Circular No. 19/2018/TT-NHNN guiding foreign exchange management for cross-border trade activities between Vietnam and China

­CIRCULAR

Guidelines on foreign exchange management for cross-border trade activitiesbetween Vietnam and China

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010;

Pursuant to the Law Amending and Supplementing Certain Provisions of the Law on Credit Institutions dated November 20, 2017;

Pursuant to the Foreign Exchange Decree dated December 13, 2005 and the Decree Amending and Supplementing Certain Articles of the Foreign Exchange Decree dated March 18, 2013;

Pursuant to Decree No. 14/2018/NĐ-CP dated January 23, 2018, of the Government detailing cross-border trade activities;

Pursuant to Government Decree No. 16/2017/NĐ-CP dated February 17, 2017 on the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

Implementing the Border Trade Agreement signed on September 12, 2016, between the Government of the Socialist Republic of Vietnam and the Government of the People's Republic of China, and the Settlement and Cooperation Agreement signed on May 26, 1993, amended on October 16, 2003, between the State Bank of Vietnam and the People's Bank of China;

At the proposal of the Director of the Department of Foreign Exchange Management;

The Governor of the State Bank of Vietnam issues this Circular to provide guidelines on foreign exchange management for cross-border trade activities between Vietnam and China.

PART I
GENERAL PROVISIONS

Article 1. Scope of application

1. This Circular stipulates contents related to foreign exchange management for cross-border trade activities between Vietnam and China, including:

a) Payment in cross-border goods and service transactions of traders;

b) Payment in goods and service transactions of border residents;

c) Payment at border markets;

d) Other foreign exchange activities prescribed in Chapter IV of this Circular.

2. The carrying of foreign currency cash, Vietnamese dong (VND) cash, and Renminbi (CNY) cash by individuals when exiting or entering through border gates between Vietnam and China shall be carried out in accordance with Vietnamese laws regarding the carrying of foreign currency cash and VND cash when exiting or entering.

Article 2. Applicability

1. Vietnamese traders and Chinese traders engaged in cross-border trade activities between Vietnam and China.

2. Vietnamese border residents and Chinese border residents engaged in cross-border trade activities between Vietnam and China.

3. Commercial banks and branches of foreign banks permitted to operate foreign exchange in Vietnam (hereinafter referred to as permitted banks).

5. Organizations engaged in duty-free business, service providers in quarantine areas at international border gates, organizations operating bonded warehouses in the border area, economic zones at border gates between Vietnam and China.

6. Other organizations and individuals related to payment activities in cross-border trade between Vietnam and China.

Chapter II
PAYMENTS IN CROSS-BORDER TRADE ACTIVITIES OF TRADERS PURCHASE AND SALE, EXCHANGE OF GOODS AND SERVICES ACROSS THE VIETNAM - CHINA BORDER

Article 3. Payment Currency

The payment currency for cross-border trade activities between Vietnam and China shall be convertible foreign currencies, VND, or CNY.

1. Bank payment, including:

a) Payment in freely convertible foreign currency through authorized banks according to current foreign exchange management regulations;

b) Payment in CNY through border branch banks;

c) Payment in VND through border branch banks.

2. Payment in cash VND or CNY.

3. Settlement of the difference in transactions offsetting export goods and services with imported goods and services (the difference to be settled through banks as stipulated in Clause 1 of this Article).

1. Vietnamese traders may collect VND cash or CNY cash from export activities through secondary border gates and informal border crossings in accordance with laws on cross-border trade activities and deposit it into a payment account opened at a border bank branch.

2. Principles for depositing cash:

a) Revenue from each export contract through secondary border gates or open border crossings must be deposited into only one bank account (in VND or CNY) opened at a border branch;

b) When depositing cash into an account, Vietnamese traders are responsible for presenting documents and bearing legal responsibility for the authenticity of the documents presented to the border bank branch, including:

(i) Original export contract or sales invoice;

(ii) A customs declaration form for goods exported through secondary border gates and informal border crossings, confirmed on the system indicating that the goods have passed the customs supervision zone, printed from the automatic clearance system. In cases where Vietnamese traders export goods through border residents, they must submit a customs declaration form for goods exported by border residents, confirmed by the Customs Office at the border gate;

(iii) An entry-exit declaration form confirmed by the Customs Office regarding the amount of CNY cash brought into Vietnam within seven days from the date of entry recorded on the entry-exit declaration form (for cases involving the deposit of CNY cash).

