Can a Refund Be Made to a Foreign Receivables Purchaser? A Practical Legal and Foreign-Exchange Analysis Under Vietnamese Law

Attorney (Vietnam Bar)

Managing Partner, NEXORA Law Firm
Attorney (Vietnam Bar)
Mediator, Bankruptcy Trustee, and Independent Auditor

Table of Contents
01 - Background to the Transaction (Transaction Structure)
02 - Does the Receivables Purchase Price Constitute a Foreign Loan?
03 - Whether a Refund of the Purchase Price to a Foreign Receivables Purchaser Is Permitted
04 - Conclusion and Practical Recommendations

This article provides a detailed analysis, from the standpoints of Vietnamese law, foreign borrowing regulations, foreign exchange control, and banking practice, of whether it is permissible to refund the purchase price and interest to a foreign purchaser of receivables in a cross-border sale of receivables (assignment of receivables). NEXORA LAW FIRM provides comprehensive legal support on receivables trading, foreign exchange control, and international commercial transactions for local Japanese-affiliated companies dealing with foreign counterparties.

In international commercial practice, assigning accounts receivable arising under a sale contract is a common technique that allows exporters to recover funds earlier, improve cash flow, and reduce payment risk.

However, where the assignee (the purchaser of the receivable) is a foreign entity, a transaction under which the purchase price is refunded under certain conditions raises highly complex legal issues in practice, both from the standpoint of foreign exchange control and from the standpoint of characterizing the legal nature of the transaction.

Against this practical backdrop, NEXORA LAW FIRM examines the theme of "refunding the purchase price to a foreign purchaser of receivables," organizing the framework of the current law, analyzing the risks that may arise in practice, and offering guidance for companies seeking to execute such transactions properly while complying with foreign exchange regulations.

01 - Background to the Transaction (Transaction Structure)

[Case]

Company A, a Vietnamese company (the "Seller"), entered into an international sale-of-goods contract with foreign company B (the "Buyer") and exported goods thereunder.
Upon completing delivery of the goods, the Seller acquired an account receivable against the Buyer under the sale contract.
To accelerate the recovery of funds and reduce payment risk, the Seller assigned this receivable to another foreign company, C (the "Receivables Purchaser"), under a receivables purchase agreement. The purchase price of the receivable was set at 90% of the face value of the receivable (the "Purchase Price"), and under the agreement, the Receivables Purchaser was to pay this Purchase Price to the Seller in advance.

The receivables purchase agreement contained the following terms:

(i) On the due date of the receivable, the Receivables Purchaser is to receive payment directly from the Buyer.

(ii) If the Buyer fails to make payment by the due date, the Receivables Purchaser may claim from the Seller a refund of the Purchase Price already advanced, together with interest.

(iii) The parties agreed that this series of transactions was expected to be completed within a period of less than one year from the date the Receivables Purchaser made its advance payment.

[Key legal issues raised by this transaction]

Given this transaction structure, the following two important legal questions arise:

Does the Purchase Price advanced by the Receivables Purchaser to the Seller constitute a foreign loan (foreign-currency borrowing) under Vietnamese law?
If it does not constitute a foreign loan, may the Seller, in accordance with foreign exchange control regulations, refund the Purchase Price and interest to the foreign Receivables Purchaser through a foreign-currency account held in Vietnam?

02 - Does the Receivables Purchase Price Constitute a Foreign Loan?

Under Article 3(1) of Decree No. 219/2013/ND-CP, a "foreign loan" in Vietnam is defined as follows:

"A foreign loan means credit extended by a non-resident to a resident in the form of a loan agreement, a deferred-payment sale contract, a loan-entrustment agreement, a finance-lease agreement, or debt instruments issued by the borrower."

Under this definition, for a transaction to be characterized as a "foreign loan," all of the following three requirements must be met:

(i) The lender is a non-resident (a foreign entity or foreign individual);

(ii) The borrower is a Vietnamese resident; and

(iii) A lending relationship involving the borrowing of funds and an obligation to repay them has been established under the contract, in one of the forms enumerated in the above decree.

[Legal characterization of the receivables purchase agreement]

Examining this transaction against the above definition, the receivables purchase agreement entered into between the Seller and the foreign Receivables Purchaser does not fall within any of the contractual forms constituting a foreign loan.

The substance of this transaction is the assignment of a property right—namely, the account receivable arising under the sale-of-goods contract—not the lending of funds.

The Receivables Purchaser is not a "lender" extending credit to the Seller, but rather is positioned as a financial investor who acquires a future receivable at a discounted price.

The advance payment of the Purchase Price is consideration for the acquisition of the receivable, not a loan premised on repayment of principal.

Furthermore, the benefit the Receivables Purchaser derives—whether proceeds from collection from the debtor, or the difference between the face value of the receivable and the purchase price—does not have the character of loan interest.

[Conclusion]

Based on the above analysis, the Purchase Price advanced by the foreign Receivables Purchaser does not constitute a "foreign loan" under Vietnamese law.

