To: Department of Taxation of Hanoi City

General Department of Taxation has received an Official Dispatch No. 77484/CT-TTHT dated November 22, 2018 of Department of Taxation of Hanoi City on remittance of profits abroad of the executive office and foreign companies as contractors of the projects in Vietnam, ticket offices of foreign airlines in Vietnam. On this matter, General Department of Taxation has opinions as follows:

Article 2 of the Investment Law No. 67/2014/QH13 dated November 26, 2014 of the National Assembly stipulates regulated entities as follows: “This Law applies to investors, other organizations and individuals involved in business investment.”

Article 11 of the Investment Law No. 67/2014/QH13 stipulates assurance of transfer of foreign investors’ assets to abroad as follows: “After all financial obligations to Vietnamese government are fulfilled, foreign investors are permitted to transfer the following assets to abroad:

1. Capital and liquidations;

2. Income from business investment;

3. Money and other assets under the lawful ownership of the investors.”

Article 1 of Circular No. 186/2010/TT-BTC dated November 18, 2010 of the Ministry of Finance on guidelines for remittance abroad of profits earned by foreign organizations and individuals from their direct investment in Vietnam under the Investment Law stipulates as follows:

“Foreign organizations and individuals that make direct investment in Vietnam under Article 21, Article 22, Article 23, Article 24, Article 25 of the Investment Law (hereinafter general called as foreign investors) and remit abroad their profits from result of investment in Vietnam under Article 2 of this Circular.

Foreign organizations and individuals that make indirect investment in Vietnam under Article 26 of the Investment Law, and remit abroad their profits under relevant laws.”

Pursuant to Circular No. 103/2014/TT-BTC dated August 6, 2014 of the Ministry of Finance on guidelines for fulfillment of tax liability of foreign entities doing business in Vietnam or earning income in Vietnam.

According to above regulations:

In case a foreign company does business in Vietnam as a foreign contractor which applies Vietnam’s accounting practice, has applied for tax registration and has been issued with a taxpayer ID number (TIN) by a tax authority; has paid VAT using credit-invoice method and has paid corporate income tax according to declared revenue and expense as prescribed in Section 2 of Circular No. 103/2014/TT-BTC, upon remittance of profits earned from business in Vietnam abroad, it shall comply with the Circular No. 186/2010/TT-BTC.

In case a foreign company does business in Vietnam as a foreign contractor which does not apply Vietnam’s accounting practice and has paid VAT using account-based method, has paid corporate income tax according to percentage of income as prescribed in Section 3 of Circular No. 103/2014/TT-BTC or has paid VAT using credit-invoice method and has paid corporate income tax according to percentage of taxable income as prescribed in Section 4 of Circular No. 103/2014/TT-BTC , upon remittance of profits earned from business in Vietnam abroad as specified in Article 11 of the Investment Law No. 67/2014/QH13, it is not required to comply with the Circular No. 186/2010/TT-BTC.

Procedures and applications for remittance abroad of profits shall comply with provisions under Circular No. 186/2010/TT-BTC.

For regulations of Circular No. 186/2010/TT-BTC concerning forms of investment specified in the Investment Law No. 59/2005/QH11 (direct investment, indirect investment), General Department of Taxation shall make further modifications in the guiding documents on the Law on Tax Administration in line with the Investment Law No. 67/2014/QH13.

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