Paying foreign suppliers and group companies: the documents banks require, foreign contractor tax before and after payment, royalties and technology transfer, management fees, intercompany interest and cost recharges, with a worked monthly payment run

Payments abroad are current transactions

Most money that a Vietnamese company sends abroad is not capital but payment: for imported goods, for services, for the right to use intellectual property, for interest on loans, and for charges from group companies. Under the Ordinance on Foreign Exchange these are current transactions, and the company may buy foreign currency from its authorised bank and pay without any State Bank approval (The foreign exchange control framework). The control lies in the bank's duty to check that each payment corresponds to a real, lawful transaction. A company that understands what its bank needs, and has its tax position settled before it pays, can run cross-border payments routinely; one that does not will find payments queried, delayed or returned.

Payments go from the company's payment accounts, in dong converted at the bank or from its foreign-currency account. The investment capital account is not used for trading payments; interest and principal on a registered foreign loan move through the loan account or the investment capital account as described in Offshore loans and State Bank registration.

What the bank will ask for

The circulars require banks to verify that a payment is supported by documents and to apply anti-money-laundering checks, and each bank publishes or provides its own list. For imported goods, expect the contract or purchase order, the commercial invoice and, once goods have arrived, the customs declaration; an advance payment before import is usually accepted against the contract, with the customs declaration supplied later. For services, expect the contract, the invoice or debit note, and often evidence that the service was delivered, such as acceptance minutes or reports. For royalties and technology fees, expect the licence or technology transfer contract, the royalty statement and, where the law requires registration, the registration certificate. For interest and loan repayments, the State Bank registration confirmation and a repayment notice. For group charges, the intra-group agreement, the allocation basis and the invoice.

Banks commonly also look at tax. Many banks ask to see the foreign contractor tax declaration and evidence of payment, or a written statement of how the company has dealt with foreign contractor tax, before remitting a service fee or royalty, and practice differs between banks and between payment types. Preparing the tax position before instructing the payment avoids most delays.

Foreign contractor tax

A payment to a foreign organisation that does not have a permanent establishment in Vietnam for Vietnam-sourced income is generally subject to foreign contractor tax (FCT). FCT is not a separate tax but a method of collecting VAT and corporate income tax from the foreign party, normally by withholding by the Vietnamese payer, which declares and pays it within ten days of each payment. Under Circular No. 103/2014/TT-BTC, as amended by Circular No. 20/2026/TT-BTC with effect from 12 March 2026 to guide Law No. 67/2025/QH15 on Corporate Income Tax, the deemed CIT element is 5% for services generally, 5% for interest, 10% for royalties and 2% for construction, with a VAT element for services at the deemed rate for the activity. Circular No. 20/2026/TT-BTC abolished the deduction method and now computes the CIT element on revenue including VAT.

Pure supplies of goods delivered at or before the Vietnamese border, with no associated services in Vietnam, are generally outside FCT; goods supplied with installation, training or other services in Vietnam bring the service element within it. Contracts are usually priced net of Vietnamese tax for the foreign party, in which case the Vietnamese payer bears the tax and must gross up the payment to compute it; a contract that is silent invites disputes about who bears the tax. A double tax treaty can reduce or eliminate the CIT element, for example where the foreign party has no permanent establishment and the treaty allocates taxing rights on the income to its home state, but only if the treaty procedure is followed. No treaty is in force with the United States. The detailed rules, treaty relief and the declaration mechanics are in Foreign contractor tax and tax treaties.

Royalties and technology transfer

Royalties for the use of trade marks, patents, software, know-how and other intellectual property bear FCT with a 10% CIT element. Where the arrangement transfers technology, the Law on Technology Transfer adds its own requirements. Law No. 115/2025/QH15, which amended the law with effect from 1 April 2026, narrowed some of the mandatory registration categories, but the transfer of technology from abroad into Vietnam remains a case in which the contract must be registered with the science and technology authority, unless the technology is on the restricted list, in which case a licence is needed instead. Registration certificates are commonly requested by banks before technology fees are remitted and support the deductibility of the fee. Whether a given licence is a technology transfer, a trade mark licence or a software licence, and what each requires, is covered in Chapter 7.

Management fees and service charges

Group management fees and shared-service charges are among the most scrutinised payments in Vietnam. For the Vietnamese company to deduct them, the charge must relate to services actually provided that benefit the company, at an arm's-length price, supported by a contract, an invoice and evidence of the services. Decree No. 255/2026/ND-CP, which replaced Decree No. 132/2020/ND-CP from 1 July 2026 and applies to the 2026 tax year, governs related-party transactions; parties are generally related through 25% ownership or significant financing or control. The tax authority looks for duplication (a charge for something the company already does itself), shareholder activities (services that benefit the parent as owner rather than the subsidiary), and allocation keys that bear no relation to benefit. A management fee that fails these tests is non-deductible, yet FCT is still due on the payment. The documentation rules are in Transfer pricing, interest and global minimum tax.

Intercompany interest and cost recharges

Interest on a shareholder loan is paid only on a loan that is registered with the State Bank where registration is required, at an arm's-length rate. It bears FCT with a 5% CIT element unless a treaty reduces it, and on the Vietnamese side net interest of a borrower with related-party transactions is deductible only up to 30% of EBITDA, with a five-year carry-forward, under Decree No. 255/2026/ND-CP.

Recharges of costs that a group company incurred for the Vietnamese company, such as travel of seconded staff, insurance premiums under a group policy or software subscriptions, need care. A recharge is a payment for something; if it is in substance a service, FCT applies to it, and a pure disbursement claimed to be outside FCT must be supported by third-party invoices in the Vietnamese company's name or clear evidence of the pass-through. Secondment arrangements, where a foreign group company bills the Vietnamese company for an expatriate's salary, can create a permanent establishment risk for the foreign company and personal income tax and work-permit consequences for the individual, and should be structured with those in mind (Work permits for foreign staff).

Running a monthly cross-border payment cycle

1. Collect and check the invoicesMatch each foreign invoice or debit note to its contract and to evidence of delivery: customs declaration for goods, acceptance minutes or reports for services, royalty statements for licences.
2. Classify each payment for FCTGoods delivered at the border (generally outside FCT), services (VAT and 5% CIT elements), royalties (10% CIT element), interest (5% CIT element); check whether a treaty applies and whether its procedure has been followed.
3. Compute the tax and the net paymentGross up where the contract is net of Vietnamese tax; compute the CIT element on revenue including VAT under Circular No. 20/2026/TT-BTC.
4. Check transfer pricing and registrationsRelated-party charges consistent with the intra-group agreement and the arm's-length analysis; technology transfer registration and State Bank loan registration in place where required.
5. Prepare the bank packContract, invoice, delivery evidence, registration certificates and, where the bank asks, the FCT position.
6. Instruct the bankPayment orders stating amount and purpose; purchase foreign currency from the bank or pay from the foreign-currency account.
7. Declare and pay FCTWithin ten days of each payment, through the e-tax portal; keep the payment receipts with the bank advices.
8. Record for year endFile the documents for the CIT finalisation, the related-party disclosure and the transfer pricing file.