Is it illegal to rent a house and sign a rental contract in foreign currency in Vietnam?

Is it illegal to rent a house and sign a rental contract in foreign currency in Vietnam?

Pursuant to Clause 13, Article 1 of the Ordinance on amendments to the Ordinance on Foreign Exchange 2013 stipulates as follows:

Article 22. Provision on limited use of foreign exchange

Within the territory of Vietnam, all transactions, payments, listings, advertisements, quotation, pricing, writing price on contracts, agreements and other similar forms of residents and non- residents must not be effected in foreign exchange except for cases permitted in accordance with regulation of the State bank of Vietnam.

Pursuant to Article 3 of Circular 32/2013/TT-NHNN stipulating principles in restricting the use of foreign exchange in the territory of Vietnam as follows:

In Vietnam’s territory, except for the cases allowed to use foreign specified in Article 4 of this Circular, all transactions, payments, listing, advertisements, quotations, pricing, prices in contracts, agreements other similar forms (including conversion or adjustment of prices of goods and services, the value of contracts and agreements) of residents and non-residents are not allowed to be conducted in foreign exchange.

Thus, it is against the law that the parties in the rental contract agree to set prices and record prices in foreign currencies, even if the equivalent value is converted in Vietnam Dong. In order to limit the case that the contract is declared invalid by the Court if there is a dispute due to the price agreement in a foreign currency, the parties should agree on the payment currency and make the payment in Vietnam Dong.

What are penalties for signing a house rental contract in foreign currency inconsistently with law regulations in Vietnam?

Pursuant to Point n, Clause 4, Article 23 of Decree No. 88/2019/ND-CP stipulating a fine ranging from VND 30,000,000 to VND 50,000,000 shall be imposed for committing one of the following violations:

n) carrying out transaction, quotation or determination of contract prices, or posting or publishing prices of goods, services or land use rights, or performing other similar acts (including converting or adjusting prices of goods or services or contract prices) in foreign currency inconsistently with law regulations;

Pursuant to Clause 3, Article 3 of Decree No. 88/2019/ND-CP, fines and power to impose fines:

a) The maximum fine for an administrative violation in the monetary and banking sector imposed on an organization is VND 2,000,000,000 and that imposed on an individual is VND 1,000,000,000;

b) The fine for every administrative violation prescribed in Chapter II hereof is imposed on an individual. The fine imposed on an organization is twice as much as the one imposed on an individual for the same administrative violation;

c) The fine imposed for an administrative violation committed by a person working at a people’s credit fund or a microfinance institution shall be 10% of the corresponding fine prescribed in Chapter II hereof; The fine imposed on the people’s credit fund or the microfinance institution or their affiliate shall be twice as much as the fine imposed on the person working there;

d) The fines imposed by each competent person prescribed in Chapter III hereof are incurred by individuals. The fines each competent person may impose upon organizations are twice as much as the fines incurred by individuals.

According to this Article, the act of signing a house rental contract in foreign currency inconsistently with law regulations in Vietnam will be fined from VND 30,000,000 to VND 50,000,000.

Best Regards!