Based on the verification of the documents specified in point b, Clause 2, Article 2 of this Circular, the border bank branch will stamp its confirmation of the amount of cash deposited by Vietnamese traders into their accounts on the original export contract or sales list.

Article 6. Use of Renminbi (CNY) Payment Account at Border Bank Branches by Traders Vietnam

Vietnamese traders engaged in cross-border purchase and sale, exchange of goods and services between Vietnam and China may use a Renminbi (CNY) payment account at a border bank branch to conduct the following transactions:

1. Receipts:

a) Receipt of CNY transfer from selling goods and services across the Vietnam-China border;

c) Receipt of CNY transfer from the difference in transactions offsetting export goods and services with imported goods and services;

d) Receipt of CNY transfer from another CNY bank account of the trader opened at a different border branch;

d) Returning the remaining CNY cash withdrawn by employees traveling to China but not fully spent to the border bank branch from which the money was withdrawn. When depositing CNY cash into an account, the trader must present to the border bank branch relevant documents related to withdrawing money from the account and an entry-exit declaration form confirmed by the Customs Office regarding the amount of CNY cash brought in. The entry-exit declaration form confirmed by the Customs Office is valid for the trader to deposit CNY cash into an account within sixty days from the date of entry recorded on the entry-exit declaration form.

e) Receipt from purchasing CNY transfers at the border branch.

2. Payments:

a) Disbursement of CNY transfer to pay for goods and services purchased across the Vietnam-China border;

b) Disbursement of CNY transfer to settle the difference in transactions offsetting export goods and services with imported goods and services;

c) Transfer of CNY transfer to another CNY bank account of the trader opened at a different border branch;

d) Withdrawal of CNY cash for individuals working for Vietnamese traders when dispatched to work in China;

đ) Sale of CNY to the border branch.

Article 7. Use of VND settlement accounts at border branch banks by traders China

Chinese traders engaged in trade and exchange of goods and services across the Vietnam-China border may use VND settlement accounts at border branch banks to conduct the following receipts and payments:

1. Receipts:

a) Receiving VND transfers from sales of goods and services across the Vietnam-China border;

b) Receiving VND transfers from the difference in offset transactions of exported goods and services against imported goods and services;

c) Receiving VND transfers from purchasing VND at border branches;

d) Receiving VND transfers from VND settlement accounts opened by that merchant at other permitted banks.

2. Payments:

a) Paying VND transfers for purchases of goods and services across the Vietnam-China border;

b) Paying VND transfers for the difference in offset transactions of exported goods and services against imported goods and services;

c) Paying VND transfers for other lawful purposes as prescribed by Vietnamese law;

d) Withdrawing VND cash for spending in Vietnam;

đ) Transferring VND to VND settlement accounts opened by that merchant at other border branches;

e) Purchasing CNY or other foreign currencies with VND transfers at border branches for transfer back home.

Chapter III
PAYMENTS IN CROSS-BORDER TRADE ACTIVITIES OF TRADERS GOODS AND SERVICES OF BORDER RESIDENTS AT BORDER MARKETS

Article 8. Payment Currency

The payment currency in border trade and exchange activities of border residents and at border markets is VND or CNY.

Article 9. Payment Methods

1. Bank payment, including:

a) Payment in CNY through border branches;

b) Payment in VND through border branches.

