Trường Lăng, Author at Viettonkin

I. Executive Summary: Unlocking Vietnam's 3-Year Corporate Income Tax Exemption for New SMEs

Resolution No. 198/2025/QH15, a landmark legislative act by Vietnam's National Assembly, introduces a significant 3-year Corporate Income Tax (CIT) exemption for newly established Small and Medium-sized Enterprises (SMEs). This pivotal policy is strategically designed to stimulate new business formation and foster robust growth within Vietnam's burgeoning private sector, offering a substantial incentive for both domestic and foreign direct investors eyeing the Vietnamese market.

To qualify for this valuable tax holiday, new enterprises must meet two primary conditions:

Their first Enterprise Registration Certificate (ERC) must be granted on or after May 17, 2025.
They must satisfy the prescribed SME classification criteria as defined by Vietnamese law.

This measure is a direct and impactful component of a broader governmental strategy aimed at bolstering entrepreneurial activity, reducing regulatory burdens, and cultivating a more dynamic and investor-friendly economic landscape in Vietnam. Viettonkin Consulting helps foreign investors navigate these opportunities, ensuring clarity from complex regulations.

II. Vietnam's Private Sector Growth & New SME Support Framework 2025

Context of Resolution No. 198/2025/QH15: Driving Private Sector as Key Economy Driver

On May 17, 2025, the National Assembly of Vietnam officially enacted Resolution No. 198/2025/QH15, a comprehensive legal framework outlining special mechanisms and policies for the advancement of the private sector. This resolution is not an isolated initiative but a concrete and direct implementation of the Politburo's Resolution 68-NQ/TW, which fundamentally redefines the private sector as the primary driver of the national economy. This legislative shift marks a historic departure from previous regulatory approaches, signaling a transition from a restrictive mindset to a proactive, development-oriented strategy aimed at unleashing the private sector's full potential.

Beyond CIT Exemption: Comprehensive SME Support in Vietnam

The 3-year CIT exemption, while substantial, is part of a multi-faceted and comprehensive support system established by Resolution 198/2025/QH15. This broader framework is designed to address various challenges faced by SMEs and to create a more conducive business environment:

Reduced Regulatory Burdens: To alleviate administrative pressure and foster a less intrusive regulatory climate, the resolution limits inspections and audits for business entities to no more than once per year, unless there is clear evidence of legal violations. This measure is intended to curtail regulatory overreach and enhance business autonomy.
Financial and Credit Support: Recognizing the importance of accessible capital, the resolution introduces a 2% annual interest rate subsidy for loans specifically designated for green, circular economy initiatives, or projects adhering to Environmental, Social, and Governance (ESG) standards. This aims to channel investment towards sustainable development.
Land Access Support: To ensure that SMEs, high-tech firms, and innovative startups have adequate physical space for operations, the resolution mandates provincial-level People's Committees to reserve a minimum of 20 hectares or 5% of the total developed land area within industrial parks and cottage industry zones for lease to these entities. Furthermore, these eligible businesses will benefit from at least a 30% reduction in land rental fees for the first five years of their lease contracts.
Support for Research, Development, Innovation, and Digital Transformation: The government encourages innovation by allowing enterprises to allocate up to 20% of their enterprise income taxable income to establish internal funds for science and technology development, innovation, and digital transformation. Additionally, businesses may deduct 200% of their actual research and development (R&D) expenses when calculating corporate income tax. To further support micro and small businesses, the State will provide free digital platforms and shared-use accounting software.
Abolition of Business License Tax: A significant administrative burden is set to be removed with the planned cessation of business license tax collection and payment starting January 1, 2026. This aims to simplify compliance for new and existing businesses.

The extensive nature of the measures outlined in Resolution 198/2025/QH15, encompassing regulatory streamlining, financial assistance, land access, and innovation promotion, indicates that the 3-year CIT exemption is not an isolated policy. This multifaceted approach suggests a foundational element of a comprehensive, strategic overhaul aimed at fostering a more robust, transparent, and competitive business environment for the private sector. This reflects a long-term commitment by the Vietnamese government to reduce systemic barriers and actively nurture entrepreneurial growth, rather than merely providing temporary relief. The emphasis on "removing barriers" and ensuring a business environment that is "open, transparent, clear, consistent, stable in the long term, easy to comply with, and low in cost" reinforces this deeper, systemic intent.

III. Key Eligibility for Vietnam's 3-Year Corporate Income Tax Exemption

The 3-year Corporate Income Tax (CIT) exemption is a significant incentive specifically designed to support newly established Small and Medium-sized Enterprises (SMEs) during their critical startup phase. To qualify for this exemption, enterprises must satisfy two crucial conditions.

Condition 1: First Enterprise Registration Certificate (ERC) Requirements

The primary requirement for the 3-year CIT exemption is that the enterprise must be granted its first Enterprise Registration Certificate (ERC) with an issue date on or after May 17, 2025.

The "Enterprise Registration Certificate" (ERC), often known as a Business Registration Certificate (BRC), is the official document legally authorizing a business to operate in Vietnam, confirming its legal status and functioning as its tax identification number. For Foreign-Invested Enterprises (FIEs), obtaining the ERC is a mandatory step that follows the issuance of the Investment Registration Certificate (IRC).

The explicit wording "first Enterprise Registration Certificate" is a critical aspect, designed as a safeguard against abuse and to ensure the incentive is directed towards truly new market entrants. This implies:

No Re-registration for Existing Entities: An ERC issued due to an amendment or re-registration of an existing entity generally will not be considered a "first" ERC for this exemption.
Mergers & Acquisitions (M&A): A business formed through a merger would typically inherit the rights and obligations of the acquired entity, including existing tax incentives and losses, and would generally not be treated as a "new" entity eligible for this "first ERC" exemption.
Household Business Conversions: While converting household businesses to legal entities is encouraged for broader support, such conversions are also unlikely to qualify for the "first ERC" exemption under the spirit of Resolution 198/2025/QH15, which aims to incentivize genuine new business formation.

This stringent interpretation ensures that the incentive aligns with the broader governmental objective of stimulating fresh economic activity rather than merely allowing existing businesses to restructure for tax relief. For foreign investors setting up new operations in Vietnam, understanding this specific condition is paramount.

Condition 2: Vietnam SME Classification Criteria (Decree 80/2021/NĐ-CP)

The second condition mandates that the enterprise must qualify as a small or medium enterprise (SME) as defined by Article 4 of the Law on Support for Small and Medium-sized Enterprises 2017 (Law No. 04/2017/QH14) and, more specifically, by Article 5 of Decree 80/2021/NĐ-CP.

