Deferred payment import contracts are a common method of purchasing goods for companies, especially for those engaged in the international trade field. When entering into deferred payment import contracts, companies not only need to be aware not only of the terms of the international sales contracts but also of the relevant provisions governing foreign borrowing by companies. In this article, we will provide some of the key points that companies need to consider when implementing foreign borrowing in the form of deferred payment imports.

1. Deferred payment imports are considered foreign loans

According to Article 4.1 of Circular 12/2022/TT-NHNN1, a foreign loan in the form of deferred payment imports is an import of goods with the first withdrawal date before the final payment date, where:

  • The withdrawal date of a foreign loan in the form of deferred payment imports is:
  • The 90thday from the date of issuance of the transport document, if the bank providing account services requires the payment documents to have a transport document; or
  • The 45thday from the date of completion of the inspection recorded on the customs declaration that has been cleared in the case the bank providing account services does not require the payment documents to have a transport document.
  • The final payment date is determined as:
  • The final payment date of the payment term according to the contract; or
  • The actual day of final payment date in the case of non-compliance with the contract or if the contract does not specify the specific payment term.
  • The term of a foreign loan in the form of deferred payment imports is the period determined from the first drawdown date to the final payment date.

At the same time, Article 3.1 of this Circular also stipulates that a foreign loan is a general term to refer to a foreign loan that is not guaranteed by the Government and a foreign loan that is guaranteed by the Government in any form of foreign borrowing through a loan agreement, a deferred payment import contract, etc. Therefore, it can be seen that even though it is not prescribed in the form of a loan agreement like ordinary loans, deferred payment import contracts are still considered foreign loans under the current laws.

2. Notable points for enterprises on foreign loans in the form of deferred payment imports

First, even though it is a foreign loan, however, when deferred payment import contracts arise, enterprises do not have to fulfill registration procedures or register changes in foreign loans with the State Bank. This is due to the characteristics of deferred payment import, this business is actually common with a large number of transactions. At the same time, in some cases, the final payment date of importing companies is flexible and does not exceed 01 year. As a result, it is not prescribed to perform registration procedures or register changes in foreign loans will create favorable conditions for enterprises when this business arises.

Second, although they are not required to carry out registration or change registration procedures for foreign loans as mentioned above, enterprises with deferred payment imports must carry out loan reporting procedures according to the laws.

Specifically, Article 41.1 of Circular 12/2022/TT-NHNN, on a monthly basis, no later than the 5th of the month following the reporting period, importing enterprises must report online on the implementation of the following clause on short, medium and long-term loans on the website for foreign loan management and debt repayment are not guaranteed by the government. Enterprises can find this website here: Vụ Quản lý ngoại hối - Ngân hàng Nhà nước Việt Nam.

If the website has a technical error and cannot send a report, the importing companies must fill out and send a written report according to the form in Appendix 05 issued with the Circular 12/2022/TT-NHNN.

In practice, many enterprises often forget their obligation to report loans when a deferred payment import occurs, or fail to report in a timely manner in accordance with the above provisions. In such cases, enterprises may be subject to administrative penalties with fines ranging from 10,000,000 VND to 20,000,000 VND2.

Therefore, it is crucial for enterprises to prioritize this obligation, at the same time, as foreign borrowing activities are now very common, the enterprise's obligation to report loans also increases, especially at times when the monthly reporting deadline is about to expire, this leads to overload and frequent errors on the website. When enterprises encounter this situation, they must report quickly by e-mailing a scanned copy or sending the original report directly to the State Bank in accordance with Appendix 05 of Circular 12/2022/TT-NHNN.

Thirdly, according to the current regulations, when a foreign loan is taken out, companies as borrowers are required to open a loan account and repay foreign debts in order to carry out capital withdrawal and repayment of foreign debts. However, this provision does not apply to enterprises with foreign loans through deferred payment imports.

Specifically, according to the provisions of Article 4.3 of Circular 12/2022/TT-NHNN, remittances for debt repayment (principal, interest) and fees related to foreign loans in the form of deferred payment imports are not required to be made through foreign loan or debt repayment accounts. Therefore, importing companies can make payments for these loans through their payment accounts.

Footnotes

1. Circular 12/2022/TT-NHNN dated September 30, 2022, providing instructions on foreign exchange administration regarding offshore borrowing and offshore debt repayment of companies ("Circular 12/2022/TT-NHNN").

2. Article 47.1, Article 3.3.b of Decree 88/2019/ND-CP dated November 14, 2019 regulating penalties for administrative violations in the field of currency and banking.

Originally Published 11 December 2023

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.