2. Payment in VND cash.

Article 10. Use of CNY Settlement Accounts at Border Branches of Vietnamese Merchants Operating at Border Markets and Vietnamese Border Residents

1. Vietnamese merchants operating at border markets may use CNY settlement accounts at border branches to conduct the following transactions:

a) Receipts:

(i) Receiving CNY transfers from sales of goods and services at border markets;

(ii) Receiving CNY transfers from CNY settlement accounts opened by that merchant at other border branches;

(iii) Returning the CNY cash withdrawn by the trader for business trips to China but not fully spent, to the border branch bank from which the money was withdrawn. When depositing CNY cash into the account, the trader shall present to the border branch bank relevant documents related to the withdrawal from the account and the Entry-Exit Declaration Form confirmed by the Customs Office regarding the amount of CNY cash brought in. The Entry-Exit Declaration Form confirmed by the Customs Office is only valid for the trader to deposit CNY cash into the account within sixty days from the date of entry recorded on the Entry-Exit Declaration Form;

(iv) Receiving CNY transfers from purchasing CNY at border branches.

b) Payments:

(i) Paying CNY transfers for purchases of goods and services at border markets;

(ii) Paying CNY transferred to the CNY settlement account opened by that trader at another border branch bank;

(iii) Withdrawing CNY cash for individuals working for Vietnamese merchants when sent on business trips to China;

(iv) Selling CNY to border branches.

2. Vietnamese traders operating at border markets engaged in trade and exchange of goods and services across the Vietnam-China border may use the CNY settlement accounts prescribed in Article 6 of this Circular to conduct the receipts and payments specified in Clause 1 of this Article.

3. Vietnamese border residents engaged in trade and exchange of goods and services with Chinese border residents and operating at border markets may use CNY settlement accounts at border branch banks to conduct the following receipts and payments:

a) Receipts:

(i) Receiving CNY transfers from sales and exchanges of goods and services with Chinese border residents and from sales and exchanges of goods and services with Chinese merchants at border markets;

(ii) Receiving CNY transfers from the difference in offset transactions of exported goods and services against imported goods and services from sales and exchanges of goods and services by border residents;

(iii) Receiving CNY transfers from CNY settlement accounts opened by that border resident at other border branches;

(iv) Receiving CNY transfers from purchasing CNY at border branches.

b) Payments:

(i) Paying CNY transfers for purchases and exchanges of goods and services with Chinese border residents and purchases and exchanges of goods and services with Chinese merchants at border markets;

(ii) Paying CNY transfers from the difference in offset transactions of exported goods and services against imported goods and services from purchases and exchanges of goods and services by border residents;

(iii) Transferring CNY to CNY settlement accounts opened by that border resident at other border branches;

(iv) Selling CNY to border branches.

Article 11. Use of VND Payment Accounts at Border Branches of Chinese Banks for Chinese Merchants Operating at Border Markets and Chinese Border Residents

1. Chinese traders operating at border markets may use VND settlement accounts at border branch banks to conduct the following receipts and payments:

(ii) Collecting VND cash from sales of goods and services at border markets;

(iii) Receiving VND transfers from purchasing VND at border bank branches;

(iv) Receiving VND transfers from VND payment accounts opened by that merchant at other authorized banks.

(i) Making VND transfers to pay for purchases of goods and services at border markets;

b) Payments:

(ii) Making VND transfers for other lawful purposes as prescribed by Vietnamese law;

(iii) Withdrawing VND cash for spending in Vietnam;

(iv) Transferring VND to VND payment accounts opened by that merchant at other border bank branches;

(v) Making VND transfers to purchase CNY or other foreign currencies at border bank branches to remit back home.

2. Chinese merchants engaged in cross-border trade and exchange of goods and services between Vietnam and China at border markets may use VND payment accounts as specified in this Article.

2. Chinese traders operating at border markets engaged in trade and exchange of goods and services across the Vietnam-China border may use the VND settlement accounts prescribed in Article 7 of this Circular to conduct the receipts and payments specified in Clause 1 of this Article.

3. Chinese border residents engaged in trade and exchange of goods and services with Vietnamese border residents and operating at border markets may use VND settlement accounts at border branch banks to conduct the following receipts and payments:

a) Receipts:

(ii) Receiving VND transfers from the difference in offsetting transactions of exported goods and services against imported goods and services from selling and exchanging goods and services with border residents;

(iii) Receiving VND transfers from selling CNY or other foreign currencies at border bank branches;

(iv) Collecting VND cash from selling and exchanging goods and services across borders and at border markets;

(v) Receiving VND transfers from VND payment accounts opened by that border resident at other authorized banks.

