Did you know how to denominate a foreign currency in transactions in Vietnam?
According to the applicable Vietnamese regulations on foreign exchange control, all advertisements, quotations, listings, and payments within the territory of Vietnam must not be implemented in a foreign currency, except as permitted in limited circumstances under the guidance of the SBV. The exemptions are listed out in Circular 32 and are fairly limited, including quotations and payments to offshore entities.
Clearly, an agreement/contract between Vietnam-based companies is not on the list of exemptions. Therefore, under current Vietnamese regulations, for an agreement/ contract between two Vietnam-based companies in which neither company is located at an export processing zone, the parties are not allowed to denominate/quote the contract price and/or make payments thereof in a foreign currency (e.g., USD).
It is worth noting that a breach of the foregoing rules, though it would not necessarily invalidate the relevant agreements, may subject the corporate violators (i.e., the Vietnam-based contracting parties) to monetary fines of up to VND 200 million (approx. USD 8,600) and the foreign currency (if in fact transacted) may be confiscated.
Should you have any questions, please feel free to contact us at finnnguyen@ivlf-lawyer.com, www.ivlf-lawyer.com |www.facebook.com/IVLFAdvisors
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