Proceeding overseas investment
Ask:
DTD International Law Firm let me ask: Currently, my company intends to invest abroad to expand and develop the business. However, as far as I know, the process for offshore investment is more complicated than domestic investment. Therefore, I hope that DTD will advise me on the order to carry out this activity in accordance with current law. Thank you!
Answer:
Hello, thank you for trusting and sending your request for legal advice to DTD International Law Firm. The content of your question has been researched and advised by our team of lawyers as follows:
*Legal grounds:
Law on Investment 2014.
Decree No. 83/2015 / ND-CP Regulations on outward investment.
Circular No. 12/2016 / TT-NHNN Guiding foreign exchange management for outward investment.
* Procedures for carrying out foreign investment activities are as follows:
Step 1: Open an offshore investment capital account
Your company opens a separate capital account at an authorized credit institution in Vietnam and must register at the State Bank of Vietnam in accordance with the law on foreign exchange management. (Article 63 of the Law on Investment 2014: Transfers of money from Vietnam to foreign countries and from abroad into Vietnam related to offshore investment activities must be conducted through a separate capital account opened at a licensed credit institution at Vietnam and must register at the State Bank of Vietnam in accordance with provisions of applicable laws on foreign exchange management ”.)
Step 2: Transfer investment capital abroad
- According to Article 64 of the 2014 Law on Investment, your company may transfer outward investment when the following conditions are satisfied:
+ The Certificate of outward investment registration is granted, except for other cases prescribed by law;
+ The investment has 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 his/her right to make investment in that country;
+ There is a capital account as prescribed in Article 63 of this Law.
Note: The transfer of outward investment capital must comply with regulations of law on foreign exchange, export, technology transfers, and relevant regulations of law.
In addition, your company may transfer foreign currencies, goods, machinery and equipment abroad before being granted an offshore investment registration certificate to meet the costs of forming investment projects, as prescribed in Clause 2, Article 19 of Decree 83/2015 / ND-CP. (At the same time, Clauses 3, 4, 5 and 6, Article 19 of Decree 83/2015 / ND-CP also give some notes as follows:
- The transfer of foreign currencies, goods, machinery and equipment overseas according to the provisions of Clause 2, Article 19 shall comply with the provisions of the relevant laws related to foreign exchange, export, customs and technology.
- The limit of foreign currency transfer prescribed in Clause 2, Article 19 must not exceed 5% of the total offshore investment capital and not more than US $ 300,000, shall be calculated into the total offshore investment capital.
- The State Bank of Vietnam guides in detail the management of foreign exchange for the transfer of foreign currencies abroad to transfer investment capital abroad (specifically in Circular 12/2016 / TT-NHNN)
- The transfer of capital by machinery, equipment and goods to foreign countries and from abroad to Vietnam to execute investment projects abroad must carry out customs procedures according to the provisions of customs law. The Ministry of Finance guides in detail the transfer of machinery, equipment and goods to foreign countries to carry out a number of investment activities before being granted offshore investment registration certificates as prescribed in Clause 2, Article 19.
Step 3. Transfer profits to Vietnam
Within 06 months from the day on which the annual tax declaration or an equivalent document is available as prescribed by the host country’s law, your company transfer the entire profit and other incomes derived from overseas investment to Vietnam. (Unless profit is used for overseas investment as prescribed in Article 66 of this Law).
If past the 6-month time limit, your company has not yet transferred profits and other incomes to Vietnam, the company shall submit a written report to the Ministry of Planning and Investment and the State Bank of Vietnam. The deadline for transferring profit to Vietnam shall be extended not more than twice, each extension shall not exceed 06 months and must be approved in writing by the Ministry of Planning and Investment.
Step 4: Use of profit for overseas investment
After gaining profits from offshore investment activities, your company may use this profit to increase capital and expand overseas investment activities according to Article 66 of the 2014 Law on Investment. However, "the procedures for adjusting the offshore investment registration certificate shall be carried out and reported to the State Bank of Vietnam".
“If profit derived from the overseas project is used for another overseas project, the investor shall follow procedures for the Certificate of outward investment registration of such project, register a capital account and monetary capital transfer schedule with the State bank of Vietnam.”
The above is the order of conducting foreign investment that DTD makes based on the provisions of law to help your company have an overview of this activity. From there, your company can have a direction for its upcoming business investment.