SME status is determined by specific thresholds related to the average annual number of employees paying social insurance, maximum annual total revenue, or maximum total capital. These thresholds are differentiated by sector (agriculture, forestry, fisheries; industry and construction; trade and services) and by size category (micro, small, medium). It is important to note that these criteria apply uniformly to all enterprises, irrespective of their ownership structure, meaning both domestic and foreign-invested companies can qualify for SME status.

SME Classification Criteria per Article 5 of Decree 80/2021/NĐ-CP

Enterprise Size	Sector	Avg. Number of Employees (Social Insurance)	Maximum Annual Total *Revenue* (VND)	OR Maximum Total *Capital* (VND)
Micro	Agriculture, Forestry, Fisheries; Industry and Construction	≤ 10 people	≤ 3 billion	≤ 3 billion
Micro	Trade and Services	≤ 10 people	≤ 10 billion	≤ 3 billion
Small	Agriculture, Forestry, Fisheries; Industry and Construction	≤ 100 people	≤ 50 billion	≤ 20 billion
Small	Trade and Services	≤ 50 people	≤ 100 billion	≤ 50 billion
Medium	Agriculture, Forestry, Fisheries; Industry and Construction	≤ 200 people	≤ 200 billion	≤ 100 billion
Medium	Trade and Services	≤ 100 people	≤ 300 billion	≤ 100 billion

A notable aspect of this classification system is the self-declaration mechanism. SMEs are required to determine and declare their size (micro, small, or medium) using a prescribed form and submit it to the agencies or organizations providing support for SMEs. Enterprises bear full legal responsibility for the accuracy of their declarations. Should an enterprise discover an inaccuracy in its declared size, it is obligated to modify and re-declare before receiving any support. Intentional untruthful declarations made for the purpose of receiving benefits will result in legal responsibility and the requirement to refund the entire support amount received.

This provision for self-declaration of SME status is a clear governmental effort to streamline the process for accessing incentives, thereby reducing bureaucratic hurdles and empowering businesses to quickly benefit from support. This aligns with the broader governmental agenda of administrative reform and reducing compliance costs. However, the simultaneous imposition of "legal responsibility" for accurate declarations and the threat of requiring refunds for untruthful declarations places a significant onus on enterprises. This indicates a shift in the regulatory burden from extensive pre-approval checks by authorities to rigorous post-audit verification. Consequently, businesses must invest in robust internal accounting and human resource systems to accurately track employee numbers (specifically those contributing to social insurance), revenue, and capital, and to maintain comprehensive supporting documentation. This mechanism, while fostering a more efficient system, demands a higher degree of internal diligence and accountability from enterprises.

IV. Applying for & Complying with Vietnam's SME CIT Exemption

The process for claiming the 3-year CIT exemption for SMEs under Resolution 198/2025/QH15 is designed to be largely automatic, based on the information provided during business registration.

Automatic Application Process for CIT Exemption

The CIT exemption for eligible SMEs is applied automatically based on the business registration data submitted by the company. This means that, unlike some other tax incentives, no separate, formal application specifically for this 3-year exemption is explicitly required.

Importance of Accurate Declaration at Registration

Given the automatic nature of the exemption, the accuracy of the information declared at the time of initial business registration is paramount. Companies are required to declare key data points such as their employee count (specifically those participating in social insurance), projected annual revenue, and charter capital. These figures are subsequently utilized by the business registration authorities and tax authorities to determine the enterprise's eligibility for SME status and, consequently, for the CIT exemption.

Required Documentation for Verification and Potential Audits

While a formal application for the exemption itself is not mandated, businesses are under a strict obligation to retain comprehensive supporting documentation. This includes, but is not limited to, financial statements, detailed payroll records (especially those pertaining to social insurance contributions), and records of total capital. Such documentation is crucial for substantiating the enterprise's SME classification and eligibility in the event of an inspection or audit by tax authorities. Tax authorities explicitly reserve the right to audit this information for verification purposes.

Annual CIT Filing Procedures for Exempt Entities

Even though an enterprise may be exempt from CIT for the first three years, it is still required to comply with annual CIT filing procedures. During the annual CIT finalization process, companies must declare their tax-exempt status based on their SME classification. General CIT filing obligations in Vietnam include preparing financial statements, accurately determining taxable income (even if it is zero due to the exemption), making quarterly provisional CIT payments (if applicable, though the exemption would likely negate this for the exempt period), and submitting the annual finalization return. Adherence to these procedural requirements for reporting income and formally claiming the exemption is essential for maintaining compliance.

The policy of automatic application of the CIT exemption, based on self-declared registration data, represents a strategic move by the Vietnamese government to reduce administrative friction and expedite the process for new businesses to access incentives. This approach marks a clear departure from more cumbersome pre-approval processes that often characterized previous incentive schemes. However, the accompanying emphasis on the enterprise's legal responsibility for accurate declarations and the explicit mention of potential audits, along with the necessity to retain supporting documentation, reveals a fundamental shift in the regulatory enforcement paradigm. Instead of rigorous upfront vetting, the system relies on post-compliance verification. This implies that while initial access to the exemption is straightforward, businesses must maintain impeccable records and be prepared to justify their SME status and eligibility at any time. This effectively transforms the administrative burden from a complex application process to one of ongoing, diligent compliance management.

V. Understanding Exclusions & Overlapping Vietnam Tax Incentives

Understanding the specific scope of the 3-year CIT exemption under Resolution 198/2025/QH15 requires distinguishing it from other tax incentives and recognizing potential limitations.

Distinguishing from Other Vietnam CIT Rates & Anti-Abuse Rules

Resolution 198/2025/QH15 specifically grants a 3-year CIT exemption for newly registered SMEs. This is distinct from other preferential CIT rates introduced by the Amended Law on Corporate Income Tax, which was passed on June 14, 2025, and is scheduled to take effect on October 1, 2025. This amended law introduces preferential rates of 15% and 17% for enterprises with annual revenues not exceeding VND 3 billion and VND 50 billion, respectively.

A crucial distinction lies in the anti-abuse safeguards. The preferential rates (15% and 17%) explicitly exclude subsidiaries or enterprises with related-party relationships to larger entities. This exclusion is a direct anti-abuse safeguard, designed to prevent the artificial fragmentation of businesses solely for the purpose of accessing SME-focused tax relief.

