At present, the regulations on foreign exchange management of indirect activities in Vietnam fall under the Ordinance on Foreign Exchange (amended and supplemented) and Circular No. 05/2014/TT-NHNN dated March 12, 2014 by the State Bank of Vietnam detailing the opening and use of indirect investment capital accounts to carry out indirect portfolio investment activities in Vietnam (amended and supplemented), which are as follows:
Foreign investors (FI) who are non-resident must open an indirect investment capital account in VND at a credit institution authorized to perform indirect investment activities in Vietnam.
Article 7 of Circular No. 05/2014/TT-NHNN details the regulations regarding transactions related to foreign indirect investment activities in Vietnam, stipulating that there must be no revenue from the transfer of capital originating from foreign direct investment activities in Vietnam.
Ms. Dang Thi My’s request for instruction regarding the transfer of contributed capital in an FDI corporation between a non-resident FI and a Vietnamese investor; this is a transaction related to foreign direct investment activities in Vietnam.
Pursuant to the provisions of Circular No. 06/2019/TT-NHNN dated June 29, 2019 detailing foreign exchange management for foreign direct investment activities in Vietnam, to Circular No. 16/2014/TT – SBV dated August 1, 2014 detailing the use of foreign currency accounts and VND accounts of residents and non-residents at authorized banks, and to Circular No. 05/2014/TT-NHNN above, the transfer of capital between foreign investors and Vietnamese investors must be done through a direct investment capital account in accordance with the provisions of Circular 06/2019/TT-NHNN; FIs are not allowed to use the indirect investment capital account to receive payment for the transfer of contributed capital in FDI corporations.