Author:

Tran Phuong Nam – Lawyer

Vo Nguyen Truc Linh  – Legal Department

In the current context of globalization, outward investment has become an inevitable trend for enterprises, contributing significantly to national economic growth and state revenues. This strategic move not only facilitates market expansion but also generates substantial added value in terms of profits for Vietnamese businesses. However, once investment projects begin to generate profits, the procedure to repatriate these profits is highly complex. It is governed by a cross-cutting framework of foreign exchange management regulations, investment laws, and international tax treaties.

From a legal advisory perspective, this article summarizes and highlights the key principles, conditions, and potential risks that enterprises must thoroughly understand when repatriating profits from overseas to Vietnam.

1. Principles and Time Limits for Profit Repatriation to Vietnam

Unlike free cash flows, profits generated from outward investment projects are subject to strict time-limit regulations under Vietnamese investment law.

• Mandatory time limit: Pursuant to Article 34 of Decree 103/2026/ND-CP on outward investment, investors are obligated to repatriate all generated profits and other incomes to Vietnam within 12 months from the date of profit distribution. Compared to Article 68 of the 2020 Investment Law, the new regulation has significantly relaxed these requirements by extending the deadline (from 06 months to 12 months). Additionally, it changes the starting point for calculating the time limit to the date of profit distribution, rather than the date of the tax finalization report or an equivalent legal document under the laws of the host country, as previously required.

The flexible adjustment regarding both the deadline and the point at which the obligation arises is considered a positive and highly practical legal development for enterprises engaged in outward investment. This change not only creates a safe buffer, providing investors with sufficient time to complete complex administrative procedures in the host country and mitigate compliance risks, but also empowers them to proactively manage financial planning, optimize cash flows, and select the most favorable exchange rates for fund transfers.

• Exceptions (Extensions): In the event that profits cannot be repatriated to Vietnam within the prescribed deadline, investors must submit a prior written notice to the Ministry of Finance and the State Bank of Vietnam. The deadline for profit repatriation may be extended, but shall not exceed 12 months from the expiration date of the initial deadline. Any delay in profit repatriation or failure to provide such notice may expose the enterprise to administrative penalties.
• Reinvestment of profits: In the event the investor wishes to use such profits to increase capital, expand an existing project, or implement a new project overseas, the investor must complete the procedures for the issuance or amendment of the outward Investment Registration Certificate before retaining the profits overseas.

2. Controlling cash flows through outward investment capital accounts

To ensure compliance with foreign exchange management regulations, immediately upon the issuance of an Outward Investment Registration Certificate, investors are required to open an investment capital account at an authorized credit institution in Vietnam, pursuant to Article 31 of Decree no. 103/2026/ND-CP.

Regarding the structure, each project is permitted to maintain only one investment capital account in a foreign currency, meaning that independent projects must maintain separate accounts. However, the law allows investors to concurrently open a capital account in a foreign currency and a capital account in Vietnamese Dong if there is a need to repatriate profits in the local currency. Pursuant to Circular no. 12/2016/TT-NHNN (as amended and supplemented by Circular no. 03/2019/TT-NHNN), all transactions relating to outward capital transfers and profit repatriation must be conducted solely through this designated account. Receiving profits directly into regular payment accounts is a common mistake; enterprises must strictly comply with this requirement to avoid the risk of violating foreign exchange management regulations.

3. Tax obligations and the issue of double taxation avoidance

In principle, income generated from outward investment projects constitutes taxable income for Vietnamese tax purposes and must be determined and declared in the tax period of the year in which the enterprise receives such income. Consequently, cross-border profit repatriation inherently carries the risk of double taxation for both organizations (corporate income tax) and individuals (personal income tax).

To mitigate this risk, Vietnamese law applies the principle of double taxation avoidance, primarily based on the Double Taxation Avoidance Agreements (DTAAs) signed with over 75 countries. In cases where the host country has entered into a DTAA with Vietnam, enterprises must directly consult the provisions of the Agreement to clearly determine the taxation rights and applicable tax rates for dividends or business profits. The availability of these treaty mechanisms enables investors to more accurately assess and estimate their tax liabilities, thereby facilitating a smooth and efficient project implementation.

In the event that the host country has not signed a DTAA with Vietnam, enterprises are still permitted to deduct the corporate income tax (or a tax of a similar nature) paid overseas when calculating their tax liability in Vietnam. However, a mandatory principle is that the maximum deductible tax amount must not exceed the tax payable under Vietnamese law. Accordingly, the tax rate for calculating and declaring this foreign-sourced income is 20%, and enterprises may not apply any domestic preferential tax rates they are currently enjoying to such income. If the actual tax paid overseas is lower, the enterprise is responsible for paying the difference in Vietnam.

Overall, the combination of the current relaxation of profit repatriation deadlines and the mechanisms for tax exemptions and double taxation relief creates favorable conditions for investors to balance their financial resources and fully fulfill their obligations in both countries. Strict compliance with tax regulations not only helps enterprises mitigate legal risks but also safeguards their investment scale, thereby strengthening their competitive position in the market.

Time of writing: June 01, 2026

The article contains general information which is of reference value. In case you want to receive legal opinions on issues you need clarification on, please get in touch with our Lawyer  at  info@cdlaf.vn

You can refer for more information:

• Foreign ownership barriers: What FDI Investors need to note before contributing capital to Vietnamese enterprises
• Cross-border E-commerce and Compliance Requirements for International Brands
• Legal Framework on Support for Innovative Startup Enterprises
• Digital signatures, timestamps, and ID codes in electronic labor contracts
• Guidance on Issuing Identification Codes for Electronic Labor Contracts under Circular 08/2026/TT-BNV