Changes were released earlier this year, affecting the recording and processing of foreign sourced loans by Vietnamese companies. This Client Update looks at what these changes mean to Vietnamese entities, and what business managers/owners need to be aware of when undertaking loans from abroad.

UTILISING FOREIGN LOANS

Accessing foreign loans for funding is common practice for companies in Vietnam.

Foreign invested companies are usually funded by part capital and part debt, with the debt provided most commonly from their parent entities. As foreign invested companies expand in Vietnam, debt is often (initially) the primary means to do so, again usually through parent entity loans from abroad. Locally owned companies also access foreign loans for a wide range of funding and expansion purposes.

Traditionally, loan proceeds would be paid straight into a Current Bank Account for a locally owned company, and into the Capital Bank Account for a foreign owned company. However, bank account requirements for receiving loan funds, along with documentation and registration requirements, have changed.

Now, companies are required to establish and utilise Offshore Loan Accounts (“OLA”) for receipt of most loans, with resulting changes in registration with the State Bank of Vietnam (“SBV”).

For more information, click Client Update Sep 2016 – OLA.


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