An FDI enterprise has accumulated undistributed profits over four consecutive years, and the investor wants to remit the whole sum at once to cut transaction costs. This article guides the combined procedure: the dossier must prove conditions year by year even though the money moves once.
Applicable Legal Framework
Cumulative undistributed profit on the financial statements is a single figure, but remittance conditions under Circular 186/2010/TT-BTC are evidenced per component year: each year in the combination needs that year’s audited financial statements, its filed CIT finalisation return, and no accumulated loss remaining at the end of the chain. The transfer itself runs once through the ICA under one combined distribution decision and one notice to the managing tax authority at least 7 working days ahead, itemising each year’s amount.
The point banks scrutinise hardest in combined dossiers is chain continuity: year N’s closing undistributed profit on year N’s audited statements must match year N+1’s opening figure on the next statements; any restatement between years (errors, accounting policy changes) needs a note so the chain does not ‘break’ under reconciliation.
Detailed Answers to Practical Questions
What is the procedure for one combined remittance of several years’ profits?
Four steps: (1) build a profit-source table by year: each year’s after-tax profit per audited statements, fund appropriations, prior distributions, each year’s remainder and the combined total; (2) issue a combined distribution decision itemising each year’s amount and the total; (3) send the remittance notice to the managing tax authority at least 7 working days ahead, with the source table attached; (4) transfer once via the ICA with a dossier containing the audit reports and finalisation receipts of every year in the combination.
What documents does a multi-year combined dossier need?
Audited financial statements of each year in the combination; each year’s CIT finalisation return and filing receipt; the combined distribution decision; the by-year profit-source table reconciling undistributed profit balances across years; the tax notice; and evidence that at the transfer date the enterprise has completed current financial obligations (including the most recent finalised year). Missing one year’s documents, the bank will carve that year out of the transfer.
One year in the chain was loss-making – how is the combination handled?
A loss year contributes no positive amount to the combination – its loss was already absorbed by later years’ profits inside the cumulative figure; the test is that the cumulative position at the combination’s latest year-end is positive with all historical losses absorbed within the chain. The source table must show the loss years too, keeping the cumulative chain transparent: tax authorities and banks assess the combination over the whole history, not just profitable years.
One combined transfer or several tranches – which is better?
Legally equivalent; the choice is managerial: one transfer reduces notices and transaction fees, suiting a single large capital need; tranches flex cash flow and FX timing but repeat the notice and point-in-time condition check each time. The shared hard rule: total transfers (one or many) never exceed the resolved, still-eligible distribution.
Action Checklist
- Build the by-year profit-source table including loss years, reconciling balances across audit reports.
- Collect audit reports and finalisation receipts for every year in the combination before planning the transfer.
- Issue the combined distribution decision itemising amounts by year and the total.
- Notify the tax authority at least 7 working days ahead, with the profit-source table attached.
- Transfer once via ICA; keep the cumulative ledger net of this combination for future distributions.
Frequently Asked Questions
What about years before the company’s mandatory audit era?
FDI enterprises are under mandatory audit for all operating years; if history leaves a year without an audit report, work with auditors and the tax authority to complete the evidential basis for that year before including it in a combination.
Part of the combined profit was already paid as share dividends to a domestic investor – how handled?
Amounts already distributed in any form are no longer undistributed profit available for cash remittance; the source table must exclude every prior distribution of any form from the combined amount.
Does combining four years into one remittance look abnormal?
No – accumulating profits over years before distributing is common practice for reinvesting FDI enterprises; a transparent year-by-year dossier is what makes the transaction ordinary.
This article has been quality-reviewed by the FLAW AI Legal Council