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Foreign Exchange Rate When Foreign Investors Contribute Capital to FDI Enterprises

posted 12 months ago

The differing opinions of authorities on which amount should used to determine if the foreign investors have fulfilled their capital contribution in its entirety raise uncertainty about whether the FDI enterprise has fully contributed its charter capital.

1. Legal regulations on contributed capital 

Clause 1, Article 4 of Circular No. 06/2019/TT-NHNN dated September 26, 2019 of the State Bank of Vietnam guiding foreign exchange management for foreign direct investment activities in Vietnam.

2. Practical situations and solutions

Option 1: Additional payment for the lack of capital

Refer to Official Letter 1185/CT-TTHT dated May 23, 2019 of the Tax Department of Long An province, enterprises must pay additional capital due to exchange rate difference when making capital contribution and the exchange rate on the Investment Registration Certificate (IRC).

Option 2: No additional submission and explanation

In essence, the capital contribution company has contributed enough capital, so it is necessary to explain to the authorities based on all documents and legal grounds such as: Account statement; Table of actual exchange rates at the date of receipt of capital contribution; Other documents such as: Minutes of capital contribution, Bank documents of the transferor.

3. Conclusion

In conclusion, the issue of foreign exchange rates when foreign investors contribute capital to FDI enterprises is a complex and nuanced matter. While the Enterprise Law 2020 provides some guidance on the matter, there are different perspectives and interpretations. Ultimately, it is crucial for all parties involved, including foreign investors, banks, and regulatory authorities, to carefully consider the legal provisions, precedents, and practical implications to ensure a fair and transparent process.

For the full detail of this post, please reference on this link: http://hmlf.vn/foreign-exchange-rate-when-foreign-investors-contribute-capital-to-fdi-enterprises/

Harley Miller Law Firm “HMLF”
Head office: 14th floor, HM Town building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone number: +84 937215585
Website: hmlf.vn
Email: [email protected] 

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