Procedures for Foreign Investors to Withdraw Capital from Enterprises in Vietnam

For foreign investors (FIs), withdrawing capital from an enterprise in Vietnam is not merely a matter of transferring money abroad. Investors must also comply with investment, corporate, tax, and foreign exchange regulations under Vietnamese law.

1. Methods for Foreign Investors to Withdraw Capital

Pursuant to the Investment Law 2020, the Enterprise Law 2020, and regulations on foreign exchange management, foreign investors may withdraw capital through the following common methods:

• Transferring all or part of their contributed capital or shares to another investor.
• Having the enterprise repurchase the investor's contributed capital or shares.
• Reducing the charter capital of the enterprise in accordance with applicable laws.
• Receiving the remaining assets upon dissolution of the enterprise or termination of the investment project.
• Remitting lawful profits generated from investment activities in Vietnam to overseas accounts.

2. Cases Requiring Amendment of Investment Registration or Enterprise Registration

Depending on the withdrawal method, the enterprise may be required to carry out corresponding procedures.

Cases requiring amendment of the Investment Registration Certificate (IRC)

• The foreign investor transfers the entire investment project.
• There is a change in the investor information stated in the IRC.
• There is a change in the investor's ownership ratio recorded in the IRC.
• The investment capital of the project is reduced.

Cases requiring amendment of Enterprise Registration

• Change of members in a limited liability company.
• Change of founding shareholders or foreign shareholders in a joint stock company.
• Reduction of the enterprise's charter capital.
• Conversion of the enterprise type following the foreign investor's divestment.

3. Conditions for Foreign Investors to Withdraw Capital

To remit capital or profits abroad, foreign investors must satisfy the following conditions:

• The capital transfer or capital reduction procedures have been fully completed in accordance with the law.
• The enterprise has fulfilled all tax and financial obligations to the Vietnamese State.
• The remittance is made through a Direct Investment Capital Account (DICA) opened at a licensed bank authorized to conduct foreign exchange activities in Vietnam.
• The investor or enterprise is not subject to enforcement measures or asset freezing by competent authorities.
• For profit remittance, the enterprise must have completed the tax finalization for the fiscal year in which the distributable profits arise.

4. Required Documentation

Depending on the withdrawal method, the dossier may include:

• Capital contribution or share transfer agreement.
• Minutes of meeting and resolutions/decisions of the owner, Members' Council, or General Meeting of Shareholders regarding the transfer or capital reduction.
• Updated list of members or shareholders after the change.
• Application dossier for amendment of the IRC (if applicable).
• Enterprise registration amendment dossier.
• Tax declarations relating to capital transfer transactions.
• Documents evidencing fulfillment of tax obligations.
• Documents proving that payment was made through the Direct Investment Capital Account (DICA).

Note: Where the transferor is a foreign organization, its legal documents must be legalized through consular legalization procedures and translated into Vietnamese with notarization or certification in accordance with Vietnamese regulations.

5. Procedures and Implementation Timeline

Generally, the capital withdrawal process is carried out as follows:

Step 1: Execute the Capital Transfer Transaction or Adopt a Capital Reduction Decision

The parties sign a transfer agreement, or the enterprise issues a decision on charter capital reduction in accordance with corporate regulations.

Step 2: Declare and Fulfill Tax Obligations

The investor or the enterprise declares and pays taxes arising from the capital transfer transaction, if any.

Step 3: Carry Out Licensing Amendment Procedures

• Amend the Investment Registration Certificate if there are changes to investor information or investment capital.
• Amend enterprise registration information regarding members, shareholders, or charter capital.

Step 4: Remit Funds Abroad

After completing all legal procedures and financial obligations, the foreign investor may transfer capital or profits abroad through the Direct Investment Capital Account in accordance with foreign exchange regulations.

6. Competent Authorities

Depending on the specific procedure, the competent authorities may include:

• Industrial Zone, Export Processing Zone, or High-Tech Zone Management Boards: responsible for handling amendments to the IRC for projects under their jurisdiction.
• Provincial Department of Finance or business registration authority: responsible for enterprise registration amendment procedures in accordance with current regulations.
• Tax authorities directly managing the enterprise: responsible for receiving and processing tax obligations arising from capital transfer transactions.
• Licensed commercial banks authorized to conduct foreign exchange activities: responsible for processing overseas remittance transactions.

7. Important Notes for Foreign Investors

• Payment for capital transfer transactions involving foreign investors must be made through the Direct Investment Capital Account in accordance with foreign exchange regulations.
• Foreign investors may only remit profits abroad after the enterprise has fulfilled all tax and other financial obligations to the Vietnamese State.
• Certain conditional business sectors applicable to foreign investors may require compliance with foreign ownership limitations following the transfer.
• If the enterprise still has outstanding financial obligations, obligations to employees, or ongoing disputes, the withdrawal process may be restricted or prolonged.
• Failure to comply with foreign exchange regulations may result in banks refusing overseas remittance transactions.

Selecting an appropriate withdrawal method and ensuring full compliance with legal procedures from the outset will help foreign investors minimize tax and foreign exchange risks while ensuring that capital remittance abroad is conducted smoothly and in compliance with Vietnamese law.