Vietnam Legal Guide: Writing contract value in VND, converted from USD

-


I often receive the same and popular question from many of my clients whether they can write contract value in Vietnamese Dong, which is converted from USD in their contracts? One of the reasons, among others, why many Vietnamese people want to write the contract value in USD or in Vietnamese Dong, which is converted from USD in their contracts, is because of the exchange rate fluctuations between VND and USD, where the VND is often seen to suffer from price escalation.




It is very simple to answer this kind of question as it is clearly stated under the applicable regulations of Vietnam. Specifically, pursuant to Ordinance No. 06/2013/UBTVQH13, within the territory of Vietnam, all transactions, payments, listings, advertisements, quotation, pricing, writing price on contracts, agreements and other similar forms of residents and non- residents must not be effected in foreign exchange except for cases permitted in accordance with regulation of the State bank of Vietnam. This regulation is further detailed by Circular No. 32 / 2013 / TT-NHNN which provides that in Vietnam’s territory, except for the cases allowed to use foreign specified in Article 4 of this Circular, all transactions, payments, listing, advertisements, quotations, pricing, prices in contracts, agreements other similar forms (including conversion or adjustment of prices of goods and services, the value of contracts and agreements) of residents and non-residents are NOT allowed to be conducted in foreign currency.

Thus, it can be seen that the contract valued in Vietnamese Dong, which is converted from USD is NOT allowed under the applicable regulations of Vietnam. However, another question is that whether such kind of contract is invalid under the laws of Vietnam?

The Civil Code 2015 of Vietnam stipulates that civil transactions with objectives and contents which breach prohibitions of the laws of Vietnam or which contravene social ethics shall be invalid. Meanwhile, pursuant to the Law on Promulgation of Legislative Documents, the Ordinance No. 06/2013/UBTVQH13 and the Circular No. 32 / 2013 / TT-NHNN are NOT laws. Consequently, the contract valued in Vietnamse Dong, which is converted from USD violates the regulations on the foreign exchange, but these violated regulations are NOT the laws. As such, it can be affirmed that that contract may not possibly be considered invalid.

In fact, there are a number of ways to resolve the above subject matters, depending on the nature of the transaction, expectations of the parties to the contract… which can be possibly shared in the next topic.

For your information, in Vietnam, laws are legal documents which are promulgated by National Assembly of Vietnam (Constitutionally, the National Assembly of Vietnam is the highest government organization and the highest-level representative body of the people. It has the power to draw up, adopt, and amend the constitution and to make and amend the laws. It also has the responsibility to legislate and implement state plans and budgets), meanwhile, the Ordinance No. 06/2013/UBTVQH13 and the Circular No. 32 / 2013 / TT-NHNN as mentioned in this topic are regulations which are NOT promulgated by the National Assembly of Vietnam.

                                                                                                    By: Vinh (Richard) | LinkedIn

Comments

Post a Comment

Popular posts from this blog

ESOP of non-public companies in Vietnam

-
In recent years, Employee Stock Ownership Plan (" ESOP ") is becoming a popular solution for Vietnamese enterprises in their human resources strategy. The issuance of shares under ESOP (" ESOP Shares ") by the public company is subject to regulations of Law on Securities, which shall not be applied to the non-public company. This article expresses some relevant respects of issuing ESOP Shares by the non-public company in compliance with current Vietnamese Law. Conditions of ESOP Shares issuance While the public companies planning to issue ESOP Shares shall closely comply with provisions of Decree No. 155/2020/ND-CP promulgated by the Government on 31 December 2020 guiding on the execution of Law on securities (hereinafter referred to as " Decree 155/2020 "), the non-public company shall not be subject to. Although conditions for ESOP Shares issuance of the non-public company are absent in Law on Enterprises as well as other legal documents, the non-public ...
Read more

Amending provisions on cooperation and investment with foreign investors in education

-
Decree No. 86/2018/ND-CP regulating on foreign cooperation and investment in education was issued on 6 June 2018 and took effect from 1 August 2018 (hereinafter referred to as Decree 86/2018). After 3 years of implementation, in addition to remarkable results in creating a legal framework for a foreign entity participating in the educational development of Vietnam, Decree No. 86/2018 has also revealed inadequacies and asynchronous issues. Therefore, it is necessary to promulgate a revising decree amending and supplementing articles of Decree No. 86/2018 (hereinafter referred to as Draft). This article points out a brunch of new and prominent regulations amended in the mentioned Draft. Firstly, the Draft supplemented the entities eligible for engaging in joint education: In particular, the Draft supplemented the entities eligible for engaging in joint education that are private educational institutions established and operating in Vietnam (regardless of investment capital in Vietnam or ...
Read more

The integrity of data message from a legal perspective (Part 3)

-
In Vietnam, electronic documents, emails, telegraphs, faxes,… which are familiar forms and can be easily collected and evaluated the integrity, electronic data is a much more comprehensive and diverse concept. The definition of electronic data specified in Clause 1, Article 99 of the Criminal Procedure Code 2015 may refer to: ” Electronic data is a   symbol, letter, digit, image, sound or similar form created, stored, transmitted or received by electronic means”.   Electronic data is collected from electronic media, computer networks, telecommunication networks, online, and other electronic sources collectively referred to as the electronic environment. Electronic data is invisible and immaterial because the electronic environment is a “virtual” environment. In addition, non-border or territorial electronic data may be initiated in one country while such data is stored in another (e.g., online gambling cases in Vietnam but the server system that stores gambling data is all abr...
Read more