Overseas remittances are now free from income tax, the State Bank of Vietnam has confirmed on its website, following government directions to facilitate overseas Vietnamese sending money home.

The policy is also being applied to foreigners who transfer money to Vietnam to help families and relatives or for charitable purposes.

Foreigners can physically bring money into the country or send money through intermediaries, including individuals, authorised credit institutions, and companies dealing in international postal and financial services.

The beneficiaries of remittances in foreign currencies can deposit, transfer or use the money for various purposes in accordance with current monetary regulations.

Banking expert Nguyen Tri Hieu told the PetroTimes that the policy indicated that the Government highly appreciated [the importance of] overseas remittances, which annually amounted to as much as 10 percent of the nation's gross domestic product.

"Data from 2013 show that remittances reached approximately 11 billion USD last year, a significant increase from 9.75 billion USD in the previous year. Besides remittances, the amounts of foreign currencies that overseas Vietnamese spent during their family visits were also sizeable," he said.

He estimated that about 1.2 million people visit their homes every year and each of them spends on average 1,000 USD on these occasions.

Hieu noted that the open policy had excited the Vietnamese diaspora and would positively affect socio-economic developments.

For the economy, it would help facilitate a healthy payment balance, stabilise exchange rates, increase foreign reserves, and enhance national finance security, as well as improve confidence in the national currency, he stated.-VNA