Regarding the 3-year CIT exemption under Resolution 198/2025/QH15, the available information indicates that the resolution "does not distinguish between domestic and foreign-invested businesses when applying the CIT exemption". This statement, when considered in isolation, might suggest that related-party exclusions do not apply to this specific 3-year exemption. However, the subsequent Amended CIT Law, which comes into effect later in 2025, introduces clear anti-abuse provisions by excluding subsidiaries and related parties from other preferential CIT rates. Given the government's stated intent to enhance the "integrity and effectiveness of tax incentives while supporting key developmental sectors" and to prevent "artificial fragmentation", it is highly probable that future implementing regulations will clarify or extend these anti-abuse provisions to encompass all SME-related CIT benefits, including the 3-year exemption. Businesses with complex ownership structures or those involved in related-party transactions should proactively monitor these forthcoming developments and seek professional advice to mitigate potential future compliance risks.

Distinction from Other Tax Incentives

Vietnam's tax incentive landscape is multifaceted, and the 3-year SME exemption should be understood in relation to other available benefits:

Innovative Startups: Innovative startups and organizations supporting innovation are eligible for a distinct incentive package. This includes a 2-year CIT exemption followed by a 50% reduction for the subsequent 4 years, specifically applicable to income derived from innovative startup activities. While an innovative startup may also qualify as an SME, these are separate incentive schemes with different eligibility criteria and durations.
General Investment Incentives: Beyond SME-specific benefits, Vietnam offers various other CIT incentives tied to encouraged sectors (e.g. high-tech industries, renewable energy, software development), encouraged locations (e.g. economically disadvantaged areas, high-tech zones), and project scale. These typically involve preferential tax rates (e.g. 10%, 17%) applied for extended periods, and/or tax holidays (e.g. 4 years of exemption followed by 9 years of 50% reduction). The 3-year SME exemption is a specific, broad-based incentive for new SMEs and should be considered alongside, but distinct from, these other targeted incentives. In instances where an SME qualifies for multiple incentives, the prevailing principle generally allows the enterprise to opt for the most beneficial support level.

VI. Strategic Advice for Foreign Investors: Maximizing Vietnam Tax Incentives

To effectively leverage the 3-year Corporate Income Tax (CIT) exemption under Resolution No. 198/2025/QH15 and navigate Vietnam's evolving tax landscape, businesses should adopt a strategic and proactive approach.

Maximizing Benefits and Ensuring Long-Term Compliance

Accurate Initial Registration: Given that the exemption is automatically applied based on business registration data, it is paramount to ensure that the initial Enterprise Registration Certificate (ERC) accurately reflects the enterprise's SME status in accordance with the detailed criteria outlined in Decree 80/2021/NĐ-CP. Any discrepancies at this stage could jeopardize eligibility.
Robust Record-Keeping: While a formal application for the exemption is not required, businesses must maintain meticulous financial statements, comprehensive payroll records (especially those detailing social insurance contributions), and accurate capital records. These documents are essential for substantiating the SME classification and eligibility in the event of an audit by tax authorities.
Monitoring SME Status: Enterprises should continuously monitor their employee count, revenue, and capital against the SME criteria. Although the initial 3-year exemption is fixed from the registration date, changes in business size in subsequent years could impact eligibility for other ongoing SME support policies.
Understanding Overlapping Incentives: If an enterprise also qualifies as an innovative startup or for other sector-specific or location-based incentives, a careful analysis should be conducted. The principle of allowing the enterprise to choose the "most beneficial" support level means that a strategic decision may be required to maximize overall tax advantages.

Importance of Expert Legal & Financial Consulting in Vietnam

Engaging with experienced legal and tax advisors early in the business setup process is crucial. This ensures full compliance with all conditions for the exemption and allows for strategic positioning of the enterprise to maximize available incentives. This guidance is particularly vital for foreign-invested enterprises navigating the complexities of Vietnamese regulations.
Businesses should develop a comprehensive long-term financial plan that extends beyond the initial 3-year tax break. The exemption provides significant short-term relief, but it is a limited-period incentive, and sustainable growth requires a strategy that accounts for future tax obligations.

Outlook on Future Policy Developments

The Vietnamese tax and business regulatory landscape is dynamic and subject to ongoing adjustments. Businesses should actively monitor the promulgation of detailed implementing regulations, especially concerning the interplay between Resolution 198/2025/QH15 and the recently Amended CIT Law. This is particularly relevant for potential clarifications regarding the application of related-party exclusions to the 3-year exemption. The broader trend indicates a governmental commitment to continuous reforms aimed at improving the business environment and attracting further investment. Staying informed about these developments will be key to long-term compliance and strategic advantage.

VII. Conclusion: Seizing Vietnam's SME Tax Opportunity

Resolution No. 198/2025/QH15 represents a significant and strategic initiative by the Vietnamese government to foster private sector growth through the provision of a 3-year Corporate Income Tax exemption for new Small and Medium-sized Enterprises. This policy, effective for enterprises granted their first Enterprise Registration Certificate on or after May 17, 2025, and meeting specific SME classification criteria, offers substantial financial relief during the critical startup phase.

Successful utilization of this incentive hinges on a clear understanding of the stringent "first Enterprise Registration Certificate" condition, which serves to target genuinely new business formations and prevent abuse through re-registrations or mergers. Equally important is a precise grasp of the detailed SME classification criteria outlined in Decree 80/2021/NĐ-CP, which vary by sector and size. While the exemption is automatically applied based on registration data, the emphasis on self-declaration places a significant responsibility on enterprises to maintain diligent compliance and robust record-keeping for potential post-registration audits.

The resolution underscores Vietnam's commitment to creating a more favorable and supportive ecosystem for new businesses, both domestic and foreign. It is part of a broader, multi-faceted governmental strategy that includes regulatory streamlining, financial support, land access, and innovation promotion. Navigating the intricacies of Vietnamese tax law and ensuring full compliance requires expert insight.

Contact Viettonkin Consulting today for a personalized consultation on how your new enterprise can maximize the 3-year Corporate Income Tax exemption and other strategic investment incentives in Vietnam.

Vietnam is no longer just an emerging market; it's a dynamic investment destination, particularly for foreign direct investment (FDI) in its burgeoning automotive and electric vehicle (EV) sectors. For international investors seeking high-growth opportunities, Vietnam presents a compelling proposition. At Viettonkin Consulting, we understand that navigating a new market can be complex. This article aims to simplify the landscape, highlighting the significant opportunities, acknowledging the challenges, and clarifying the supportive legal framework, empowering you to make informed investment decisions.

The Fast Lane: Why Vietnam's Automotive and EV Sectors Are Red-Hot

The excitement around Vietnam's automotive and EV industries isn't just hype; it's backed by robust market fundamentals and proactive government support.

