Can Vietnamese citizens directly trade securities overseas? Is it allowed to use profits derived from overseas investment to implement new overseas investment projects?
In Vietnam, what are the requirements for transferring overseas investment capital?
In Article 66 of the Law on Investment 2020, the transfer of overseas investment capital is regulated in Vietnam as follows:
Transfer of overseas investment capital
1. An investor is allowed to transfer overseas investment capital to conduct investment activities if the following conditions are met:
a) The overseas investment registration certificate has been granted, except for the case prescribed in Clause 3 of this Article;
b) 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 their right to carry out investment activities in that country;
c) There is a capital account as prescribed in Article 65 of this Law.
2. The transfer of overseas investment capital must comply with regulations of law on foreign exchange management, export and technology transfer and relevant regulations of law.
3. Investors are entitled to transfer foreign currencies, goods, machinery and equipment overseas to serve market survey, research and market exploration and to carry out investment preparatory activities as prescribed by the Government.
This content is guided by Article 82 of Decree 31/2021/ND-CP as follows:
Transfer of overseas investment capital
1. Every investor is entitled to transfer overseas investment capital to conduct investment activities in a foreign country as prescribed in Article 66 of the Law on Investment.
2. Every investor is entitled to transfer foreign currency, goods, machinery and equipment overseas before being issued with the overseas investment registration certificate to cover the costs of activities that set up their investment project, including:
a) Market and investment opportunity research;
b) Field survey;
c) Document study;
d) Collection and purchase of documents and information relating to selection of the project;
dd) Consolidation, assessment, appraisal of the project including selection of a consultant to carry out the assessment and appraisal;
e) Organization of scientific seminars and conferences;
g) Establishment and operation of overseas contact offices;
h) 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;
i) 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;
k) Contract negotiation;
l) Purchase or lease of assets for supporting the setting up of the project overseas.
3. The overseas transfer of foreign currency, goods, machinery and equipment prescribed in Clause 2 of this Article shall comply with regulations of law on foreign exchange, exportation, customs and technology.
4. The limit of foreign currency transfer prescribed in Clause 2 of this Article shall not exceed 5% of the total overseas investment capital and not exceed USD 300,000, and shall be included in the total overseas investment capital, unless otherwise prescribed by the Government.
5. The State Bank of Vietnam shall elaborate on management of foreign exchange for the overseas transfer of foreign currency for carrying out the activities prescribed in this Article.
6. The transfer of capital in the form of machinery, equipment and goods from and to Vietnam for the execution of overseas investment projects must undergo customs procedures according to regulations of law on customs. The Ministry of Finance shall provide detailed instructions on overseas transfer of machinery, equipment and goods for carrying out the activities prescribed in this Article.
Thus, the transfer of overseas investment capital shall be conducted when the following requirements are met:
- Have an overseas investment registration certificate
- Have the investment activities approved or licensed by a competent authority
- Have a capital account as prescribed
Can Vietnamese citizens directly trade securities overseas?
Pursuant to Article 52 of the Law on Investment 2020 stipulating the forms of overseas investment in Vietnam as follows:
Forms of overseas investment
1. Investors shall carry out overseas investment activities in the following forms:
a) Establishment of a business organization in accordance with the law of the host country;
b) Making investment on the basis of an overseas contract;
c) Contribution of capital to, purchase of shares or stakes of an overseas business organization to participate in management of such business organization;
d) Trading in securities, other financial instruments, or making investment via securities investment funds and other intermediary financial institutions in a foreign country;
dd) Other forms of investment prescribed by law of the host country.
2. The Government shall elaborate the forms of investment mentioned in Point d Clause 1 of this Article.
Accordingly, Vietnamese citizens are allowed to trade securities overseas through intermediary organizations such as overseas securities investment funds and other overseas intermediary financial institutions.
In Vietnam, is it allowed to use profits derived from overseas investment to implement new overseas investment projects?
Pursuant to Clause 1, Article 68 of the Law on Investment 2020, there are the following provisions:
Repatriation of profit
1. 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 overseas investment unless the profit is retained as prescribed in Article 67 of this Law.
According to Clause 1, Article 67 of the Law on Investment 2020, investors are entitled to retain profits derived from overseas investment for reinvestment in the following cases:
Use of profit overseas
1. The investor is entitled to retain profit derived from overseas investment for reinvestment in the following cases:
a) Continuing to contribute overseas investment capital if capital has not yet been fully contributed as registered;
b) Increasing overseas investment capital;
c) Executing a new investment project overseas.
Thus, inverters can use profits derived from overseas investment for the implementation of new overseas investment projects in accordance with the above provisions.
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