A reasonable time period for paying a dividend may be up to 15 working days mainly subject to internal approval process (e.g. company owner decides/passes a resolution regarding dividend payment).

Yes, there are timing restrictions on paying dividends. A company can only pay annual dividend and only after it has fulfilled all tax and financial obligations as required by law. No interim profits/dividend distribution based on the interim profit during the year is allowed. A foreign owned company needs to notify the tax authority 7 working days before paying dividends to its shareholder. In addition, investors can remit dividend upon the termination of their investment in Vietnam after all tax and financial obligations have been cleared off.

The accounts required to support payment of a dividend should include the whole financial statements as the law provides that the dividend paid is based on financial statements. A foreign invested company must have its financial statements audited.

No, there are no restrictions on the amount of after-tax-dividends that can be paid. However, by law, a company can only declare and pay after-tax profit to its shareholders if:

• The company has made profit and fulfilled its tax obligations and other financial obligations under the law;
• After all determined dividends are fully paid, the company can ensure that it can still fully pay the debts and other obligations that are due for payment.
• In addition, if the company is a foreign owned company, the company must not have accumulated loss.

There are no specific provisions on reserves and ways to increase reserves in a single member limited liability company under Vietnamese law.

No, but foreign owned company must notify the tax authority 7 working days before a payment of dividend.

Yes. 

• Typically, if the  company has a direct investment capital account ("DICA”), the company will remit the profits/dividends to the foreign shareholder via the DICA. If the company has had to close its DICA due to certain corporate restructuring events prescribed under the regulations, the foreign shareholder will have the right to receive profits/dividends to its VND or foreign currency accounts in Vietnam for conversion and repatriation. If the company does not have a DICA and the foreign shareholder had made their investment through an indirect investment capital account in VND (normally abbreviated as IICA or INCA), the company will remit the profits/dividends in VND to the foreign shareholder’s IICA. The foreign shareholder will then have the right to convert the profits/distributions received into foreign currencies for repatriation.

Generally speaking, Vietnamese law does not provide any regulation prohibiting companies from obtaining loan for dividend payment purpose, but there are certain nuances to be borne in mind depending on whether the loan will be long term or short term, and onshore or offshore.

Yes, dividends can be paid in cash, in shares or other assets from the retained earnings of the company in accordance with the company's charter and investors' decision.

Yes. As for an overseas remittance of dividend to a foreign shareholder, in practice, when the Vietnamese company submits a notification of dividend distribution to the tax authority, the tax authority will check their system immediately to determine whether the company has any outstanding tax liabilities. If yes, the company would not be able to remit dividend overseas. In addition, each bank may have its own requirements for supporting documents, and therefore this should be checked with the relevant bank(s) early in the process.

No, there are generally no specific restrictions from a corporate law perspective on lending funds intra-group but cross-border. Please note that under the Law on Enterprises, the related party transaction may be subject to the Board of Members d or General Meetings’ Shareholders’ approval.

From a tax perspective, loan interest expenses that are incurred by a borrower having any related party transaction and exceed 20% of net profit before tax plus interest expenses and depreciation/amortization expenses (Earnings Before Interest, Taxes, Depreciation and Amortization) would not be deductible for corporate income tax purpose.