In Vietnam, the management and use of foreign currency is governed by the Ordinance on foreign exchange control 2005 (amended in 2013) and other relevant regulations.
Article 22 of the Ordinance on foreign exchange control, Article 3 of Circular 32/2013/TT-NHNN dated December 26, 2013 of the State Bank guiding the implementation of regulations on restricting the use of foreign exchange in the territory of Vietnam (amended by Circular 16/2015/TT-NHNN dated October 19, 2015) stipulates: In Vietnam’s territory, all transactions, payments, listing, advertisements, quotations, pricing, prices in contracts, agreements other similar forms (including conversion or adjustment of prices of goods and services, the value of contracts and agreements) of residents and non-residents are not allowed to be conducted in foreign exchange, except for cases permitted under the regulations of the State Bank of Vietnam.
I. 17 Cases allowed to use foreign exchange in the territory of Vietnam
According to Article 4 of Circular 32/2013/TT-NHNN (amended in 2015), the following cases are allowed to use foreign exchange in the territory of Vietnam
1. Customs agencies, police, border guard and other state agencies at border gates of Vietnam and bonded warehouses are allowed to list in foreign currency and collect in foreign currency by transfer or cash from non-residents for various taxes, charges for exit and entry visa, charges for provision of services and other charges and fees as prescribed by law.
2. Banks and non-bank credit institutions and branches of foreign banks licensed to do business and provide foreign exchange services (hereinafter abbreviated to the authorized credit institutions) are allowed for transactions, payments, listing, advertisements, quotations, pricing, prices in contracts, agreements in foreign exchange within the scope of business and foreign exchange services permitted by the State Bank of Vietnam (SBV) in accordance with laws.
3. Other organizations licensed to provide foreign exchange services are allowed for transactions and listing in foreign currency within the scope of foreign exchange service provision permitted by the State Bank of Vietnam (SBV) in accordance with laws.
4. Residents being entities with legal person status are allowed to transfer internal capital in foreign currency between their accounts with accounts of their dependent units that have no legal person status and vice versa.
5. Residents are allowed to contribute capital in foreign currency by transfer in order to perform foreign investment projects in Vietnam.
6. Residents performing contracts of import and export entrustment shall comply with the following provision:
a) Residents entrusted with import are allowed to write price in contracts of import entrustment in foreign currency and receive payments in foreign currency by transfer for the value of import contract from the import-entrusting party;
b) Residents entrusted with export are allowed to write price in contracts of export entrustment in foreign currency and pay in foreign currency by transfer for the value of export contract for the export-entrusting party.
7. Residents being domestic and foreign contractors shall comply with the following provision:
a) For costs outside Vietnam involving the implementation of bidding package through international bid as prescribed in the Law on bid: Contractors are allowed to bid in foreign currency and receive payments in foreign currency by transfer from investors or principal contractors for payment and remittance to foreign countries.
b) For implementation of bidding package as prescribed by law on oil and gas: Contractors are allowed to bid in foreign currency and receive payments in foreign currency by transfer from investors or principal contractors for payment and remittance to foreign countries.
8. Residents being insurers shall comply with the following provision:
a) They are allowed to make quotations, fix prices, write prices of insurance services in contracts in foreign currency or receive payments in foreign currency by transfer from the insurance-buying parties for goods and services required to purchase the re-insurance in foreign countries.
b) Cases of arising damages for part re-insured abroad, residents being the insurance-buying organizations shall be allowed to receive amounts for compensation in foreign currency by transfer from foreign reinsurers through the insurers so as to pay costs for overseas damage remedy.
9. Residents being organizations trading in free-duty goods are allowed to list the prices of goods in foreign currency and receive payments in foreign currency by transfer or cash from provision of goods. Foreign currencies used in transactions at free-duty stores shall comply with legislations on sale of duty-free goods.
10. Residents being organizations providing services in isolated areas at international border gates, organizations trading in bonded warehouses are allowed for listing, quotation, pricing, prices in contracts in foreign currency and receipt of payments in foreign currency by transfer or cash from provision of goods and services.
11. Residents being organizations that act as agents for foreign transportation firms on the basis of agent contracts signed by two parties shall comply with the following provision:
a) They are allowed to make quotations, fix prices and write prices in contract in foreign currency, on behalf of foreign transportation firms, for freights of international goods. Payment must be performed in Vietnam dong;
b) They are allowed to provide payment services on behalf of their customers in foreign currency by transfer so as to pay goods and services at international sea ports, in isolated areas at international airports;
c) They are allowed to provide payment services in foreign currency by cash, under authorization of foreign ship firms, so as to pay salaries, bonus, and allowances for non-residents.
12. Residents being exporting and processing enterprises shall comply with the following provision:
a) They are allowed for prices in contracts in foreign currency and payment in foreign currency by transfer when they buy goods from domestic market for production, processing, reprocessing, and assembling of export goods or for export, except for goods banned export. Domestic enterprises are allowed to make quotations, fix prices in foreign currency or receive payments in foreign currency by transfer when they sell goods for exporting and processing enterprises;
b) They are allowed for quotations, pricing and prices in contracts in foreign currency and payment, receipt of payments in foreign currency by transfer with other exporting and processing enterprises.
13. Residents being organizations trading in the domains of air transport, hotel, and tourist are allowed for listing, advertisement of prices of goods and services in Vietnam dong and equivalent foreign currency on websites, specialized-line publications (excluding menu and service price table) that only use foreign language.
