On September 30, 2022, the State Bank of Vietnam (SBV) issued Circular No. 12/2022/TT-NHNN on guidelines for foreign exchange administration in respect of foreign borrowing and foreign debt repayment of enterprises (hereinafter referred to as “Circular 12”) replacing Circular No. 03/2016/TT-NHNN dated February 26, 2016, Circular 05/2016/TT-NHNN dated April 15, 2016 and Circular 05/2017/TT-NHNN dated June 30, 2017.
Circular 12 was issued with the expectation of completing the legal framework on foreign borrowing and foreign debt repayment of enterprises, meeting the practical needs and overcoming outstanding issues and inadequacies in the practice. There are major changes in Circular 12 related to the administrative procedures in order to improve the efficiency, shorten the time of procedures to achieve SBV’s management objectives. Besides, Circular 12 added a number of detailed regulations on foreign borrowing and foreign debt repayment.
Source: Vietthink
There are new points have been amended and supplemented in Circular 12:
1. From the effective date of Circular 12 (November 15, 2022), the enterprise has to make monthly online report about the situation of foreign borrowing and debt repayment that are not guaranteed by the Government, no later than the 5th day of the month of following the reporting period.
2. Using the website to declare registration information, register for loan changes and report on the performance of self-borrowing and self-repaying loans:
Specifically, the loan must be registered with the State Bank of Vietnam, including:
- Mid-term and long-term foreign loans.
- Short-term loans with extended principal debt repayment period whose total term is over 01 year.
- Short-term loans without an extension agreement but with outstanding principal debt balance (including principally entered interest) at the date of 01 year from the date of first capital withdrawal, unless the borrower completes the above-mentioned principal debt balance within 30 working days from the date of 01 year from the date of first capital withdrawal.
3. Time limit for borrowers to submit foreign loan registration documents:
The borrower sends the dossier to the competent authority in accordance with Circular 12 within the following time limit:
(i) Thirty (30) working days from the date of signing the Mid-term and long-term foreign loans agreement;
(ii) Thirty (30) working days from the date of signing the agreement to extend a short-term foreign loan into a Mid-term and long-term foreign loans for a short-term loan with an extension of the principal debt repayment period of the loan is over one (01) year and the date of signing the extension agreement is within one (01) year from the date of first capital withdrawal;
(iii) Thirty (30) working days from the date the borrower is issued the Enterprise Registration Certificate, the License for establishment and operation under specialized laws, the date of signing the investment contract under public-private partnership (PPP contract), the date the parties sign a foreign loan agreement to convert the investment preparation amount into loan capital (whichever is later), applicable to foreign loans arising from the transfer of money for investment preparation of projects that have been granted Investment Registration Certificates into foreign loans;
(iv) Sixty (60) working days from one (01) year from the date of first capital withdrawal for:
- Loans specified in Clause 2, Article 11 of Circular 12 (Short-term loans with extended principal repayment period but the total term of the loan is more than 01 year) and the date of signing the extension agreement is one (01) years from the first date of capital withdrawal; and
- Loans specified in Clause 3, Article 11 of Circular 12 (Short-term loans without extension agreement but with outstanding principal balance (including principally entered interest) at the time of one (01) year from the first date of capital withdrawal, unless the borrower completes the payment of the above principal balance within thirty (30) working days from the date of one (1) year from the first date of capital withdrawal).
4. Loan changes are no longer need to be registered:
(i) Changing the plan for payment of interest and fees on foreign loans with the plan confirmed in written by the State Bank of Vietnam, but do not change the method of determining the prescribed interest and fees. The borrower is responsible for making a table to calculate the interest and fees to be paid so that the account service provider bank has a basis for checking and monitoring when making the money transfer;
(ii) Changing (increase or decrease) the amount of capital withdrawal, repayment of principal debt, interest and fees within one hundred (100) currency units of the foreign borrowed currency with the amount stated in the written registration confirmation, written confirmation of registration for change of foreign loans;
(iii) Change of the actual withdrawal or principal debt repayment amount of a particular period is less than the amount stated in the capital withdrawal and debt repayment plan on the registration confirmation or change registration confirmation document of foreign loans. Noted: For this content, before making capital withdrawal and debt repayment for the remaining amount of that period, the borrower is responsible for registering changes in the plan for capital withdrawal and debt repayment for the remaining amount which have not been implemented under regulations.
5. Principles of foreign exchange management for foreign loans in the form of goods import with deferred payment:
Circular 12 supplements the regulation on money transfers as debt repayment (principal, interest), and fee payment related to foreign loans in the form of goods import with deferred payment, which are not required to be done via foreign loan or debt repayment accounts and are not subject to registration and registration for changes in foreign loans as prescribed in Chapter III of this Circular.
Basically, Circular 12 does not have many changes in the goals and principles of Circular No. 03/2016/TT-NHNN dated February 26, 2016, Circular 05/2016/TT-NHNN dated April 15, 2016 and Circular 05/2017/TT-NHNN June 30, 2017. The new points of Circular 12 aim to manage effectively the foreign exchange related to foreign loans and repayment of enterprises, attract and focus resources on the growth and development of the country's economy, control foreign currency capital flows and foreign debt repayment activities of enterprises to ensure the compliance with the laws. The new points of the circular focus mainly on the adjustment, supplement and amendment of administrative procedures in this field; regulations on reporting regime; on the responsibilities of related parties, in order to create more favorable conditions for enterprises; publicity and transparency, but still ensure the effective management; effectively credit institutions are allowed to provide account services, as well as the enterprises' responsibilities in borrowing and paying foreign debts, ensuring compliance with regulations and using loans effectively.
Vietthink News.
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