Consultation on Conditions, Documentation, and Risks in Profit Distribution and Repatriation of Profits Abroad
Question: What documents are required for profit distribution and overseas remittance of profits, and are there any potential risks?
Answer:
1. Conditions for profit distribution and overseas remittance of profits
a. Preparation of financial statements that have been audited for the fiscal year in which the profit is distributed.
b. Submission of the corporate income tax finalization declaration for the relevant fiscal year.
c. Fulfillment of all financial obligations (taxes, fees) and obtaining confirmation from the tax authority on the fulfillment of tax obligations to the State Budget, which serves as the basis to request a written confirmation from the tax authority (Form No. 01/ĐNXN issued with Appendix I of Circular 80/2021/TT-BTC).
d. No accumulated losses remain after losses have been carried forward in accordance with regulations.
e. Prior notification to the competent tax authority of the intended profit remittance abroad, as required before the actual remittance (this process is further explained in Section 5.2 of this Legal Opinion).
f. Profit remittance in cash must be conducted through the direct investment capital account, as required by regulations.
Legal basis: Article 3 and Article 5 of Circular 186/2010/TT-BTC; Article 70 of Circular 80/2021/TT-BTC; and Clause 1, Article 9 of Circular 06/2019/TT-NHNN.
2. Documents required for profit distribution and overseas remittance of profits
The foreign investor may directly, or through an authorized representative (the Client), submit a notification of the profit remittance abroad to the tax authority that oversees the enterprise in which the foreign investor holds capital (the Client), at least 07 working days prior to the intended remittance. The Client should prepare a dossier including the following documents:
a. Resolution of the General Meeting of Shareholders / Members’ Council / Director on the distribution of profits to shareholders, foreign investors, or retained earnings for reinvestment;
b. Audited financial statements for the fiscal year in which the profit is distributed;
c. Corporate income tax finalization declaration as submitted by the Client to the competent tax authority;
d. Official letter from the tax authority confirming the fulfillment of tax obligations;
e. Notification on the overseas profit remittance submitted by the Client (in the form issued with Circular 186/2010/TT-BTC).
3. Risks in profit distribution and overseas remittance of profits
The Client may face legal risks if the profit remittance abroad does not strictly comply with the prescribed conditions, timeline, and documentary requirements as outlined in Section 5.1 of this Legal Opinion. Such non-compliance could result in the competent tax authority refusing to grant approval. Furthermore, any omission or invalid document (e.g., missing audited financial statements or corporate income tax payment receipts) could lead to substantial delays in bank processing, far exceeding the standard processing time of 3–5 working days. Therefore, ensuring full compliance and timely fulfillment of tax obligations is a fundamental requirement for the smooth implementation of the Client’s profit distribution and remittance, helping to avoid unnecessary bottlenecks and procedural errors.
