Changing investment capital in an FDI company requires amending both the IRC and ERC at DPI — IRC amendment takes 15-35 working days, followed by ERC amendment in 3-5 days. Capital increases need a contribution schedule and funding source evidence. Capital decreases need proof that all creditors are satisfied and remaining capital sustains operations.
Most FDI companies go through capital changes at least once in their first 5 years — scaling production, expanding into new markets, or restructuring after initial operations don’t match projections. Capital restructuring is a standard part of the business setup lifecycle in Vietnam. The process is straightforward but carries compliance traps around contribution schedules and CIT incentive implications.
Key takeaways
- Both IRC and ERC amendments required at DPI. IRC amendment (15-35 days) precedes ERC amendment (3-5 days).
- Capital contribution schedule: 90 days from ERC issuance (Enterprise Law, Article 75). Missed schedules trigger enforcement.
- Retained earnings capitalization: converts profits to charter capital without new cash injection.
- Capital decrease requires complete debt settlement proof before DPI approval.
- CIT incentive implications: capital changes may affect tax holiday calculations or incentive qualification thresholds.
Capital Increase
Why FDI Companies Increase Capital
Capital increases serve distinct business purposes:
Operational expansion: financing new production lines, additional facilities, or market expansion within Vietnam. Manufacturing FDI in industrial zones frequently increase capital for capacity upgrades.
Working capital needs: charter capital determines borrowing capacity and may affect the ratio of debt-to-equity under State Bank of Vietnam regulations for foreign borrowing.
Regulatory requirements: some conditional sectors require minimum legal capital. Growth beyond certain thresholds may trigger re-evaluation of capital adequacy.
Retained earnings capitalization: converting accumulated profits into charter capital rather than repatriating dividends — common for FDI companies reinvesting in Vietnam operations.
Capital Increase Process
Step 1: Internal Resolution
The Member’s Council (LLC) or General Meeting of Shareholders (JSC) passes a resolution to increase capital, specifying:
- New total investment capital and charter capital amounts
- Source of additional capital (foreign remittance, retained earnings, additional investor)
- Capital contribution schedule
- Amended business plan justifying the increase
Step 2: IRC Amendment at DPI (15-35 working days)
File with the provincial Department of Planning and Investment:
| Document | Notes |
|---|---|
| Application for IRC amendment | Standard form per Circular 03/2021/TT-BKHDT |
| Resolution of members/shareholders | Notarized |
| Updated investment project financial plan | Showing deployment of additional capital |
| Proof of capital source | Bank statements, parent company board resolution, audited financials |
| Current IRC (certified copy) | For reference |
DPI reviews: capital utilization rate of existing investment (has the original capital been fully deployed?), justification for increase, and any sector-specific capital requirements.
Step 3: ERC Amendment at DPI (3-5 working days)
After IRC amendment is issued, file the ERC amendment reflecting the new charter capital figure.
Step 4: Complete Capital Contribution
The actual capital must be transferred within the schedule specified in the amended IRC. For cash contributions from overseas: wire transfer to the Direct Investment Capital Account (DICA) at the company’s Vietnamese bank. The bank records the contribution and reports to the State Bank of Vietnam.
Capital Contribution Schedule Enforcement
The Enterprise Law (Law 59/2020/QH14, Article 75) requires charter capital to be contributed per the schedule registered in the ERC. For new companies, the initial contribution must be completed within 90 days of ERC issuance. For capital increases, the contribution timeline follows the schedule specified in the amended IRC — typically 90 days from amendment approval.
If the contribution isn’t completed on schedule:
- DPI written reminder — requesting timeline for completion
- Adjusted IRC — scaling down charter capital to match actual contributions, reducing total investment capital proportionally
- CIT incentive recalculation — if incentives were based on a larger capital amount, the qualification threshold may no longer be met
- Voting rights reduction — for JSCs, uncontributed shares may be cancelled; for LLCs, member voting rights adjust proportionally to actual contributions (Enterprise Law, Article 47)
In practice, DPI typically issues one written reminder before taking formal action. FDI companies that demonstrate partial progress — equipment orders placed, construction contracts signed — often receive schedule extensions. The enforcement escalation from reminder to IRC adjustment to potential revocation generally unfolds over 6-12 months, not immediately upon schedule expiration.
Funding Sources
| Source | Requirements | Documentation |
|---|---|---|
| Foreign remittance from parent | Wire to DICA, forex bank confirmation | Bank credit advice, SWIFT confirmation |
| Retained earnings | Resolution to capitalize, no outstanding tax obligations | Audited financial statements, tax clearance |
| Additional new investor | M&A/share transfer registration process first | New investor admission documents |
| Equipment contribution in-kind | Independent valuation, customs clearance | Valuation report, import documentation |
Equipment contributions (in-kind capital) require independent valuation by a licensed Vietnamese valuation firm. Customs clearance documentation must match the valuation — discrepancies trigger both customs and tax authority inquiries.