Vietnam's Automotive and EV industry is experiencing significant growth, driven by increased domestic demand and supportive government policies. *Photo: Viet Nam News*

1. A Market in Overdrive:

Vietnam’s automotive market is on a rapid upward trajectory, with projections indicating that annual car sales could hit 600,000 units by 2025. Looking further ahead, the Ministry of Industry and Trade has proposed a strategic plan aiming to nearly double this figure by 2030, targeting between 1 and 1.1 million vehicles sold each year. This anticipated growth—averaging 14–16% annually—signals significant opportunities for stakeholders across the automotive value chain, from manufacturers to service providers.

2. The Electric Revolution is Here:

The EV momentum in Vietnam is undeniable. EVs already account for approximately 20% of new car sales, with consumer interest steadily climbing – up to 33% of Vietnamese consumers are considering an EV for their next purchase. This strong consumer appetite, coupled with the government's visionary approach, is propelling the EV sector forward.

3. Unprecedented Government Incentives:

Vietnam's government is rolling out the red carpet for EV development. Key incentives include:

Registration Fee Exemptions: First-time registration fees for battery EVs remain at 0% through 28 February 2027 under Decree 10/2022 (as amended by Decree 51/2025). This directly reduces the cost of ownership, making EVs more attractive to consumers.
Excise Tax Reductions: Significant reductions in excise tax for EVs (e.g., 1-3%) until early 2027, further enhancing their competitiveness.
Import Duty Exemptions for Auto Parts: Decree 101/2021 provides crucial import tax exemptions on components for auto production (including EVs) until 2027, conditional on meeting minimum output requirements. This incentivizes local assembly and manufacturing.

4. Strategic Location & Free Trade Advantages:

Vietnam's geographical position within ASEAN makes it a pivotal hub for regional supply chains. Its extensive network of Free Trade Agreements (FTAs) further sweetens the deal, easing the export of auto parts and vehicles to major global markets. This connectivity reduces trade barriers and opens up broader market access for investors.

5. A Magnet for Global FDI:

The confidence of international investors is evident. Domestic champion Vingroup has committed over US$13.5 billion (plus an additional US$3.5 billion in loans) to its EV arm, VinFast. Numerous global OEMs are entering the market through joint ventures and assembly projects, signaling a strong belief in Vietnam's potential.

6. Robust Legal and Regulatory Framework:

Vietnam's commitment to fostering a favorable FDI climate is underscored by its legal framework. The Law on Foreign Investment 2020 (Law 61/2020) and its implementing Decree 31/2021 streamline FDI processes, guarantee investor rights (including profit repatriation and asset protection), and ensure equal treatment. These laws also offer targeted incentives for high-tech and strategic projects, aligning perfectly with the automotive and EV sectors.

Navigating the Road Ahead: Addressing Challenges

While the opportunities are vast, a pragmatic approach requires acknowledging and understanding the existing challenges.

1. The Localization Puzzle:

Currently, only about 20% of auto parts are produced domestically, leading to a heavy reliance on imports. This impacts cost and potentially limits the full benefit of incentives. Investors who can contribute to increasing local content will find significant advantages.

2. Building Out the Infrastructure:

While major cities boast a growing EV charging network, rural coverage remains limited. Investment in expanding charging infrastructure presents a key opportunity for both public and private players.

3. Bridging the Skills Gap:

A shortage of local suppliers capable of producing advanced components and a need for upgrading workforce skills are areas that require attention. Collaborative efforts in training and technology transfer will be crucial for long-term success.

4. Understanding Regulatory Nuances:

Investors must navigate various licensing, land use, environmental regulations, and part certification processes. Additionally, strict FDI reporting requirements under the Investment Law 2020 and related decrees (e.g., Decree 29/2021, Circular 03/2021) necessitate meticulous compliance.

The Bedrock: Vietnam's Supportive Legal & Policy Foundations

Vietnam's legal and policy landscape provides a strong foundation for foreign investors, offering clarity and protection.

Law on Foreign Investment 2020 (Law 61/2020): This cornerstone legislation guarantees investor rights, including profit repatriation, asset protection, and non-discriminatory treatment.
Decree 31/2021: This decree implements the Law 2020, providing specific conditions for FDI across various sectors, clarifying incentives, and outlining market access lists.
EV Specific Decrees (10/2022 & 51/2025): These decrees are instrumental in driving EV adoption through significant registration fee exemptions, demonstrating the government's tangible support.
Decree 101/2021: This decree offers critical import tax exemptions for auto and EV components for qualifying projects, directly reducing production costs.
Environmental & Infrastructure Policies: The government is actively promoting EV infrastructure development, including policies to subsidize EV charging electricity and set standards for charger deployment.
FDI Monitoring Framework: Decrees and circulars like Decree 29/2021 and Circular 03/2021 mandate comprehensive reporting on investment status, employment, financials, R&D, and environmental compliance, ensuring transparency and accountability. While Circular 200/2014 dictates general accounting standards, FDI enterprises must comply, contributing their financial data to broader monitoring efforts.

Your Path to Success with Viettonkin Consulting

Vietnam's automotive and EV sectors present a powerful combination of rapid market growth, robust government support, strategic positioning, and expanding foreign partnerships. While challenges like low parts localization, infrastructure needs, workforce skills, and regulatory complexity exist, they are manageable with the right strategy and local expertise.

Successful foreign investment in Vietnam will hinge on:

Deep Local Integration: Actively seeking opportunities to integrate into local supply chains and foster domestic partnerships.
Strategic Infrastructure Investment: Identifying and investing in areas that strengthen the EV ecosystem, such as charging networks.
Proactive Regulatory Navigation: Partnering with experts to ensure seamless navigation of Vietnam's evolving legal and regulatory frameworks.

At Viettonkin Consulting, we leverage our deep local knowledge and extensive experience to help foreign investors confidently enter and thrive in Vietnam's dynamic market. We simplify the complexities, connect you with the right opportunities, and ensure your investment journey is smooth and successful.

Ready to explore the vast potential of Vietnam's automotive and EV sectors? Contact Viettonkin Consulting today to discuss your investment strategy.

As Vietnam and Brazil mark 35 years of diplomatic relations, a new chapter is unfolding—one that may reshape trade and investment between Southeast Asia and South America. In November 2024, the two countries elevated their relationship to a Strategic Partnership, signaling a commitment to deeper cooperation in trade, innovation, and sustainable development.

Central to this momentum is the proposed Free Trade Agreement (FTA) between Vietnam and the Southern Common Market (MERCOSUR), a South American trade bloc in which Brazil plays a leading role. For Brazilian investors, this FTA represents a golden opportunity to tap into one of Asia’s most dynamic economies—and for Vietnam, it’s a strategic move to diversify trade and attract high-quality foreign direct investment (FDI).