(i) Making VND transfers to pay for purchases and exchanges of goods and services with Vietnamese border residents and at border markets;

b) Payments:

(ii) Making VND transfers to pay for the difference in offsetting transactions of exported goods and services against imported goods and services from purchases and exchanges of goods and services with border residents;

(iii) Transferring VND to VND payment accounts opened by that border resident at other border bank branches;

(iv) Making VND transfers for other lawful purposes as prescribed by Vietnamese law;

(v) Withdrawing VND cash for spending in Vietnam;

(vi) Purchasing CNY transfers or other foreign currencies at border bank branches to remit back home.

OTHER FOREIGN EXCHANGE ACTIVITIES RELATED TO PAYMENT TRANSACTIONS IN VIETNAM-CHINA BORDER TRADE

Chapter IV
OTHER FOREIGN EXCHANGE ACTIVITIES RELATED TO PAYMENT ACTIVITIES IN BORDER TRADE VIETNAM - CHINA

Article 12. Activities of Entrusted Settlement in CNY

1. Entrusted CNY payment activity refers to the authorized bank (Principal) entrusting an authorized bank with a border branch bank (Entrustee) to carry out CNY payments through the border branch bank in the trade and exchange of goods and services across the border by traders as stipulated in this Circular.

2. Principles of entrusted settlement in CNY:

a) In the case of entrusted CNY import payment, the Principal pays in VND to the Entrustee. In the case of entrusted CNY export payment, the Principal receives payment in VND from the Entrustee;

b) Entrusted CNY payment activities must be documented in a written contract between the Principal and the Entrustee, which must minimally include the following contents: name and address of the Principal and the Entrustee; scope and content of the entrustment; purpose of the entrustment; beneficiary of the entrustment; duration of the entrustment; rights and obligations of the Principal and the Entrustee; other contents agreed upon by the parties in accordance with the law;

c) The Entrusted Party shall not re-entrust to a third party.

Article 13. CNY payment activities within the system of authorized banks with border branch banks

CNY payment activities within the system of authorized banks for the trade and exchange of goods and services across the border by traders shall be conducted through border branch banks in accordance with internal regulations of the authorized banks.

Article 14. Cooperation agreement on payment between authorized banks with border branch banks and Chinese banks

Authorized banks with border branch banks may enter into written agreements with commercial banks in the border region of China regarding the opening of CNY or VND accounts, payment methods, account management methods, and other contents in compliance with the laws of each country.

Article 15. Exporting and Importing CNY Cash and VND Cash

1. Authorized banks with border branch banks may carry out the export and import of CNY cash and VND cash to regulate the cash volume serving the operations of border branch banks.

2. Activities of exporting and importing CNY cash and VND cash shall be conducted through international border gates and main border gates in the border area, and the border economic zone of Vietnam-China.

3. When exporting and importing CNY cash and VND cash, permitted banks with border branches shall have the responsibility to:

a) Declare to the Customs Gate in accordance with the law;

b) Take measures to manage, supervise, and ensure safety in the handover, storage, and transportation of CNY cash and VND cash;

c) Bear risks related to the activities of exporting and importing cash themselves.

Article 16. Use of RMB Settlement Accounts at Border Branches of Other Organizations

The organization specified in Clause 5 of Article 2 of this Circular may use RMB settlement accounts at border branches to conduct the following collection and payment transactions:

1. Receipts:

b) Depositing CNY cash received from the supply of goods and services in compliance with relevant legal provisions;

c) Returning the amount of CNY cash withdrawn by the organization for employees traveling to China but not fully spent at the border branch where the money was withdrawn. When depositing CNY cash into the account, the organization presents to the border branch the relevant documents related to withdrawing money from the account and the Entry-Exit Declaration Form confirmed by the Customs Gate regarding the amount of CNY cash brought in. The Entry-Exit Declaration Form confirmed by the Customs Gate is only valid for the organization depositing CNY cash into the account within sixty days from the date of entry recorded on the Entry-Exit Declaration Form.

c) Returning the amount of RMB cash withdrawn by employees for business trips to China but not fully spent at the border branch where the withdrawal was made. When depositing RMB cash into the account, the organization shall present to the border branch relevant documents related to the withdrawal from the account and the Entry-Exit Declaration Form endorsed by the customs authority regarding the amount of RMB cash brought in. The Entry-Exit Declaration Form endorsed by the customs authority is only valid for organizations depositing RMB cash into their accounts within sixty days from the date of entry recorded on the Entry-Exit Declaration Form.

