Foreign loans in Vietnam: regulations and important provisions.

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Foreign loans in Vietnam: regulations and important provisions

Accessing foreign loans is a common practice for companies operating in Vietnam, where many foreign invested businesses are usually funded by part capital and part debt. The debt is generally provided by their parent entities or other financial institutions through international loans.

In the below article we cover the overall foreign loan regulations and important provisions that business owners and financial officers need to be aware of when utilising loans from abroad.

Using foreign loans: requirements and limitations

Companies which operate legally and in a compliant manner (including locally owned companies) are permitted to access loans from foreign organizations or individuals (applied to companies not guaranteed by the government) for a wide range of funding and expansion purposes.

Foreign invested companies are allowed to borrow medium or long-term foreign loans, with the total amount of the company’s existing medium and long-term loans not exceeding the difference between its charter capital and the total investment capital specified in its IRC. For example, where company has USD 20,000 charter capital and USD 100,000 total investment capital, the USD 80.000 (100,000 – 20,000) is the maximum amount for a medium/long term loan which the company can take.


Note: A medium/ long-term foreign loan is a foreign loan with a term of more than 12 months, which is measured from the date of initial drawdown until the repayment of all outstanding amounts under the loan.


If the company does not have an IRC, the total medium and long-term foreign loan (including the domestic loans) must not exceed the need for loans serving the business or project of investment, which has been approved by a relevant authority.

Bank account prerequisites for utilising foreign loans

In case the borrower is a foreign invested enterprise, for medium/long-term foreign loans, the bank account used for receiving the funds related to the loans must be a Direct Investment Capital Account (DICA).

In respect to short term foreign loans, the borrower can use a DICA or Offshore Loan Account (as distinct from DICA) to process receipts and payments related to foreign loans.

In case the borrower is not a foreign-invested enterprise, an Offshore Loan Account is required to be opened at the banking provider in order to perform transactions relating to any foreign loans (including fund withdrawal, principal and interest payment).

Registration to the State Bank of Vietnam and required documents

Foreign loans that are subject to registration to the State Bank of Vietnam include:

  • Long-term and medium-term foreign loans
  • Short-term loans with no renewal contract, which remain outstanding for one year since its initial disbursement
  • Renewed short-term loans with more than 1 year to maturity.

Note: Any changes or modifications to foreign loans agreements are required to be registered with the State Bank of Vietnam by the borrower. However, borrowers are only required to notify about certain changes:

  • Creditor’s information
  • Commercial transaction name of the account service provider
  • Borrower’s Head Office address

Note:  Changes done within 10 days upon the State Bank’s approval on debt repayment, disbursement fund withdrawal plan and actual fee remittance are not required to be registered with the State Bank.


Depending on specific cases, the following documents may be required for foreign loan registration, according to Circular 03/2016/TT-NHNN:


– Foreign loan registration form

– Specified loan purposes in writing

– Business registration certificate or investment registration certificate

– Foreign loan agreement

– Written guarantee of loan in letter or contract

– Authority’s written approval

– Report of compliance in accordance to SBV’s regulations

– Confirmation of account service provider

– Invoice with profits in Vietnamese dong (VND)

– Explanatory statement on demands for foreign capital in VND


The borrower is required to submit the registration form within 30 days from the date of signing the agreement on medium/long-term foreign loan or the date of signing the agreement on extension of the short-term foreign loan to become medium/ long-term loan. Investors can choose to submit the documents online via or submit traditionally by post or in person. The State Bank of Vietnam will generally respond within 12 – 15 days if the documents are sufficient.

Mandatory reports on foreign loans for investors

All companies which have accessed foreign loans are required to submit a foreign loan report to the State Bank of Vietnam, notwithstanding if the loans are short or long term. There are 2 types of reports:

  • Periodic report: On a quarterly basis, no later than the 5th day of the month immediately after the reporting period, the borrower is required to lodge with the State Bank an review report on the implementation of the foreign loans and the repayment status; the report can be submitted on the website or directly in person/traditional way. The periodic report can be submitted online or follow appendix from Circular03/2016/TT-NHNN.
  • Ad-hoc report: in certain unexpected events or whenever necessary, the borrower or the account service provider is required to send specific reports upon the request of the State Bank of Vietnam.

Withholding tax on foreign loan interest payments

The income from loan interest received by a foreign lender is subject to Corporate Income Tax which a Vietnamese borrower must withhold, currently at a rate of 5% (CIT)*. This matter can be addressed through appropriate gross-up clauses in the loan agreement. Within 10 days since the payment for foreign loan interest is made, the company is required to prepare and submit the withholding tax declaration and tax payment.

*Subject to any exemptions that may exist under DTA’s

Regulations on deductible loan interest expense for CIT calculation

According to Decree 68/2020/NĐ-CP amendments to Decree 20/2017/NĐ-CP, the total loan interest cost arising within a specified tax period qualified as a deduction from income subject to corporate income tax shall not exceed 30% of total net profit generated from business activities plus loan interest costs and amortization costs arising within that period (EBITDA).

In the case of a no-interest loan, the borrower pays back only the borrowed amount, without any interest. However, the authorities may impose deem interest for taxation purposes, as they consider these transactions do not follow common market prices.



If you need any assistance with these or any other matters relevant for international investors in Vietnam, our experts are ready to work with your company to ensure you understand how the above will apply to your specific situation in Vietnam.


Contact our teams for expert support and further information on tax compliance in Vietnam.


Tran Minh Thai – Accounting Officer –

Do Thi Thao – Accounting Director –

Matthew Lourey – Managing Partner –


Last updated on June 20, 2022
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