Opening bank accounts is a crucial step when starting a business in Vietnam. Foreign-owned companies must maintain multiple types of bank accounts. Therefore, each serving distinct functions and purposes, it is essential for business owners and managers to understand the differences between these account types to prevent delays and errors in daily operations. The two primary types are the Capital Account and the Current Account. Let’s dive into how they differ for what purpose(s), and under what circumstance(s), you should use one instead of the other.

What is a Capital Bank Account in Vietnam?

A capital bank account, aka a Direct Investment Capital Account (DICA), is a bank account created to receive capital or loans coming from overseas. Its initial purpose is where the foreign investor(s) (the business owners) transfer the capital of the company into the newly established business. After successfully registering a foreign-owned company or transferring a company to a foreign owner, creating a capital bank account is the first and foremost thing you need to do.

What is the Capital Account used for?

As we know, every company has 90 days from the issuance date of the business license (BRC date) to fulfill the capital injection responsibility. Due to this time restriction, it is crucial to open the capital account as soon as possible to ensure the business owner(s) can transfer the capital on time. The Capital Account, as the name implies, serves one purpose: a transaction relating to the capital and business owners. This account is not intended for daily business transactions.

Capital Movements:

• Injecting initial capital after obtaining the business license.
• Increasing the capital in case the business needs more funds from the owner(s)

Loan/Debt Financing from overseas:

• Receiving loans from foreign sources
• Debt repayment to foreign sources (settle foreign loans)

Profit Distribution to owners:

• Distributing dividends and other profits to owners 

Each foreign-owned company in Vietnam can have only one Capital Account (DICA) for one currency at a time. This means that if you want to open a USD Capital Account at a new bank, you must close the existing USD DICA to ensure that only one USD DICA exists for the company. The currency of the DICA, in most cases, is USD, but not necessary. The currency of the DICA must match with the currency of the capital stated on the license.

As a matter of fact, the Capital Account serves very specific purposes as mentioned, not for daily business transactions. Hence, to use the money you inject into the business to pay vendors or staff, you’ll need to move the capital (funds) to the other bank account called “Current Account” which we will discuss below.

What is the Current Account in Vietnam?

The Current Bank account is the bank account through which your business transactions are conducted. Payments from clients and payments to vendors or staff are processed through this account. In brief, the Current Account is the central hub for the financial operations of your business.

The Current Account, sometimes also called a Payment account, reflects the actual business activity of the company. A company can have multiple Current Accounts in different currencies at different banks. One company in Vietnam can open an unlimited number of current bank accounts of this kind.

In brief, the Current Account can be used for the following purposes:

• Revenue collection

• • • Collecting payment from clients
    • Collecting interest from other investments

• Expense disbursement

• • • Spending for vendors
    • Paying employees
    • Settling Taxes and obligations to the authority
    • Settling bank loans 

• Investment in another business

• • Purchase assets/property
  • Invest in a new company or other businesses

Compare Capital Account Vs. Current Account in Vietnam (Summary)

Common mistakes if you do not understand the difference between Capital and Current bank account in Vietnam

For those who are not familiar with accounting, finance, and banking terms, understanding the various bank account types in Vietnam can be challenging. We recognize that this can be a hassle for many foreign investors first time starting a business in Vietnam. With years of experience in helping thousands of foreign-owned companies successfully incorporate in Vietnam, we have compiled comprehensive knowledge about bank account types and how to differentiate them as above. This guide aims to help our clients avoid the following common mistakes:

• Creating a Capital Account too late, leading to rushed capital injection or even late capital transfer.
• Sending capital to the wrong account.
• Sending the capital in DICA without stating that is a “capital injection”.
• Requiring clients/customers to make payments to the Capital Account.
• Opening the account with the wrong currencies.
• Transferring profit from the current account
• Receiving/Settling overseas loans via current account

All the mistakes mentioned above can result in delays in processing your business plan or even more severe consequences. If a transfer is made to the wrong account, the bank will hold the funds and require an explanation and clarification before issuing a refund, which can take considerable time. Furthermore, if these mistakes lead to late capital injections, the company could face serious penalties or even be forced to close.

How VNBG can assist you in opening bank account(s) for your company in Vietnam?

At VNBG, we understand the challenges that many foreign-owned companies encounter when they first come to Vietnam. We work to help you understand all aspects of the process, offering free consultations on all matters that may affect your business, from licensing to operations. Our consultants will thoroughly discuss bank account openings with the clients.

You may wonder where or how to start all of these steps. Worry not!!! As part of our full incorporation service package, every company will have three bank accounts opened for them: one Capital Account (mostly in USD) and two Current Accounts (one in VND and one in the foreign currency of your choice). This ensures your company is fully prepared for operation. All you need to do is inject the capital and start your business operations.

We provide a comprehensive range of services beyond the standard incorporation package

Furthermore, we don’t just hand over the bank account details and leave you to manage on your own. We provide you with detailed guidelines on how to inject the capital, which account to use, and how to properly write the transfer description. This ensures you get everything right from the start, avoiding the mistakes that could cause time and cost delays for your business.

It is all because we understand that timings and deadlines are crucial for the smooth operation of any business. Therefore, we want to make sure that you will meet your capital contribution deadline. We will also provide many other free instructions along the way to help you understand business reality in Vietnam. 

Beyond these services, we also offer comprehensive business solutions that cover wider aspects of running a business. These include accounting and bookkeeping, compliance reports, and recruitment. Additionally, we also offer services for virtual office setups and license amendments. We aim to be your one-stop solution for setting up and managing your business in Vietnam. Contact our consultant today to understand everything you need to know about starting a business in Vietnam.