Capital Structures in Vietnam 2026: Why the Right Structure Can Still Fail
Capital structuring in Vietnam is often approached as an incorporation issue: determine the charter capital, record the investment capital on the Investment Registration Certificate (IRC), obtain the Enterprise Registration Certificate (ERC), and proceed with the investment. In practice, this is only the beginning.
For foreign investors, capital structure is a continuing regulatory and commercial position. It affects how a project is licensed, how it may be funded, whether financing costs are tax deductible, how funds can be repatriated and how easily the investment can expand, restructure or exit. Equally important, a properly approved capital structure does not ensure that the underlying funding has been implemented correctly.
Vietnam’s foreign exchange regime effectively creates two parallel compliance tracks. The first concerns what the authorities have approved and recorded on the IRC and ERC. The second concerns how the money actually enters, moves through and leaves Vietnam. A structure can therefore be correct on paper but still fail in practice if funds are transferred through the wrong bank account, accompanied by an incorrect payment description or inadequately documented.
Alitium’s publication, Capital Structures in Vietnam 2026: A Foreign Investor’s Guide, examines these issues from a practical and commercial perspective, reflecting the significant legal and regulatory changes introduced through September 2026.
Three different layers of capital
A starting point for any Vietnamese investment is to distinguish between charter capital, investment capital and loan capital. Although sometimes treated interchangeably, each serves a different purpose and is assessed by different stakeholders.
Charter capital represents the owners’ committed equity in the Vietnamese enterprise. It is recorded on the ERC and establishes the ownership base of the company. It also provides an important reference point for creditors, tax authorities and the application of certain related-party financing thresholds.
Investment capital is a broader, project-specific concept recorded on the IRC. It represents the total funding required to implement an investment project and will generally comprise a combination of contributed equity and loan capital. Licensing authorities use this figure to assess whether the project is credible, appropriately funded and capable of being implemented at the proposed scale.
Loan capital is the debt component of the funding structure. It may be provided by shareholders, other related parties, commercial banks or third-party lenders, either within Vietnam or from offshore. This component commonly attracts the greatest regulatory scrutiny because it engages foreign loan registration, foreign exchange controls, transfer pricing and interest-deductibility requirements.
The appropriate balance between these three elements should therefore be determined by the actual requirements and expected development of the project, rather than by reference to the minimum capital that may be accepted during licensing.
Capital adequacy and interest deductibility
Vietnam does not apply a conventional thin-capitalisation rule that automatically reclassifies debt as equity when a fixed debt-to-equity ratio is exceeded. Instead, the corporate income tax rules limit the deductibility of interest expense for affected enterprises.
Under the framework applying from 1 July 2026, net interest expense on relevant borrowings is generally deductible only up to 30% of EBITDA. Disallowed interest may be carried forward, subject to a five-year limit, but this provides limited relief where a project does not subsequently generate sufficient earnings capacity.
Foreign investors must also consider the related-party tests applying to lending and guarantee arrangements. The applicable analysis can depend on the size of the loan or guarantee relative to the borrower’s equity and its proportion of medium and long-term debt.
Beyond the technical rules, authorities and financial institutions will consider whether the proposed equity contribution is commercially credible. A project funded with minimal charter capital and substantial shareholder debt may raise concerns about the investor’s commitment, financial capacity and ability to deliver the project. This can affect licensing, local borrowing and the registration of offshore shareholder loans.
Evidence of funding and foreign loan registration
For projects requiring an IRC, the licensing process is fundamentally concerned with financial capacity. Investors should expect to substantiate both the equity and debt components of their proposed investment capital through appropriate financial statements, bank confirmations, financing commitments, term sheets or shareholder support documentation.
The updated investment framework has simplified certain documentary requirements, but it has not removed the underlying expectation that investors demonstrate access to sufficient capital. Projects involving State-allocated or State-leased land may also require project execution security, with the applicable deposit or bank guarantee increasingly connected to implementation milestones.
Foreign loans require a separate analysis. Short-term offshore loans are subject to restrictions on their permitted purposes and can become registrable if extended or left outstanding beyond the relevant period. Medium and long-term foreign loans generally require registration with the State Bank of Vietnam, and commercial banks will ordinarily refuse to process drawdowns, interest payments or principal repayments unless the required registration is in place.
Loan terms, drawdown schedules and subsequent amendments should consequently be planned before funds are remitted. Foreign loan registration should not be treated as a retrospective administrative exercise.
Moving the money correctly
The practical execution of the capital structure is just as important as its design. Foreign-invested enterprises within the applicable scope must maintain an investment capital account (still commonly referred to in practice as a Direct Investment Capital Account, or DICA) at a licensed bank.
Capital contributions, qualifying share-transfer payments, profit remittances and other regulated investment transactions must be routed through the prescribed account. Medium and long-term foreign loan transactions will generally pass through the investment capital account of a foreign-invested enterprise, while other borrowers may require a dedicated foreign loan borrowing and repayment account.
The bank record is central evidence that capital was contributed or borrowed correctly. An IRC or ERC does not retrospectively validate a payment made through an ordinary operating account. Each transfer must also carry an accurate payment narrative and be supported by documentation consistent with the transaction recorded in the company’s licences, loan agreements and State Bank registration.
Pre-investment expenditure requires particular care. Where costs are incurred before the company or its investment capital account exists, investors should preserve complete evidence of the original transfer, the expenditure and its relationship to the investment project. The receiving bank should be consulted early if the investor intends for those amounts subsequently to be recognised as part of its capital contribution.
Structuring for future flexibility
An effective structure should accommodate the project’s expected development rather than simply satisfy its initial licensing requirements. This may include the ability to convert shareholder loans into charter capital if the business needs a stronger equity base or wishes to reduce exposure to the interest-deduction cap.
Vietnamese regulations recognise debt-to-equity conversion, but the process requires coordinated amendments to the enterprise registration, loan registration and banking records. Accrued interest, ownership dilution, foreign exchange differences and the tax treatment of the conversion must also be considered.
A single Vietnamese company may also hold multiple IRCs for separate investment projects. This can reduce the administrative and governance burden of establishing a new company for every project or location. However, the investor must maintain project-level records showing how capital and financing have been allocated to each licensed project.
The commercial lesson is straightforward: capital structuring and capital execution must be treated as one coordinated exercise. Investors should establish a commercially credible funding mix, prepare the evidence required by the licensing and banking authorities, register foreign loans on time and ensure every remittance follows the correct account route.
Download the full publication: Capital Structures in Vietnam 2026: A Foreign Investor’s Guide: https://www.alitium.com/uploads/Capital Structures in Vietnam 2026.pdf
Alitium supports foreign investors with market-entry planning, investment structuring, company establishment, trading licences and ongoing legal, tax and compliance requirements. To discuss establishing or expanding your business in Vietnam, contact the Alitium team at vietnam@alitium.com
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This guide is intended to provide an overview of recent updates and announcements. While it aims to present useful insights, it is important to note that the content shared here should not be considered as formal legal, tax or financial advice. For specific guidance on tax obligations or legal matters related to your business, we strongly recommend consulting with a qualified professional, such as a tax advisor or legal expert, or directly reach out to us.
