Direct investment capital account in accordance with Vietnamese law

Currently, Vietnam is one of the countries attracting large foreign investment. Therefore, policies as well as legal regulations to control investment activities are always given priority and attention. Many people wonder what is a direct investment capital account? Follow the article below of Lawyer X to know more about what is a direct investment capital account!

What is a direct investment capital account?

Direct investment capital account is a payment account in foreign currency; or in Vietnam dong opened by a foreign direct investment enterprise; or foreign investor at an authorized bank to conduct related transactions to foreign direct investment activities in Vietnam.

Subjects opening and using direct investment capital accounts

According to the provisions of Clause 1, Article 5 of Circular 06/2019/TT-NHNN, the following provisions are made:

Objects to open and use direct investment capital accounts include:

Enterprises with foreign direct investment capital: Enterprises established in the form of investment to establish economic organizations, in which foreign investors are members or shareholder; and must carry out procedures for issuance of Certificate of Incorporation investment registration certificate in accordance with the law on investment; Enterprises other than those specified at Point a of this Clause; in which foreign investors own 51% or more of the enterprise’s charter capital, including: Enterprises in which foreign investors contribute capital; or purchase shares capital contribution to the enterprise leading to foreign investors owning from 51% of charter capital ratio or more of the enterprise; Enterprises established after separation, merger or consolidation resulting in foreign investors owning 51% or more of the enterprise’s charter capital; Newly established enterprises under the provisions of specialized laws; Project enterprises established by foreign investors to implement PPP projects in accordance with the law on investment.

Foreign investors participating in BCC contracts, foreign investors directly implementing PPP projects in the absence of project enterprises.

Regulations on opening a direct investment capital account

Must open a foreign currency direct investment capital account at 01 (one) authorized bank to conduct lawful foreign currency revenue; and expenditure transactions related to foreign direct investment activities in Vietnam;

Corresponding to the type of foreign currency in which the capital contribution is made only 01 (one) direct investment capital account in that foreign currency can be opened at 01 (one) authorized bank;

In case of investment in Vietnam dong, they may open 01 (one) direct investment capital account in Vietnam dong at the authorized bank; where the foreign currency direct investment capital account has been opened to perform the following transactions: lawful revenue and expenditure transactions in Vietnam dong related to foreign direct investment activities in Vietnam;

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 or PPP project.

Steps to change authorized bank where direct investment capital account is opened

Open a direct investment capital account at another licensed bank;

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

Direct investment capital accounts at other authorized banks can only be used to conduct revenue; and expenditure transactions specified in Articles 6 and 7 of Circular 06/2019/TT-NHNN after completing the above steps.

Revenue and expenditure transactions by foreign currency direct investment capital account

Collected transactions:

Collection of remittances for direct investment capital contributions in foreign currencies of foreign investor; Vietnamese investors in foreign direct investment enterprises, foreign investors participating in BCC contracts, investors foreign investors directly implement PPP projects;

To collect and transfer the payment for the transfer value of investment capital or investment projects as prescribed in Article 10 of this Circular;

Collecting foreign currency transfers purchased from authorized credit institutions to transfer capital; profits and lawful revenues abroad according to the provisions of this Circular;

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

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

Collecting and transferring share capital surplus from the issuance of new shares to increase charter capital in foreign-invested enterprises;

Collecting foreign currency transfers earned from domestic sales of petroleum products in accordance with the law on oil; and gas and Guarantee agreement and commitment of the Government (if any);

Transfer revenues related to foreign loans of enterprises with foreign direct investment capital in accordance with the law on foreign borrowing and repayment of enterprises, except for the case specified in Clause 3, Article 5. This circular;

Other legal revenues in foreign currencies related to foreign direct investment activities in Vietnam.

Payment transactions:

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 investor directly 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;

Expenses for selling foreign currency to authorized organizations to transfer to the current account in Vietnam dong of the foreign direct investment enterprise; foreign investor participating in BCC contract, foreign investor in addition to directly implementing PPP projects;

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 for the transfer of investment capital or investment projects to the transferor in the foreign country. Vietnam in Vietnamese dong according to the provisions of Article 10 of this Circular;

Expenses for transferring profits and lawful foreign currency incomes from foreign direct investment activities in Vietnam by foreign investors abroad;

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

Expenses for foreign currency conversion to transfer capital, profits and lawful revenues from outward direct investment activities in cases where the currency for transferring capital, profits and lawful revenues abroad is different from the currency. of the opened direct investment capital account;

Transfer payments related to foreign loans in foreign currencies of enterprises with foreign direct investment capital in accordance with the law on borrowing and paying foreign debts of enterprises, except for the case specified in Clause 1 of this Article. 3 Article 5 of this Circular;

Other legal payments in foreign currencies related to foreign direct investment activities in Vietnam.

Related article

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• Service of setting up a foreign-invested company in Vietnam
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