Outward investment activities can expand the network and business market for investors. An effective overseas investment can bring in large, expected returns. Vietnamese law already has general provisions on the conduct of outward investment activities. Let’s join Lawyer X to find out about this issue through the following situation: “Hello, lawyer! My company in Viet Nam has completed the necessary investment procedures to invest overseas, we are now starting to gradually conduct outward investment activities. Can you tell me what the laws of Vietnam are about conducting outward investment activities? Thanks for your advice!”
Legal grounds
2020 Viet Nam Law on Investment
What is conduct of outward investment activities?
Business investment means the use of investment capital by investors to carry out business activities. Investor means an organization or individual carrying out business investment activities. Investors include domestic investors, foreign investors and foreign-invested economic organizations.
Conduct of outward investment activities abroad can be understood as the investor’s carrying out the necessary work as well as other legal procedures of outward investment procedures in accordance with the committed objectives, contents and progress so that the investment project can be realized in reality.
Opening of outward investment capital accounts
– Investors shall open an outward investment capital account at an authorized credit institution in Vietnam in accordance with regulations of law on foreign exchange management.
– Transfer of money from Vietnam to abroad and from abroad to Vietnam pertaining to outward investment activities must be made via the investment capital account specified in Clause 1 of Article 65 of Law on Investment in accordance with regulations of law on foreign exchange management.
Transfer of investment capital overseas
* Investors are allowed to transfer their outward investment capital to conduct outward investment activities in accordance with Article 66 of Law on Investment.
– An investor is allowed to transfer investment capital overseas in order to conduct investment activities if the following conditions are met:
+ The outward investment registration certificate has been granted, except for the case prescribed in Clause 3 of Article 66 of Law on Investment
+ The investment activities have been approved or licensed by a competent authority of the host country. If the host country’s law does not cover investment licensing or approval, the investor must provide documents proving its/his/her right to carry out investment activities in that country;
+ There is a capital account as prescribed in Article 65 of Law on Investment.
– The transfer of investment capital overseas must comply with regulations of law on foreign exchange management, export and technology transfer and relevant regulations of law.
– Investors are entitled transfer foreign currencies, goods, machinery and equipment overeas to serve market survey, research and market exploration and to carry out investment preparatory activities as prescribed by the Government.
* Investors are allowed to transfer foreign currencies, goods, machinery and equipment overseas before being granted the outward investment registration certificate to cover the costs of the investment project formation, including:
– Market and investment opportunity research;
– Field survey;
– Document study;
– Collection and purchase of documents and information relating to selection of the project;
– Consolidation, assessment, appraisal of the project including selection of a consultant to carry out the assessment and appraisal;
– Organization of scientific seminars and conferences;
– Establishment and operation of overseas contact offices;
– Participation in international bidding, making deposits or other financial guarantees, payment of costs and charges as requested by procuring entity, host country in connection with the conditions for participation in bidding or execution of the project;
– Participation in sale, purchase or merger of companies, making deposits or other financial guarantees, payment of costs and charges as requested by sellers or as prescribed by laws of the host country;
– Contract negotiation;
– Purchase or lease of assets for supporting the setting up of the project overseas.
The overseas transfer of foreign currency, goods, machinery and equipment above shall comply with regulations of law on foreign exchange, exportation, customs and technology. The limit of foreign currency transfer above shall not exceed 5% of the total outward investment capital and not exceed USD 300,000, and shall be included in the total outward investment capital, unless otherwise prescribed by the Government.
* The transfer of capital in the form of machinery, equipment and goods from and to Vietnam for the execution of outward investment projects must undergo customs procedures according to regulations of law on customs.
Use of profit overseas
– The investor is entitled to retain profit derived from outward investment for reinvestment in the following cases:
+ Continuing to contribute outward investment capital if capital has not yet been fully contributed as registered;
+ Increasing outward investment capital;
+ Executing a new investment project overseas.
– Investors shall follow the procedures for adjusting the outward investment registration certificate as prescribed in Article 63 of Law on Investment in the cases specified in Points a and b Clause 1 of Article 67 of Law on Investment; and follow the procedures for issuance of the outward investment registration certificate as prescribed in Article 61 of Law on Investment in the case specified in Point c Clause 1 of Article 67 of Law on Investment
Repatriation of profit
– Within 06 months from the date on which the tax declaration or an equivalent document is available as prescribed by the host country’s law, the investor shall repatriate the entire profit and other incomes derived from outward investment unless the profit is retained as prescribed in Article 67 of Law on Investment.
– If the profit and other incomes are not repatriated within the time limit prescribed in Clause 1 of this Article, the investor shall send a written notification to the Ministry of Planning and Investment and the State Bank of Vietnam. The time limit for repatriation of profit may be extended by no more than 12 months from the expiry of the time limit
– If the investor, within the time limit, has failed to repatriate profit or send the notification or if the investor, within the extended time limit specified in Clause 2 of Article 68 of Law on Investment, has failed to repatriate profit, such investor shall incur penalties in accordance with law.
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Frequently asked questions
Yes! Investors shall open an outward investment capital account at an authorized credit institution in Vietnam in accordance with regulations of law on foreign exchange management.
Yes! Transfer of money from Vietnam to abroad and from abroad to Vietnam pertaining to outward investment activities must be made via the investment capital account specified in Clause 1 of Article 65 of Law on Investment in accordance with regulations of law on foreign exchange management.
Within 06 months from the date on which the tax declaration or an equivalent document is available as prescribed by the host country’s law, the investor shall repatriate the entire profit and other incomes derived from outward investment unless the profit is retained as prescribed in Article 67 of Law on Investment.
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Conclusion: So the above is Conduct of outward investment activities in accordance with Vietnamese Law. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