14. Residents and non-residents being organizations are allowed to make agreements and pay salaries, bonus and allowances in labor contracts in foreign currency by transfer or cash to non-residents and residents who are foreigners working in such organizations.
15. Non-residents being diplomatic agencies, consular agencies are allowed for listing in foreign currency and collection of charges for exit and entry visa, other charges and fees in foreign currency by transfer or cash.
16. Non-residents shall comply with the following provision:
a) They are allowed to transfer in foreign currency for other non-residents;
b) They are allowed for prices in contracts in foreign currency and payment of export goods and services in foreign currency by transfer for residents. Residents are allowed to make quotations, fix prices in foreign currency or receive payments in foreign currency by transfer when they supply goods and services for non-residents.
17. Other cases allowed to use foreign exchange in the territory of Vietnam will be considered and approved by the SBV’s Governor based on the actual situations and necessities of each case
The use of foreign currency in border areas is a special case. Article 26 of the Ordinance on foreign exchange control regulates the Principles in restricting the use of foreign exchange in the territory of Vietnam as follows: The use of the currency of a country that shares a border with Vietnam is carried out in accordance with the regulations of the international conventions of which the Socialist Republic of Vietnam is a member and the regulations of the State Bank of Vietnam.
According to Circular 19/2018/TT-NHNN dated August 28, 2018 of the State Bank guiding foreign exchange management for border trade between Vietnam and China (taking effect on October 12, 2018), the currencies used for cross-border trade between Vietnam and China conducted by traders are convertible foreign currencies, VND or CNY.
II. Use of personal foreign currency cash in Vietnam
According to Article 24 of the Ordinance on foreign exchange control, Article 23 of the Decree dated July 17, 2014, individual residents, non-residents have the rights to keep, carry, give, present, inherit and sell foreign currency cash to authorized credit institutions, transfer it overseas as regulated in this Decree, and pay it to any entity eligible for the receipt of foreign currency cash.
Residents as Vietnamese citizens are eligible to use foreign currency cash to open foreign currency savings account at authorized credit institutions, withdraw interest and savings amount of currency which they have deposited.
The buying and selling of cash foreign currency by individuals (currency exchange) must be conducted at authorized credit institutions in accordance with the provisions of the Ordinance on foreign exchange control and Circular 20/2011/TT-NHNN dated August 29, 2011, of the State Bank of Vietnam, which regulate the buying and selling of cash foreign currency by individuals with authorized credit institutions.
According to Article 3 of Circular 20/2011/TT-NHNN, the purchase, sale of foreign currencies in cash shall be performed at places which are authorized to sell foreign currencies in cash belonging to operating network of authorized credit institutions in line with provisions of applicable laws.
The selling of foreign currencies in cash by individuals shall be performed at places which are authorized to purchase foreign currencies in cash belonging to operating network of authorized credit institutions in line with provisions of applicable laws and their foreign currency exchange agents.
Authorized credit institutions include banks, non-bank credit institutions, and branches of foreign banks that are permitted to operate and provide foreign exchange services in accordance with the law.
Economic organizations that are not credit institutions but wish to provide currency exchange services must register with the State Bank of Vietnam to obtain a Certificate of Registration as a foreign exchange agent, as stipulated in Article 4 of Decree 89/2016/ND-CP dated July 1, 2016, by the Government, which regulates the conditions for foreign exchange agency activities, the provision of services for receiving and disbursing foreign currency by economic organizations.
III. Sanctions imposed on violations
Depending on the nature and severity of the violation, the violated individual may be administratively sanctioned or prosecuted for criminal liability according to the provisions of the law.
According to Decree 96/2014/ND-CP dated October 17, 2014 by the Government, which regulates administrative sanctions in the field of currency and banking, certain violations will be subject to the following penalties:
– A fine of 40 to 80 million Vietnamese dong for acts such as: individuals buying and selling foreign currency with each other; buying and selling foreign currency at incorrect exchange rates prescribed by the State Bank; transferring and carrying foreign currency, Vietnamese dong in and out of Vietnam in violation of the law.
– A fine of 80 to 100 million Vietnamese dong for buying and selling foreign currency at unauthorized institutions.
– A fine of 200 to 250 million Vietnamese dong for acts such as: making payments for goods and services in foreign currency in violation of the law; engaging in the trading and supply of derivative exchange rate products, foreign exchange in violation of the law; conducting transactions, providing quotations, pricing, recording prices in contracts, agreements, listings, advertising prices of goods, services, land use rights in foreign currency in violation of the law.
In addition to the aforementioned penalties, the competent authorities may also apply additional penalties as stipulated in point a, clause 8 of Decree 96/2014/ND-CP, such as confiscating the foreign currency and Vietnamese dong in cases of violations such as: transferring and carrying foreign currency, Vietnamese dong in and out of Vietnam in violation of the law; buying and selling foreign currency at unauthorized institutions.
Regarding criminal liability, according to the provisions of point i, clause 1 of Article 206 of the current Criminal Code, individuals who engage in illegal foreign exchange activities that cause property damage of 100,000,000 Vietnamese dong or more may be prosecuted for violating regulations on banking activities and other activities related to banking.
The above information is provided by Mys Law. For any questions regarding the content of this article, please contact 0969.361.319 or email: [email protected] for further clarification. Best regards!
