Moving Money In and Out of Vietnam: Capital Accounts, Contributions and Remittance

The bank call that ruins a week usually goes like this: the parent wired the capital, the money landed in the company's ordinary account, and now nobody can register it as charter capital. The funds are in Vietnam and they are the wrong kind of money.

Getting money into and out of Vietnam is not difficult, but it is procedural, and almost every problem comes from doing something in the wrong account or the wrong order.

The investment capital account is not your operating account

A foreign-invested company holds a dedicated capital account, separate from the current account it uses for day-to-day business. Capital contributions from the foreign investor come in through that account. Profits, and eventually returned capital, go out through it. The operating account pays salaries, suppliers and tax.

Open the capital account before the first transfer, in the currency recorded in your investment registration, and make sure the parent's finance team has the correct details. Money that arrives in the wrong account does not automatically become charter capital, and untangling it costs time you will want back.

Contribute the capital on the registered schedule

Your licensing documents state how much capital will be contributed and by when. That schedule is an obligation, not an aspiration. Missing it is a registration breach, and it also undermines anything that depends on capital being paid in, including certain immigration positions and any conversation with a bank.

If the business no longer needs the registered amount, reduce it formally rather than quietly under-contributing. If it needs more, decide deliberately between an increase in capital and a shareholder loan, because the two are very different animals.

Capital increase or shareholder loan

Domestic pricing and payment run in dong

Transactions inside Vietnam are settled in Vietnamese dong. Contracts with international counterparties are frequently expressed in another currency and converted, which works as a pricing mechanism provided the payment itself is in dong and the conversion clause is specific: which rate, published by whom, on what date.

An undefined conversion clause is a dispute waiting for a currency move. Define it once, in every template you use, and the question stops recurring.

Practical takeaway. Write the conversion mechanism into your standard contract terms rather than negotiating it per deal. The cost of getting this wrong is small each time and constant.

Paying suppliers abroad

Payments out of Vietnam for goods and services need supporting documentation: the contract, the invoice, evidence of delivery, and the tax position. Payments for services performed by a foreign party attract withholding under the foreign contractor tax regime, and a supplier who quoted a net figure will expect that to be grossed up.

Build the withholding into the commercial terms at contract stage. Discovering it at the first payment run means either an unexpected cost or an uncomfortable conversation with a supplier who thought they were getting the full amount.

Getting profits home

Profit remittance is the step groups plan last and should plan first. In outline, profits can be remitted once the financial statements are finalised and audited, the annual tax obligations are settled, and the accumulated position supports a distribution. There is a notification step before the transfer, and the bank will want the underlying documents.

Two things stop remittances more than anything else. Accumulated losses from earlier years, which absorb current profits before anything can leave. And incomplete tax finalisation, which means the numbers supporting the distribution are not yet fixed. Both are visible months in advance to anyone who looks.

Managing the currency itself

A company earning dong and reporting in another currency carries exchange exposure whether or not it manages it. The practical levers, in order of how much they are worth:

• Match the currencies. If revenue is in dong, fund costs in dong where you can. Natural matching is cheaper than any instrument.
• Shorten the cycle. Faster collection and shorter payment terms reduce the window in which the rate can move against you.
• Price with a mechanism. Contracts that allow a revision when the rate moves beyond a defined band transfer part of the risk to the counterparty.
• Talk to your bank about the hedging instruments available locally before you need them. We are not investment advisers and this is not financial advice; the point is that the conversation should happen during budgeting, not during a move.

A sequence that avoids the common problems

Open the capital account before any transfer. Contribute on the registered schedule, in the registered currency. Decide capital versus loan deliberately, and register the loan if it is long term. Fix the conversion mechanism in your contract templates. Build foreign contractor tax into supplier terms. Keep the tax finalisation current so a distribution is possible when you want one. Review the currency position at budget time, not at year end.

None of this is exotic. It is a small number of procedural decisions that are cheap to make correctly at the start and expensive to correct once money has moved.

Planning capital contributions or a profit distribution from Vietnam? Our accounting and tax team sets up the capital account correctly, keeps the contribution schedule on track and prepares the documentation a remittance needs.