Vietnam–Brazil Trade at a Glance

Diplomatic ties established: 1989
Strategic Partnership launched: November 2024
Two-way trade in 2024: Nearly USD 8 billion
Brazil’s share of Vietnam–Latin America trade: 34.8%

Brazil is already Vietnam’s largest trading partner in Latin America, and the proposed FTA is expected to significantly boost this relationship by reducing tariffs, simplifying customs procedures, and opening new sectors for investment.

Why Vietnam Is an Attractive FDI Destination for Brazil

1. Strategic Location in ASEAN

Vietnam offers Brazilian companies a gateway to the 680-million-strong ASEAN market, with preferential access through existing FTAs such as:

ASEAN Free Trade Area (AFTA)
Regional Comprehensive Economic Partnership (RCEP)
CPTPP and EVFTA

A Vietnam–MERCOSUR FTA would complement these agreements, allowing Brazilian firms to leverage Vietnam as a regional export hub.

2. Stable Growth and Pro-Investment Policies

Vietnam’s GDP growth remains among the highest in Asia, supported by:

A young, tech-savvy workforce
Political stability
Ongoing legal reforms (e.g., Resolutions 57 and 59) to improve transparency and digital governance

The government has prioritized green growth, digital transformation, and innovation, aligning well with Brazil’s strengths in agritech, bioenergy, and fintech.

Sectors Where Brazil Can Benefit Most from Investing in Vietnam

🌾 Agribusiness and Food Processing

Brazil’s leadership in global agriculture, combined with Vietnam’s cost-effective processing, packaging, and export logistics, creates synergies for joint ventures and fast access to Asian markets.
Investment in joint ventures or processing plants in Vietnam can help Brazilian firms reach Asian markets faster and more efficiently.

⚡ Renewable Energy and Biofuels

Vietnam is targeting net-zero emissions by 2050 and is rapidly expanding its solar, wind, and biomass capacity.
Brazilian expertise in bioethanol and sustainable energy can support Vietnam’s green transition and open doors for energy partnerships.

🧬 Pharmaceuticals and Biotechnology

Vietnam’s growing middle class is driving demand for healthcare and life sciences.
Brazilian pharmaceutical firms can benefit from local production incentives and regional export potential.

📦 Logistics and Supply Chain Infrastructure

Vietnam is investing heavily in ports, highways, and industrial zones.
Brazilian logistics companies can partner in smart warehousing, cold chain logistics, and e-commerce fulfillment.

💻 Digital Transformation and Fintech

Vietnam’s digital economy is projected to reach USD 50 billion by 2025.
Brazilian fintech and IT firms can explore B2B platforms, mobile payments, and blockchain solutions in a fast-growing digital market.

FTA with MERCOSUR: What’s at Stake?

The proposed FTA between Vietnam and MERCOSUR (Brazil, Argentina, Paraguay, Uruguay) is expected to:

Eliminate or reduce tariffs on key exports
Facilitate investment flows and joint ventures
Enhance cooperation in innovation, sustainability, and digital trade

This agreement would mirror the success of Vietnam’s FTAs with the EU and UK, which have significantly boosted exports and FDI inflows.

Strategic Collaboration Beyond Trade

Vietnam and Brazil are also exploring cooperation in:

Climate change and green development
Digital transformation and smart governance
Education, science, and cultural exchange

These areas offer long-term investment opportunities and align with global ESG (Environmental, Social, and Governance) trends.

Conclusion: A Bilateral Relationship with Global Potential

The Vietnam–Brazil Strategic Partnership and the proposed MERCOSUR–Vietnam FTA mark a pivotal milestone in South–South cooperation.

For Brazilian investors, Vietnam presents:

A politically stable, high-growth economy
Preferential access to ASEAN and global markets
Strong synergies in agriculture, clean energy, life sciences, and digital innovation

At Viettonkin Consulting, we are ready to help Brazilian businesses navigate Vietnam’s regulatory landscape, identify investment opportunities, and build lasting partnerships.

As global trade dynamics shift toward South–South cooperation, Vietnam and Egypt are emerging as pivotal players in connecting Southeast Asia and North Africa. With diplomatic relations dating back to 1963, Egypt was one of the first countries in the Middle East and North Africa (MENA) to establish ties with Vietnam. Today, both nations are exploring the next logical step in their partnership: a bilateral Free Trade Agreement (FTA).

This potential FTA could unlock significant opportunities for foreign direct investment (FDI), particularly for Egyptian businesses seeking to expand into Asia and for Vietnamese firms looking to access African markets.

Vietnam–Egypt Trade Snapshot

Diplomatic relations established: 1963
Vietnam’s exports to Egypt (H1 2024): USD 246 million, up 4.1% YoY
Key Vietnamese exports: Coffee, pepper, cashew nuts, machinery, electronics, textiles
Vietnam’s largest investment in Egypt: USD 30 million project in Sadat City

Trade between the two countries continues to grow steadily, with Vietnamese enterprises increasingly eyeing Egypt as a strategic entry point into Africa. Conversely, Egypt is beginning to recognize Vietnam’s role as a manufacturing and logistics hub in Asia.

Why a Vietnam–Egypt FTA Matters

1. Strategic Market Access

Vietnam is a member of 15+ FTAs, including RCEP, CPTPP, and EVFTA, offering access to over 50 global markets.
Egypt is a member of the African Continental Free Trade Area (AfCFTA), connecting it to 1.3 billion consumers across Africa.

An FTA would allow both countries to serve as trade gateways—Vietnam into ASEAN and East Asia, and Egypt into Africa, the Middle East, and Europe.

2. Complementary Economies

Vietnam and Egypt have non-competing, complementary strengths:

Vietnam: Advanced in manufacturing, electronics, textiles, and digital services
Egypt: Strong in agriculture, logistics, energy, and regional trade facilitation

This complementarity creates fertile ground for joint ventures, technology transfer, and supply chain integration.

Sectors Where Egypt Can Benefit Most by Investing in Vietnam

🏭 Manufacturing and Industrial Processing

Vietnam is a global manufacturing hub, especially in:

Electronics and semiconductors
Textiles and garments
Automotive components

Egyptian firms can invest in assembly plants, component manufacturing, or industrial park development, leveraging Vietnam’s skilled labor and export infrastructure.

