It is Circular No. 03/2019/TT-NHNN dated 29 March 2019 (“Circular 03”) due to amend Circular 32/2013/TT-NHNN dated 26 December 2013 (“Circular 32”), the State Bank of Vietnam relaxes the restrictions on the use of foreign currency in Vietnam.
Principle of restriction on use of foreign currency in Vietnam
Under Circular 32, except for 16 limitative exceptions set out therein, all transactions, payments, listings, advertisements, quotations, setting [fixing] prices, and recording prices in contracts and agreements and other similar forms (including conversion or amendment of prices of goods and services and of contract and agreement prices) in Vietnam of residents and non-residents must be conducted in the local currency, the Vietnamese Dong.
New exception: security deposits for auctions
Circular 03 adds an exception to the rule mandating transactions in Vietnam to be in Vietnamese Dong for foreign investors participating in auctions in Vietnam to pay deposits in a foreign currency by bank transfer in the following cases:
(i) Purchase of shares in State-owned enterprises to be equitized in accordance to a plan approved by the Prime Minister of Vietnam;
(ii) Purchase of shares or charter capital portions from the State in State-owned enterprises and enterprises with State capital to be divested in accordance to a plan approved by the Prime Minister of Vietnam;
(iii) Purchase of shares or charter capital from State-owned enterprises investing in enterprises to be divested in accordance to a plan approved by the Prime Minister.
Circular 03 records the right of the foreign investor whose bid in an auction contemplated above in unsuccessful, to remit to abroad the deposit in such foreign currency after subtracting any applicable auction expenses or fees.
The new exception unfortunately does not extend to payment of deposits for purchase of equity in private enterprises “from private players” or foreign-owned enterprises.
Circular 03 will come into force on 13 May 2019.
The information provided in this article is for information purposes only and is not intended to constitute legal advice should be obtained from qualified legal counsel for all specific situations.
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