Foreign investors investing in Vietnam face great challenges while transferring money to Vietnam, specifically their client’s bank account in Vietnam. The challenges could ring from corporate taxes to a hefty stretch of processes that can take too much time. However, having a tax outsourcing company at your service end to handle the processes for you and act as legal counsel can save you a lot of time and effort.
Cekindo has sketched up ways to transfer money overseas with their pros and cons mentioned to help investors make the best decision.
Transfering under an Invoice
The transaction done under invoices will be conducted between the client in Vietnam and the parent company overseas/foreign investor. At Cekindo, the accounting team will assist the investor in issuing a legal invoice. There’s no service fee for this process.
|The process is fast.||The amount transferred to the Client’s company bank account will be recorded as revenue. Tax (CIT) will be applied to the profit of the company (= total revenue – expense)|
Transferring Under Loan Agreement
Another way to get the transaction done is through a loan agreement (contract). To avoid registration with the State Bank, this loan agreement should be a one-year contract with no interest so that the parties involved don’t have to pay an extra fee. Although a tenure of at least one year is required for the loan agreement, the company can have more than one loan agreement in a year.
Cekindo prepares the loan agreement or contract between the client in Vietnam and the lender (Parent company or the investor). There’s a one-time service fee of USD 400 charged to prepare the loan agreement and to open a loan account with Vietnam bank (Vietcom Bank).
|The amount being transferred to the company bank account is NOT subject to Corporate Income Tax (CIT).||It will take around 2-3 weeks to process and receive funds to the company’s Vietnamese bank account. According to the loan agreement, the loan must be returned to the lender within one year. The company in Vietnam (Client) should ensure that it has the funds to transfer this money back.|
Increasing Charter Capital of the Company
A company can also increase the charter capital by injecting the investment made by foreign investors. Charter capital is an amount that shareholders contribute to use as working capital to operate the company. So injecting the investment amount into the charter capital can help the company amount to its total investment value and avoid tax imposition. However, without prior approval from the local licensing authority, investors cannot increase or decrease the charter capital amount.
Though, Cekindo can help the client increase this charter capital legitimately by changing/updating this information on the Investment Registration Certificate (IRC) / Enterprise Registration Certificate (ERC). One time service fee of USD 1,500 – 1,700 is priced for the entire process.
|The amount being transferred to the company bank account is NOT subject to Corporate Income Tax (CIT).||IT takes around 6-8 weeks to complete the procedures (increase capital, inject this amount to investment capital account, update information on IRC/ERC).|
Note: Please note that injecting investment into chartered capital is an expensive and time-taking process and is advised against doing it frequently. So it’s best that the client has a prepared mind for projection and decision on the increment of the charter capital.
How Can Cekindo Help
Cekindo helps an investor with various business ancillary services, including market research, company registration, legal advisory, business licensing, etc. Our experienced consultants help you carve a roadmap of the prospects of your investment and ensure you stay on top of all the regulatory and statutory aspects of your business.