🌾 Agri-Food Processing and Packaging

Vietnam’s agricultural exports (coffee, cashews, pepper) are globally competitive. Egyptian investors can:

Set up processing and packaging facilities
Partner in cold chain logistics
Export value-added products to the Middle East and Africa

⚡ Renewable Energy and Green Technology

Vietnam is targeting net-zero emissions by 2050 and expanding its solar, wind, and biomass sectors. Egypt, with its experience in solar and hydroelectric power, can:

Invest in green energy projects
Transfer clean tech solutions
Collaborate on climate finance and carbon markets

📦 Logistics and Maritime Infrastructure

Vietnam’s ports and logistics networks are expanding rapidly. Egyptian logistics firms can:

Invest in smart warehousing and inland ports
Develop multimodal transport solutions
Facilitate ASEAN–Africa trade corridors

💻 Digital Economy and Fintech

Vietnam’s digital economy is projected to reach USD 50 billion by 2025. Egyptian tech firms can explore:

Fintech platforms for mobile payments and remittances
E-commerce logistics
AI and cybersecurity services

Mutual Strategic Advantages

Vietnam	Egypt
Access to ASEAN, China, Japan, Korea	Access to Africa, Middle East, EU
Strong in manufacturing and digital	Strong in logistics and agriculture
Member of CPTPP, RCEP, EVFTA	Member of AfCFTA, COMESA, GAFTA
Political stability and pro-FDI policies	Strategic location at trade crossroads

What’s Next? Toward a Bilateral FTA

While no formal FTA has been signed yet, both governments have expressed interest in deepening economic ties. A bilateral FTA would likely include:

Tariff reductions on key goods
Investment protection clauses
Customs cooperation and trade facilitation
Technology and innovation partnerships

Such an agreement would formalize trade flows, reduce costs, and enhance investor confidence on both sides.

Conclusion: A Bilateral Opportunity with Global Reach

The Vietnam–Egypt partnership is more than symbolic—it’s a strategic alliance with the potential to reshape trade between Asia and Africa. For Egyptian investors, Vietnam offers:

A stable, high-growth economy
Access to global markets
Sectoral synergies in manufacturing, energy, and digital innovation

At Viettonkin Consulting, we are ready to help Egyptian businesses navigate Vietnam’s regulatory landscape, identify investment opportunities, and build long-term partnerships in one of Asia’s most promising economies.

The recently amended Capital Law, passed by the National Assembly on May 28, has introduced a transformative legal framework for Hanoi. This law aims to foster synchronized, sustainable, and distinctive development while enhancing social security and living facilities. By emphasizing innovation and decentralization, it creates opportunities for city authorities to utilize unique mechanisms and mobilize resources effectively. A standout feature of this amendment is the pilot implementation of two innovative urban development models: Transit-Oriented Development (TOD) and Business Improvement District (BID).

Urban Planning as a Key Driver

Urban planning has been highlighted as a critical tool for managing Hanoi's growth. While TOD and BID are well-established models in many developed countries, they are newly introduced to Hanoi through this legal amendment. Their implementation has the potential to redefine the city’s urban landscape, offering a fresh approach to sustainable and inclusive development.

The Transit-Oriented Development (TOD) Model

The TOD model prioritizes the development of residential, commercial, and entertainment areas around public transport hubs, such as bus stops and railway stations. By reducing dependency on personal vehicles, this model aims to create a more sustainable and accessible urban environment. It also enhances the quality of living by ensuring that essential public services are within easy reach.

Hanoi’s urban planning project has already identified the construction of 14 urban railway lines, which will serve as the backbone for TOD implementation. These railway lines will form the foundation for new urban areas, strategically located to allow residents to walk conveniently to public transport hubs. This integration of public transport into urban planning is expected to reduce traffic congestion, improve environmental quality, and provide better access to amenities.

The Business Improvement District (BID) Model

BID is another forward-thinking approach that combines economic development with cultural preservation. This model involves collaboration between governments, corporations, and communities to create vibrant urban areas. By promoting cultural and commercial activities, BID serves as a catalyst for local economic growth, environmental conservation, and heritage preservation.

In Hanoi, the historic "36 old streets", known for their cultural significance, provide a perfect opportunity for BID development. These areas can be revitalized into bustling hubs of cultural and commercial activities, attracting tourists and generating economic benefits while safeguarding the city’s heritage. Such initiatives have been successfully implemented in countries like the United States, Germany, and Japan, United Kingdom, Australia, and Singapore, offering valuable insights for Hanoi’s future development.

Opportunities and Challenges

The implementation of TOD and BID presents significant opportunities for Hanoi to enhance its urban identity and improve the quality of life for its residents. However, several challenges must be addressed to ensure the success of these models.

One major hurdle is the current state of urban development in Hanoi. Certain inner-city districts have been poorly managed, resulting in issues with urban landscapes and building architecture. Additionally, uneven development between inner-city and peripheral districts creates disparities that may hinder the smooth adoption of these models.

Both TOD and BID require substantial financial investments, which pose challenges in securing early-stage funding. Successful implementation will also demand close collaboration among government agencies, businesses, and local communities. The risk of public infrastructure being overwhelmed and real estate prices rising around these development zones further complicates the process. Addressing these concerns will be essential to achieving sustainable and equitable urban growth.

Strategies for Successful Implementation

To overcome these challenges, Hanoi’s authorities must adopt a comprehensive and strategic approach. A synchronized planning system, encompassing socio-economic, construction, and transportation planning, is crucial. Clear development roadmaps will help ensure that the goals of TOD and BID are met efficiently.

Integrating public transportation, commercial activities, and residential spaces into urban planning is another essential step. By creating well-connected urban areas with both surface and underground infrastructure, the city can provide residents with easy access to services and amenities without long commutes.

Preserving Hanoi’s historical and cultural values should also be a priority. The unique architecture and cultural heritage of the city’s urban areas form a strong foundation for socio-economic growth. Leveraging these assets will enhance the city’s identity and improve the quality of life for its residents.

Mobilizing resources effectively is key to the success of TOD and BID. By utilizing specific mechanisms allowed under the Capital Law, Hanoi can attract non-state investments and prioritize critical projects like parks, pedestrian zones, and advanced public transport systems. Technology can play a vital role in monitoring and addressing issues during the implementation process, ensuring timely solutions and efficient management.

Conclusion

The introduction of TOD and BID under the amended Capital Law represents a groundbreaking step for Hanoi. These models hold the promise of transforming the city into a more sustainable, accessible, and vibrant urban center. By addressing challenges such as resource constraints, infrastructure demands, and social equity, Hanoi can unlock the full potential of these development approaches. With strategic planning and collaboration, the city stands poised to usher in a new era of growth and innovation.

Author: Master, architect Pham Hoang Phuong is an expert in research and critical theory on architecture, planning and urban development management, with nearly 25 years of experience; former deputy editor-in-chief of Vietnam Architecture Magazine and is currently working at the National Institute of Architecture (Ministry of Construction).

