New rules on transfer of profits abroad
The Ministry of Finance issued Decree No.186/2010/TT-BTC on November 18, providing guidelines on a foreign investor's transfer of profits abroad. The new decree takes effect in 45 days from the date it was promulgated and replaces Circular No 124/2004/TT-BTC of December 2004.
The new decree distinguishes between annual transfers and transfers made upon the completion of investment and business operations in Viet Nam.
Annually transferred profits are net profits earned from direct investment in a fiscal year according to either audited financial statements or corporate income tax declarations of the enterprise, less profits that have been re-invested into Viet Nam. Profits to be transferred upon completion of investment are total net profits earned from the investment, less any already transferred abroad.
Foreign investors are strictly prohibited from transferring profits abroad where there have been accumulated losses under audited financial statements after losses have been carried forward from the previous year, in accordance with the Law on Corporate Income Tax.
Foreign investors must give notice in accordance with the law to tax management authorities before commencing any transfer of profits abroad.
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