Paying dividends from a Vietnamese subsidiary to a foreign parent: conditions, timing and the paper trail

A Vietnamese subsidiary can pay its profits to a foreign parent, and many do every year. The normal pattern is annual: once the financial year has closed, the accounts are audited and the corporate income tax (CIT) for the year has been finalised, the profit available for distribution is transferred through the company's direct investment capital account. The conditions are not onerous, but they are specific, and a missing document typically delays the transfer by weeks rather than days.

For a group treasury used to moving cash between subsidiaries whenever it likes, the Vietnamese process can feel slow. The way to speed it up is to prepare during the year, not after the board resolution. This guide sets out what a subsidiary normally needs in place, in the order it is usually asked for.

The basic conditions

The rules on remitting profits abroad sit partly in tax law and partly in foreign exchange regulation. In practice, a subsidiary is expected to have:

• Finished the financial year for which profits are distributed — profit is normally remitted annually after year end, or when the investment ends;
• Audited financial statements for that year; foreign-invested enterprises are generally required to be audited;
• Finalised its CIT for the year under Law 67/2025/QH15, which applies from the 2025 tax year, and settled the tax due;
• No accumulated losses left unrecovered on the balance sheet — the rules generally do not permit profits to leave while past losses remain;
• Met its other tax and financial obligations to the Vietnamese state, so that no outstanding tax debt stands in the way.

In addition, a notice to the tax authority before remittance has long been part of the process. Check with your adviser what notification, if any, the rules currently in force require and in what form — and note that tax administration has been guided by Decree 252/2026/ND-CP and Circular 89/2026/TT-BTC since 1 July 2026.

How much can be paid

The distributable amount is the after-tax profit shown in the audited accounts, adjusted for anything the company's charter, the investment terms or the law requires it to keep. Three points often surprise group finance teams:

1. Accounting profit and taxable profit differ. The CIT finalisation may add back expenses that the accounts deducted. The tax is based on the taxable figure; the dividend comes from accounting profit after tax. Reconcile the two before promising a number to the parent.
2. Losses carried forward reduce what is distributable. A company that made losses in its first years must recover them before profits can leave, even if the current year is profitable.
3. Exchange differences. Profits are measured in the accounting currency, usually Vietnamese dong. The foreign currency amount received by the parent depends on the rate on the day of conversion, and the bank will convert only what the documents support.

A simple illustration, with hypothetical figures: a subsidiary with an after-tax profit of VND 30 billion this year and VND 8 billion of losses still carried from earlier years has, at most, VND 22 billion to distribute — before any reserves its charter requires.

The paper trail banks and tax officers ask for

The transfer goes through the direct investment capital account, and the bank will want to see why the money is leaving. A typical file:

Banks differ in what they ask for beyond this core, so ask your bank for its list in the autumn, not in April. And keep copies of everything in the company's own archive: the same documents will be needed again for the parent's home-country tax filing and for any later sale of the investment.

Tax on the dividend itself

A dividend is paid out of profit that has already borne Vietnamese CIT. Whether any further Vietnamese tax applies at the point of payment depends on who the owner is — a foreign company, or an individual — and on the rules in force when the dividend is paid. Individual shareholders are taxed on investment income under the personal income tax rules; for a foreign corporate owner, check the current treatment rather than relying on what applied to another group company some years ago.

The more common tax question is on the parent's side. The home country may tax the dividend and give credit or exemption for Vietnamese tax. Here a double taxation agreement between Vietnam and the parent's country may matter — not usually to reduce Vietnamese tax on the dividend, but to support the parent's claim for relief at home. The parent's tax team will want evidence of Vietnamese tax paid: the CIT finalisation, payment records and, if relevant, a certificate from the Vietnamese tax authority. Agree what they need before the year-end close.

Alternatives to dividends — and their limits

Groups sometimes prefer to take cash out of Vietnam as service fees, royalties or interest rather than dividends, because those payments are made during the year and may be deductible for the subsidiary. Each route has its own tax consequences:

• Foreign contractor tax. Payments to an overseas group company for services, royalties or interest are generally subject to foreign contractor tax, which the Vietnamese company declares and pays.
• Deductibility conditions. The subsidiary must show the service was actually received, was needed for its business and was priced at arm's length. Management fees without evidence of the service are among the first items inspectors disallow.
• Related-party rules. All of these are related-party transactions, disclosed each year and subject to the transfer pricing rules — since 1 July 2026 including Decree 255/2026/ND-CP on tax administration of related-party transactions.

Used for their real purpose, these payments are ordinary. Used mainly to move profit out of Vietnam, they invite exactly the scrutiny that makes them expensive. See our guides on foreign contractor tax for the mechanics.

Planning the year so the transfer is quick

For a subsidiary with a calendar year end, the finalisation deadline for an organisation is the last day of the third month after year end — 31 March — under the Law on Tax Administration. A realistic plan works back from that date and from the parent's own cash needs:

The timetable is a planning aid, not a legal sequence, and the deadlines themselves should be checked against the texts in force. The point is that the parent's expectation of cash in April is set in September. A subsidiary that starts the conversation after the audit is signed will usually pay later than one that started it before the year closed, and will have less room to fix whatever the bank questions.

Groups sometimes ask whether to leave profits in Vietnam instead. Retained profits can fund expansion, repay a shareholder loan or be converted to capital, each with its own procedure. That is a legitimate choice, but make it deliberately each year rather than by default because the file was not ready.

Common delays, and where to check yourself

• Audit signed late because the auditor was appointed late or the group reporting timetable took priority.
• Losses nobody tracked from the early years, discovered when the bank reads the balance sheet.
• A tax notice left unanswered in the e-tax account, which surfaces as an outstanding liability.
• Capital contributions not fully documented, so the bank questions the owner's position.
• A resolution signed by the wrong body under the subsidiary's charter.

Before starting the process, check the company's e-tax account for outstanding amounts and unanswered notices, the taxpayer information lookup for the company's status and managing tax office, and your own records for the capital contribution trail. Keep the whole remittance file with the accounting records for at least 10 years, the minimum retention under the Law on Accounting.