Rules on Foreign Loans in Vietnam
Foreign invested companies registered and established in Vietnam may raise funds from abroad, but the relevant foreign loans must comply with the relevant regulations formulated by competent administration authorities such as the State Bank of Vietnam. The specific rules and requirements include:
- Loan Limit
For a foreign invested company with an investment registration certificate, the limit of all medium or long-term loans shall not exceed the difference between the total investment capital to implement the project and the registered capital specified in the investment registration certificate.
- Registration
Foreign loans not guaranteed by the government may be divided into short-term loans with a maturity of up to 1 year and medium or long-term loans with a maturity exceeding 1 year. Medium or long-term loans must be registered with and approved by the State Bank of Vietnam while short-term loans do not have so such requirement under normal circumstances.
- Loan Purpose
Short-term foreign loans can be used for the following purpose:
(1) restructuring the borrower’s existing foreign debts; or
(2) payment of short-term payables (except for principal of domestic debts) arising from the implementation of investment projects, business plans other business, or projects of the borrower and measured in accordance with applicable accounting regulations.
Medium or long-term foreign loans can be used for following purpose:
(1) restructuring the borrower’s existing foreign debts;
(2) financing the implementation of the borrower’s licensed investment projects; or
(3) financing the implementation of the borrower’s business plans or other projects.
KAIZEN Group is equipped with experienced and highly qualified professional consultants and is therefore well positioned to provide professional advices and services in respect of the formation and registration of company, application for various business licences and permits, company compliance, tax planning, audit and accounting in China. Please call and talk to our professional consultants for details.
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