Re-investment with Profit Earned in Vietnam

Foreign investors can use the profit earned from their investment activities in Vietnam to increase the legal capital or the investment capital of an operational project or to invest in another project in Vietnam.

The State Committee for Cooperation and Investment (now the Ministry of Planning and Investment) says in Circular 215UB/LXT dated February 8, 1995 giving guidelines for foreign investment in Vietnam, that foreign investors using the shared profit for reinvestment will be refunded the tax they have paid for the profit in the following cases:

-Reinvestment in areas encouraged by the Vietnamese Government.

-The re-investment capital will be used for more than three years.

-Having contributed in full the legal capital stated in the investment license.

The tax paid for the profit used for re-investment will be refunded when the re-investment has been made.

The application for re-investment submitted to the State Committee for Cooperation and Investment (now the Ministry of Planning and Investment) must state the objective of re-investment, such as investing in a new project or expanding production of the existing project, and the amount of profit used for the re-investment.

In case of investment in a new project, the project must have a license from the licensing authority. 

In case of re-investment with the profit earned to increase the legal capital or the investment capital of the joint venture enterprise in operation, the re-investment must be approved by the board of directors. If the enterprise is 100% foreign-owned, the re-investment to increase legal capital or investment capital must be described by the director of the enterprise.

The application must also include the certificate (or bill or notarized copy) for the amount of profit tax already paid issued by the tax authority.

If investors fail to make the re-investment for a period of more than three years for any reason, or are found not to really use the profit for re-investment, they must reimburse the refunded profit tax, including the interest.