remitted abroad during the operation of foreign investors in Vietnam and amounts have been used for other expenditures of foreign investors in Viet Nam.

3. Foreign investors are not allowed to remit abroad the profits distributed or earned from direct investment activities in Vietnam in the year where the profits are generated, in the case in the financial statements of the enterprise that the investor foreign investment in the year in which profits are generated still have accumulated losses after the loss has been carried forward in accordance with the law on corporate income tax.

Example: Foreign investor A contributes capital to establish a Company in Vietnam. In 2009, the company incurred a loss of 4 billion dong.

Assume that in 2010, the Company has a pre-tax income of VND 3 billion. Thus, after clearing and transferring losses from 2009 to regulations, in 2010 the Company had a loss of 1 billion dong. The company is not allowed to distribute profits to the capital contributors and foreign investor A is not allowed to repatriate the distributed profits of 2010 back home.

Assume that in 2010, the Company has a pre-tax income of VND 5 billion. Thus, after clearing and carrying forward losses from 2009 to regulations, in 2010 the Company has remaining taxable income of VND 1 billion. If the corporate income tax rate applied by the Company is 25%, the Company shall pay CIT of VND 250 million (= VND 1 billion x 25%). The company is entitled to distribute the profit after tax to the capital contributors and foreign investor A is entitled to repatriate the distributed profit of 2010 to the country.

Article 4. Time to transfer profits abroad

1. Transfer profits abroad every year.

Foreign investors are entitled to annually transfer profits distributed or earned from direct investment activities in Vietnam abroad at the end of the fiscal year, after the enterprise in which the foreign investor participates. the investor has fulfilled its financial obligations to the State of Vietnam in accordance with the law, has submitted its audited financial statements and corporate income tax finalization declarations for the fiscal year to the management agency. direct tax.

2. Remittance of profits abroad upon termination of direct investment activities in Vietnam.

Foreign investors are entitled to remit profits abroad at the end of their direct investment activities in Vietnam after the enterprise in which the foreign investor invests has fulfilled its financial obligations to the Vietnamese State. Nam according to the provisions of law, has submitted audited financial statements and corporate income tax finalization declarations to the direct tax administration agencies, and has fulfilled all obligations as prescribed by the Law on Management of Taxes. tax administration.

3. Responsibilities of enterprises where foreign investors participate in capital investment.

Enterprises where foreign investors participate in capital investment are responsible for fulfilling financial obligations to the State of Vietnam in accordance with the provisions of law related to income forming the profits that investors foreign investment moving abroad.

Article 5. Notice of profit transfer abroad

The foreign investor directly or authorizes the enterprise in which the foreign investor participates to make a notice of the remittance of profits abroad according to the form promulgated together with this Circular and send it to the tax authority directly. management of enterprises in which foreign investors participate, at least 07 working days before transferring profits abroad.

Article 6. Implementation organization

This Circular takes effect 45 days after its signing, replacing Circular No. 124/2004/TT-BTC dated December 23, 12 of the Ministry of Finance guiding the implementation of regulations on the transfer of profits to of foreign economic organizations or individuals, having profits from the forms of investment specified in the Law on Foreign Investment in Vietnam.

In the course of implementation, if there are any problems, organizations and individuals are requested to report them to the Ministry of Finance for additional guidance.

SOCIAL REPUBLIC OF VIETNAM
Independence - freedom - happiness
--------

NOTIFICATION

ON TRANSFER OF PROFITS FOREIGN

Five………..

Dear: ……………………………….

1. Name of foreign investor: ……………………………………………………

Nationality: ……………………………………………………………………………………………….

Organization Individuals

2. Name of enterprise that foreign investor participates in capital investment: ……………………

Investment license number: ……………………………………………………. Day: ………………………..

Address of the head office of the enterprise: ……………………………………………………

Tax code: ………………………………………………………..

3. Registration of profits remitted abroad of investors:

4. Proposed profit amount to be transferred abroad this time:

– In money (of which country): …………………………………………………….

– In kind (name of goods, quantity, volume, value):…………………….

If transferring by money, it is withdrawn from account number …….opened at Bank …………

I certify that the above information is correct and take full responsibility before the law for the information announced.