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Introduction

On June 17, 2025, with the support of 94.56% of voting members, the National Assembly officially adopted a resolution to reduce the standard Value‑Added Tax (VAT) rate from 10% to 8%. This strategic adjustment aims to stimulate production and consumption, support businesses and households, and sustain Vietnam’s growth momentum through the second half of 2025 and into 2026. This guide unpacks the key points of the policy, outlines your compliance obligations, and answers frequently asked questions to ensure you’re fully prepared.

Key Highlights

VAT Rate Cut: 10% → 8%
Applicable Goods & Services: Those listed in Clause 3, Article 9 of VAT Law 48/2024/QH15 (e.g. manufacturing, retail, logistics, IT services).
Exceptions: Telecommunications; financial‑banking; securities; insurance; real estate; metal & mining products (except coal); special‑consumption goods/services (except gasoline).
Effective Period: July 1, 2025 – December 31, 2026.
Budget Impact: Estimated revenue loss of VND 39.54 trillion in H2 2025 and VND 82.2 trillion in 2026 (total VND 121.74 trillion).

1. Legal Basis

Resolution of the National Assembly: Adoption on June 17, 2025, to temporarily reduce the VAT rate.
VAT Law 48/2024/QH15: Specifies subjects and rates; Clause 3, Article 9 lists the goods/services now enjoying the reduced rate.
Previous Decree 180/2024/NĐ‑CP: Provided a similar 2% cut for January 1 – June 30, 2025.

2. Scope of Reduction

The recent resolution carefully delineates which goods and services see their VAT rate fall from 10% to 8%. In practice, this means most manufacturing, wholesale and retail activities—the very engines of everyday commerce—will benefit from the lighter burden. Transportation and logistics services, newly included in the list of eligible sectors, can now pass on cost savings to shippers and end‑users alike. Likewise, IT and software services join the reduction cohort, acknowledging the strategic role of Vietnam’s burgeoning tech industry. On the other hand, certain industries remain outside this preferential scope: telecommunications, financial‑banking services (including securities, insurance and related activities), real estate transactions, metal and mining products (with the sole exception of coal), plus a handful of special‑consumption goods and services. Notably, gasoline—a perennial fiscal lever—continues to enjoy the reduced rate, ensuring broad consumer impact.

Category	Previous Rate	New Rate	Notes
Manufacturing & Wholesale/Retail	10%	8%	Standard goods and services
Transportation & Logistics	10%	8%	Newly included in this resolution
IT & Software Services	10%	8%	Newly included
Telecommunications; Finance & Banks	10%	N/A	Not eligible for reduction
Real Estate	10%	N/A	Not eligible
Special‑Consumption Products	10%	8%	Exception: gasoline retains reduction

3. Implementation Timeline

While policy changes often come with tight deadlines, this time, businesses are granted a welcome window to prepare. The new 8% VAT rate officially takes effect on July 1, 2025, and will apply through December 31, 2026. This gives companies several weeks—not just to react, but to prepare thoughtfully and thoroughly.

Between now and the effective date, businesses should begin by updating their accounting and invoicing systems to reflect the new rate. Equally important is ensuring that internal teams—especially finance and sales—understand how the changes apply in practice: which goods and services are eligible, and which remain at 10%.

It’s also wise to review any open quotes, contracts, or purchase orders that extend beyond July 1. If they still reflect the 10% rate where the 8% rate should apply, adjustments should be made in advance to avoid confusion—or worse, non-compliance.

We recommend treating this as an opportunity to get ahead, not just a deadline to meet. Taking early action can help your business avoid last-minute system issues, reduce operational disruption, and ensure that your compliance is smooth and stress-free when the new rate kicks in at midnight on June 30.

Action	Deadline/Date
National Assembly resolution takes effect	July 1, 2025
Period of reduced VAT rate	July 1, 2025 – Dec 31, 2026
Businesses must update billing and accounting systems	Before July 1, 2025

4. Impacts on Government Budget

Naturally, a reduction in VAT comes with fiscal implications. The government is projected to absorb an estimated revenue shortfall of VND 39.54 trillion in the second half of 2025, followed by an additional VND 82.2 trillion throughout 2026. In total, the cumulative impact on state revenue is expected to reach VND 121.74 trillion over the full course of the policy period.

However, this short-term budget impact is part of a broader economic strategy. By easing the tax burden on businesses and consumers, the government aims to stimulate production, consumption, and market demand, with the expectation that increased economic activity will help offset the losses through growth in other tax channels.

To support this approach, complementary measures are being implemented—most notably, tightened fiscal discipline, accelerated digitalization of tax administration (including the widespread use of e-invoices and certified cash registers), and strategic deployment of reserve funds to cover urgent and essential expenditures. These steps reflect a commitment to ensuring that the VAT reduction serves as both a stimulus and a sustainable component of broader fiscal planning.

Offset Measures:

Strengthening tax administration and digitization (e‑invoices via cash registers)
Tightening budget expenditure and leveraging reserves for urgent needs
Pursuing GDP growth of ≥ 8% in 2025 to generate offsetting revenue

5. Compliance Checklist

With the VAT reduction set to take effect on July 1, 2025, businesses have a valuable opportunity—not only to ensure compliance but also to align operations for maximum benefit. So, what should your next steps look like?

Start by updating your accounting and invoicing systems to apply the new 8% rate accurately. This technical update may seem straightforward, but implementing it early can help prevent costly errors down the line.

Next, we recommend conducting a focused training session with your finance and sales teams. Make sure your staff understands which goods and services are eligible for the reduced rate—and just as importantly, which are not. A clear internal understanding now can save time and mitigate risk later.

In parallel, carry out a quick review of all active contracts, quotations, and purchase orders. Any documents that stretch across July 1 and still reference the old 10% VAT should be updated promptly to reflect the new rate. These small administrative steps are key to avoiding regulatory issues or disputes with clients.

Don’t overlook documentation. Keep detailed records of how VAT was applied across your transactions, as this will be essential in the event of an audit. Proper recordkeeping remains one of the most effective safeguards against compliance concerns.

Finally, it’s important to communicate the change proactively to your customers and stakeholders. Clear, timely updates about pricing, invoicing, or billing changes will help manage expectations—and reinforce your professionalism in handling the transition.

Taken together, these actions will not only help your business meet regulatory requirements with confidence, but also position you to benefit fully from the cost efficiencies that the VAT reduction is intended to unlock.

6. Frequently Asked Questions

Q1: Do exempt activities (e.g. education, healthcare) need any adjustment?
A1: No—services already exempt (0% rate) under VAT Law remain unchanged.

Q2: What if I mistakenly issue a 10% invoice after July 1?
A2: You should issue a corrective invoice immediately, applying the 8% rate, to avoid penalties.