2. Payments:

b) Withdrawing CNY cash for individuals working for the organization when dispatched to work in China;

c) Selling CNY transfers to the border branch.

c) Payment for CNY transfer to the border branch of the bank.

Article 17. Purchase of CNY cash to be taken back to China by Chinese traders and border residents

2. Chinese border residents with VND cash income from trade activities, goods exchange, service provision in Vietnam, and salaries, bonuses, allowances may purchase RMB cash at border branches to take back to their home country.

3. When purchasing RMB cash to take back to their home country, traders and Chinese border residents must present the required documents and certificates as stipulated by authorized banks and bear legal responsibility for the authenticity of such documents and certificates.

Chapter V
RESPONSIBILITIES OF ORGANIZATIONS AND INDIVIDUALS

1. Guide relevant organizations and individuals to fully comply with the provisions of this Circular.

2. Inspect, check, and supervise cross-border trade settlement activities between Vietnam and China according to the provisions of this Circular. In case of discovering violations of the provisions of this Circular, the State Bank of Vietnam's provincial border branch shall handle them according to its jurisdiction in accordance with the law.

3. Coordinate with related agencies and organizations to manage cross-border trade payment activities between Vietnam and China in their respective areas in accordance with the law.

Article 19. Responsibilities of Authorized Banks

1. Authorized banks have the responsibility:

a) To fully comply with and guide customers to strictly follow the provisions of this Circular;

b) To examine, check, and retain documents and certificates consistent with actual transactions to ensure that foreign exchange services are provided for the intended purpose and in compliance with the law.

2. In addition to the responsibilities stipulated in Clause 1 of this Article, authorized banks with border branches also have the responsibility:

a) To publicly display and announce the buying and selling rates of CNY/VND at border branches in accordance with the regulations of the State Bank of Vietnam;

b) Issue internal documents on RMB agency settlement operations and RMB settlement operations within the system of authorized banks in compliance with the provisions of this Circular and relevant laws;

c) To comply with Vietnamese laws and international treaties to which Vietnam is a party when negotiating cooperation agreements on payments with Chinese banks.

Article 20. Responsibilities of Individuals, Traders, and Other Organizations

1. Present the required documents and certificates as stipulated by authorized banks when conducting foreign exchange transactions and bear legal responsibility for the authenticity of the presented documents and certificates at authorized banks.

2. Strictly comply with the provisions of this Circular and related laws.

Chapter VI
IMPLEMENTATION

Article 21. Reporting System

1. Authorized banks engaged in cross-border trade settlement between Vietnam and China shall implement reporting systems as prescribed by the State Bank of Vietnam concerning reporting and statistical regulations applicable to credit institutions and foreign bank branches (excluding entrusted RMB settlement data).

Article 22. Implementation Provisions

1. This Circular takes effect from October 12, 2018.

2. From the effective date of this Circular, Decision No. 689/2004/QĐ-NHNN dated June 7, 2004, of the Governor of the State Bank of Vietnam on the issuance of the Regulations on Settlement in Trade and Service Exchange in Border Areas and Border Economic Zones between Vietnam and China shall cease to be effective.

3. This Circular amends and supplements Article 1 of Circular No. 33/2013/TT-NHNN dated December 26, 2013, of the State Bank of Vietnam guiding procedures for approving foreign currency cash import and export activities of authorized banks as follows:

“Article 1. Scope of Regulation and Applicability

1. This Circular stipulates the procedures for approving foreign currency cash import and export activities (excluding currencies of neighboring countries) of commercial banks, foreign bank branches authorized to operate foreign exchange (hereinafter referred to as authorized banks).

2. Foreign currency cash export and import activities involving currencies of countries sharing borders shall be carried out according to separate regulations of the State Bank of Vietnam.