Capital Decrease
When FDI Companies Decrease Capital
Capital decrease is less common than increases but serves specific restructuring needs:
Reflecting accumulated losses: years of losses may leave charter capital overstated relative to actual net assets. Reducing capital to match economic reality eliminates the gap between registered and actual equity — a gap auditors and tax authorities flag during inspections.
Business downsizing: scaling back operations, exiting product lines, or reducing footprint within Vietnam. Lower charter capital aligns with reduced operational scope and may lower future reporting obligations.
Investor exit: when one member exits and remaining members choose not to fully replace that member’s capital contribution, charter capital decreases proportionally.
Post-acquisition restructuring: after acquiring a Vietnamese entity, foreign investors sometimes reduce inflated charter capital from the previous ownership structure to align with actual operational needs.
Capital Decrease Process
DPI applies heightened scrutiny for capital decreases to protect creditors and employees.
LLC capital decrease follows the Enterprise Law (Law 59/2020/QH14, Article 68): the Members’ Council passes a resolution to reduce charter capital, updates the company charter, and files the ERC amendment within 10 working days of the resolution.
JSC capital decrease under Article 112 can occur through: (a) returning contributed capital proportionally to shareholders, (b) buying back issued shares, or (c) adjusting charter capital to reflect actual paid-in amounts after the contribution period expires.
Required documents for IRC/ERC amendment:
- Resolution to decrease charter capital with justification
- Latest audited financial statements showing net asset position
- Written confirmation that all debts are settled or adequately provisioned
- Tax clearance or confirmation of no outstanding tax obligations
- Employee confirmation: no outstanding severance or SHUI obligations
- Updated investment project plan reflecting reduced scope (for IRC amendment at DPI)
DPI evaluation criteria:
- Are all financial obligations settled — including tax, SHUI, and trade creditors?
- Is the remaining capital sufficient for continued operations under the declared business activities?
- Are there any pending labor disputes or outstanding employee entitlements?
- Does the decrease affect any conditional business line minimum capital requirements?
Common rejection reasons: insufficient documentation of debt settlement, ongoing tax audit or unresolved tax dispute, or remaining capital below sector-specific minimum thresholds (banking: VND 3,000 billion / ~USD 120 million; real estate: VND 20 billion / ~USD 800,000).
Processing time: 15-35 working days at DPI for IRC amendment, plus 3-5 days at DPI for ERC amendment.
Tax and Compliance Implications
CIT Incentive Impact
Capital changes may affect CIT incentive qualification:
- Tax holiday calculations tied to investment capital thresholds may be recalculated
- Encouraged sector qualification based on total investment may change
- Zone incentive requirements specifying minimum investment amounts
Review CIT incentive conditions before initiating capital changes. A capital decrease that drops below the incentive threshold may affect future procedures — including tax refund applications, new investment registrations, and other incentive-related filings.
For example, an FDI manufacturing company enjoying a 10% CIT rate based on total investment exceeding VND 6,000 billion (~USD 240 million) would lose that preferential rate if a capital decrease brings total investment below the threshold.
Business License Tax — Abolished from 2026
Business License Tax (BLT) — previously tiered by charter capital at VND 1–3 million annually — was abolished effective January 1, 2026 (Resolution 198/2025/QH15, implemented by Decree 362/2025/ND-CP). Capital changes no longer trigger BLT tier adjustments, removing one compliance step from the amendment process.
FDI companies that paid BLT for 2025 or earlier should verify final settlement with the district tax authority — overpayments are creditable against other tax obligations.
Foreign Loan Capacity
The State Bank of Vietnam limits net short-term and medium/long-term foreign borrowing based on capital structure. Capital increases expand foreign borrowing capacity; decreases contract it. If the company has outstanding registered foreign loans, capital changes require SBV notification.
A capital increase from VND 50 billion (~USD 2 million) to VND 150 billion (~USD 6 million) effectively triples the company’s borrowing headroom for medium/long-term foreign loans — a significant consideration for FDI companies financing expansion through parent company loans.
Post-Amendment Actions
After capital change IRC/ERC amendments are completed:
- Update tax registration — notify the district tax authority within 10 working days
- Update bank account — DICA account authority may need adjustment at the commercial bank
- Notify SBV — if the company holds foreign loan registrations
- Update insurance — directors’ and officers’ liability insurance (if held) may reference capital amounts
- File next DPI periodic report — updated capital in the quarterly investment activity report
Capital decreases during company dissolution follow a separate exit process with additional tax clearance requirements.
For corporate amendment filings including capital changes, IRC/ERC coordination, and post-amendment compliance — Indochina Link’s company formation and licensing service covers capital restructuring and DPI coordination for FDI companies.
This guide reflects capital change procedures as of March 2026 under the Investment Law (Law 143/2025/QH15, effective March 1, 2026), Enterprise Law (Law 59/2020/QH14), and Decree 168/2025/ND-CP on enterprise registration. Procedures and capital requirements may change with sector-specific regulations — consult qualified legal and tax advisors for current requirements.
