Can 100% foreign-owned enterprises pay salaries in foreign currency (USD) to Vietnamese employees?

Principles of restricting the use of foreign exchange in the territory of Vietnam

Pursuant to Article 3 of Circular 32/2013/TT-NHNN stipulating the principles of restricting the use of foreign exchange in the territory of Vietnam as follows: after:

In the territory of Vietnam, except for cases where foreign exchange is used as specified in Article 4 of this Circular, all transactions, payments, listings, advertisements, quotations, valuations, price recording in contracts, agreements and other similar forms (including conversion or adjustment of prices of goods, services, value of contracts and agreements) of residents and non-residents may not be made in foreign exchange.

Can 100% foreign-owned enterprises pay salaries in foreign currency (USD) to Vietnamese workers?

Pursuant to Article 4 of Circular 32/2013/TT-NHNN stipulating cases of using foreign exchange in the territory of Vietnam as follows:

– Customs agencies, police, border guards and other State agencies at Vietnam’s border gates and bonded warehouses are listed in foreign currency and collected in foreign currency by transfer or cash from non-residents for taxes, entry and exit visa fees, service provision fees and other fees and charges as prescribed by law.

– Banks, non-bank credit institutions, foreign bank branches licensed to do business and provide foreign exchange services (hereinafter referred to as licensed credit institutions) are allowed to transact, make payments, list, advertise, quote, set prices, write prices in contracts, and negotiate in foreign exchange within the scope of business and provision of foreign exchange services that have been permitted by the State Bank of Vietnam in accordance with the provisions of law.

– Other organizations permitted to provide foreign exchange services are traded and listed in foreign currency within the scope of providing foreign exchange services that have been permitted by the State Bank of Vietnam in accordance with the provisions of law.

– Residents who are organizations with legal status may transfer internal capital in foreign currency between that organization’s account and the account of a dependent unit without legal status and vice versa.

– Residents can contribute capital in foreign currency by transfer to implement foreign investment projects in Vietnam.

– Residents execute import and export entrustment contracts according to the following regulations:

+ Residents who receive import entrustment may record the price in the import entrustment contract in foreign currency and receive payment in foreign currency by transfer for the value of the import contract from the import entrustment party;

+ Residents receiving export entrustment can record the price in the export entrustment contract in foreign currency and pay in foreign currency by transfer for the value of the export contract to the export entruster.

– Residents who are domestic contractors or foreign contractors shall comply with the following regulations:

+ For overseas costs related to the implementation of bidding packages through international bidding according to the provisions of the Bidding Law: contractors are allowed to bid in foreign currency and receive payment in foreign currency by transfer from the investor and main contractor for payment, payment and transfer abroad.

+ For the implementation of bidding packages according to the provisions of law on oil and gas: contractors are allowed to bid in foreign currency and receive payment in foreign currency by transfer from the investor and main contractor for payment, payment and transfer abroad.

– Residents who are insurance enterprises shall comply with the following regulations:

+ To quote, evaluate, and write the price of insurance services in the contract in foreign currency and receive payment in foreign currency by transfer from the insurance buyer for goods and services that must be reinsurance purchased abroad;

+ In case of loss arising from reinsurance abroad, the resident who is an insurance purchasing organization is entitled to receive compensation in foreign currency transferred from the foreign reinsurance company through the insurance enterprise to pay the costs of overcoming the loss abroad.

– Residents who are organizations selling duty-free goods are allowed to list goods prices in foreign currency and receive payment in foreign currency by bank transfer or cash from the supply of goods. Foreign currency used in transactions at duty-free shops shall comply with the provisions of law on duty-free sales.

– Residents are organizations providing services in quarantine areas at international border gates, bonded warehouse business organizations that are listed, quoted, priced, recorded prices in contracts in foreign currency and receive payment in foreign currency by transfer or cash from the provision of goods and services.

– Residents who are organizations acting as agents for foreign carriers on the basis of an agency contract signed between the two parties shall comply with the following regulations:

+ To quote, set prices, and write prices in contracts in foreign currency on behalf of foreign carriers for international freight charges. Payment must be made in Vietnamese Dong;

+ Be able to pay on behalf of foreign currency by bank transfer to pay for goods and services at international seaports and quarantine areas at international airports;

+ Be able to pay foreign currency in cash to pay salaries, bonuses, and allowances to non-residents authorized by foreign shipping lines.

– Residents who are export processing enterprises shall comply with the following regulations:

+ Prices are recorded in contracts in foreign currency and payments are made in foreign currency by bank transfer when purchasing goods from the domestic market for production, processing, recycling, assembly of export goods or for export, except for goods banned from export. Domestic enterprises are allowed to quote and price in foreign currency and receive payment in foreign currency by bank transfer when selling goods to export processing enterprises;

+ Be able to quote, evaluate, record prices in contracts in foreign currency and make payments, receive payments in foreign currency by bank transfer with other export processing enterprises.

– Residents who are business organizations in the fields of air transportation, hotels, and tourism may list and advertise prices of goods and services in Vietnam Dong and equivalent foreign currencies on electronic news websites and specialized publications (excluding menus and service price lists) using only foreign languages.

– Residents and non-residents are organizations that can negotiate and pay salaries, bonuses, and allowances in labor contracts in foreign currency by transfer or cash to non-residents and residents who are foreigners working for that organization.

– Non-residents are diplomatic missions and consular offices listed in foreign currency and collect entry and exit visa fees, other fees and charges in foreign currency by transfer or cash.

– Non-residents comply with the following regulations:

+ Transfer money in foreign currency to other non-residents;

+ To record prices in contracts in foreign currency and pay for export of goods and services in foreign currency by transfer to residents. Residents are quoted and priced in foreign currency and receive payment in foreign currency by transfer when providing goods and services to non-residents.

Thus, according to the above regulations, only foreign employees working for the enterprise will receive salaries, bonuses and allowances in foreign currency.

How is the law stipulated by the law if businesses wish to pay salaries in US dollars?

Pursuant to Official Dispatch 3245/LDTBXH-TL of 2001, the instructions are as follows:

“For businesses that wish and request to continue implementing the regulations on salaries in US dollars stated in the labor contract and pay salaries in Vietnamese Dong according to the average interbank exchange rate announced by the State Bank of Vietnam at the time of salary payment, they must send an official dispatch to the Department of Labor, War Invalids and Social Affairs of the province to determine this. Enterprises that do not have a written request must immediately switch to regulating salaries in Vietnamese Dong and record it in the labor contract according to regulations. intended to mention above…”.

Thus, the two parties can agree on a salary in USD, but when making payment, it must be converted into Vietnam Dong at the exchange rate announced by the State Bank of Vietnam at the time of payment.