Accordingly, the receivables purchase transaction between the Seller and the foreign Receivables Purchaser falls outside the scope of Decree No. 219/2013/ND-CP, and it is considered that no registration obligation or related procedure applicable to foreign loans is required.

03 - Whether a Refund of the Purchase Price to a Foreign Receivables Purchaser Is Permitted

3.1. Legal Nature of the Receivables Purchase Agreement

Viewed from both its form and substance, the agreement between the Seller and the foreign Receivables Purchaser can be evaluated from two legal perspectives.

First, this transaction may be characterized as an "assignment of a receivable" (transfer of the right to demand performance of an obligation) under Article 365 of the 2015 Civil Code—that is, a transaction in which the Seller transfers to the Receivables Purchaser the right to collect on the receivable arising under the sale contract.

Second, where the Receivables Purchaser is an entity performing a financial intermediary function, the transaction could also be evaluated as a factoring transaction (purchase of accounts receivable) under the 2024 Law on Credit Institutions.

Regardless of which legal characterization is adopted, the core purpose of this contract is the transfer of a property right—the receivable—rather than the lending of funds.

The advance payment made by the Receivables Purchaser to the Seller is consideration for the acquisition of the receivable, and does not indicate an intention to lend funds or extend credit.

Accordingly, this transaction is not subject to laws applicable to foreign loans or credit transactions, and should instead be evaluated, as a transaction involving a foreign element, within the framework of the Civil Code and foreign exchange control regulations.

3.2. Examining Whether the Refund of the Purchase Price May Be Remitted Abroad

Under Article 3(2) of Circular No. 16/2014/TT-NHNN (2014) and the Ordinance on Foreign Exchange Control (2005, as amended in 2013), foreign exchange transactions that a Vietnamese resident company may conduct through a foreign-currency account are, in principle, limited to the following two categories:

(i) Capital transactions
Direct investment, indirect investment, foreign borrowing and its repayment, outbound lending and recovery of receivables, and other transactions relating to capital flows.

(ii) Current transactions
Payments and remittances relating to import/export transactions, payments for the provision of services, commercial credit, investment income, interest payments, and other lawful one-way remittances.

Consequently, for any foreign-currency remittance that does not clearly fall within one of these categories, a commercial bank may refuse to process the remittance on the ground of insufficient legal basis.

3.3. Application to This Transaction

As set out above, the Seller's act of refunding the Purchase Price (and interest) to the foreign Receivables Purchaser does not clearly fall within either the capital-transaction or current-transaction category.

Two possible characterizations may be considered:

(i) A payment relating to an export transaction
While this would typically be a current transaction, the refund obligation at issue here does not arise from the payment obligation under the original sale-of-goods contract, but from an obligation under an independent receivables purchase agreement, and is therefore difficult to characterize as a payment relating to an export transaction.

(ii) A payment relating to commercial credit
Commercial credit refers to a transaction in which the seller grants the buyer a grace period for payment. In this case, however, the advance payment was made not by the buyer of the goods but by a third party—the foreign Receivables Purchaser—and, because the transaction carries a right of recourse, it differs in nature from commercial credit.

04 - Conclusion and Practical Recommendations

Based on the foregoing analysis, the following important legal conclusions can be drawn regarding this transaction.

First,
the Purchase Price advanced under the receivables purchase agreement is not, in substance, a transaction involving the extension of credit, and does not fall within any form of foreign loan set out in Decree No. 219/2013/ND-CP.
This transaction is, at its core, an assignment of a receivable (a claim) arising from a commercial transaction, and does not give rise to a lending/borrowing relationship.

Second,
under the current foreign exchange control regulations, the refund of the Purchase Price and interest to the foreign Receivables Purchaser is not clearly positioned as either a capital transaction or a current transaction.
As a result, in banking practice, there is a risk that payment may be suspended or refused on the ground that the legality of the remittance cannot be confirmed.

Practical recommendations

In light of the above, Vietnamese companies involved in a receivables purchase transaction with a foreign element should pay particular attention to the following points.

First,
before entering into the contract, it is important to consult in advance with the relevant bank to obtain clear guidance on remittance procedures, required documentation, and the legal basis for the transaction.

Second,
where the transaction has a strong financial character or a highly investment-like structure, it is advisable to consider applying for prior approval from the State Bank of Vietnam (SBV) or registering the transaction as a special capital transaction.
This can reduce the risk of violating foreign exchange regulations.

Third,
before entering into the contract, it is essential to consult a lawyer experienced in foreign exchange control, international investment, and cross-border commercial transactions, and to obtain a legal risk assessment of the entire transaction structure.

In an international receivables purchase transaction of this kind, accurately grasping the legal nature of the transaction and strictly complying with foreign exchange control regulations is key to avoiding administrative risk and violations of capital controls.

At the same time, these measures are not merely a means of avoiding risk—they also enhance the company's financial transparency and legal soundness, and strengthen trust with its foreign partners.