Q3: Are imports covered by this reduction?
A3: Yes—imports subject to the standard 10% VAT rate now enjoy the 8% rate, barring exceptions.

Conclusion

The VAT rate reduction from 10% to 8% represents a timely “fiscal stimulus” designed to lower costs for businesses and consumers alike. While it entails a measurable impact on state revenues, the government’s accompanying measures aim to preserve budgetary balance and propel the economy toward robust growth. For businesses, the window from now until July 1 is crucial: update your systems, train your teams, and communicate changes clearly to ensure seamless compliance and maximize the benefits of this policy shift.

For tailored advice on how this VAT reduction affects your specific operations, contact the Viettonkin Legal Team today!

Vietnam is entering a new era of legal modernization. With the issuance of Resolution 66-NQ/TW by the Politburo on April 30, 2025, the country has laid out an ambitious roadmap to transform its legal system into one of the most transparent, efficient, and investor-friendly in Southeast Asia. For foreign direct investors (FDIs), this resolution signals a significant shift toward a more predictable and innovation-driven business environment.

A Vision for 2045: Legal Certainty in a High-Income Vietnam

Resolution 66 sets two major milestones:

By 2030: Vietnam aims to establish a synchronous, transparent, and enforceable legal system, removing regulatory bottlenecks and aligning laws with the three-tier government model.
By 2045: The country envisions a modern legal framework that meets international standards, supporting its goal of becoming a high-income, developed nation.

This long-term vision is not just aspirational—it is backed by concrete reforms that will directly impact how foreign businesses operate in Vietnam.

Key Reforms That Matter to Investors

1. A Transparent, Low-Compliance Legal Environment

Resolution 66 emphasizes the development of a socialist-oriented market economy with a legal system that is:

Open and transparent
Safe and predictable
Low in compliance costs

This means fewer bureaucratic hurdles, simplified administrative procedures, and a stronger legal foundation for property rights, freedom of contract, and equal treatment across all economic sectors.

2. Empowering the Private Sector

The resolution recognizes the private economy as the primary engine of growth. It calls for:

Legal mechanisms to ensure equal access to capital, land, and talent
Support for SMEs and startups
Promotion of regional and global private economic groups

For FDIs, this translates into a more level playing field and greater opportunities to partner with or invest in Vietnamese private enterprises.

3. Legal Frameworks for Emerging Sectors

Vietnam is preparing for the future by building legal corridors for:

Artificial Intelligence
Digital and green transformation
Data resource exploitation
Crypto assets

These frameworks will enable FDIs to explore new industries and innovative business models with legal clarity and protection.

4. International Integration and Legal Harmonization

Resolution 66 calls for improved international legal cooperation and alignment with global standards. This includes:

Enhanced legal predictability for cross-border transactions
Stronger enforcement of international agreements
Better dispute resolution mechanisms

This is especially relevant for investors seeking long-term stability and legal recourse in Vietnam.

Institutional and Technological Overhaul

To ensure effective implementation, the resolution introduces several institutional innovations:

A Central Steering Committee on Legal Reform, led by the General Secretary
A special financial mechanism to fund law-making and enforcement
Digital transformation of legal processes, including the use of AI and big data

These measures aim to streamline governance, reduce corruption, and accelerate policy responsiveness—all of which are critical for investor confidence.

Timelines and What to Expect

Year	Milestone
2025	Eliminate major legal bottlenecks
2027	Complete legal updates for the 3-level government model
2028	Finalize legal system for investment and business
2030	Achieve a transparent, enforceable legal system
2045	Reach international legal standards in a high-income Vietnam

Opportunities for Foreign Investors

With Resolution 66, Vietnam is not just reforming laws—it is redefining its investment climate. Key opportunities include:

Early entry into emerging sectors with supportive legal frameworks
Strategic partnerships with Vietnamese private firms
Participation in legal and institutional modernization projects
Increased protection for intellectual property and digital assets

Conclusion: A Legal Leap Forward

Resolution 66-NQ/TW is a bold declaration of Vietnam’s intent to become a top-tier investment destination in ASEAN. For foreign investors, it offers a rare combination of legal certainty, market dynamism, and forward-looking governance.

At Viettonkin Consulting, we are closely monitoring the implementation of these reforms and are ready to help you navigate the evolving legal landscape. Whether you're entering Vietnam for the first time or expanding your footprint, now is the time to align your strategy with Vietnam’s legal transformation.

Vietnam continues to demonstrate its commitment to legal modernization and transparency—key pillars for attracting and retaining foreign direct investment (FDI). The latest milestone in this journey is Resolution No. 59/2024/UBTVQH15, issued by the National Assembly Standing Committee on December 11, 2024. This resolution adjusts the 2025 Law- and Ordinance-Making Program, introducing new legislative priorities that directly impact the business and investment environment.

For foreign investors, understanding these legislative updates is essential to navigating Vietnam’s evolving regulatory landscape and identifying new opportunities.

What Is Resolution 59/2024/UBTVQH15?

Resolution 59 is a formal adjustment to Vietnam’s legislative agenda for 2025. It outlines the addition of several key draft laws and resolutions to be discussed and passed by the National Assembly. These additions reflect Vietnam’s strategic focus on legal clarity, digital governance, and economic modernization.

Key Legislative Additions for 2025

1. Extension of Agricultural Land Use Tax Exemption

What it is: A draft resolution to extend the duration of tax exemptions on agricultural land use, continuing the provisions of Resolution No. 55/2010/QH12.
Why it matters: This move supports Vietnam’s agricultural sector, which remains a critical part of the economy. For investors in agribusiness, food processing, and rural development, this signals continued government support and potential tax advantages.

2. Revised Law on Promulgation of Legal Documents

What it is: A revision of the Law on Promulgation of Legal Documents, aiming to streamline the legislative process, reduce legal inconsistencies, and improve transparency.
Why it matters: This reform aims to streamline the legislative process, reduce legal inconsistencies, and improve transparency. For FDIs, this means greater predictability and fewer regulatory surprises.

3. Draft Law on Personal Data Protection

What it is: A comprehensive legal framework to regulate the collection, processing, and storage of personal data.
Why it matters: This law is crucial for tech companies, e-commerce platforms, and any business handling customer data. It aligns Vietnam with global data protection standards (e.g., GDPR), enhancing trust and compliance for international investors.

4. Revised Press Law

What it is: An update to the existing Press Law to reflect the digital media landscape, providing clearer guidelines for media, advertising, and digital content businesses.
Why it matters: This could impact media, advertising, and digital content businesses, offering clearer guidelines and potentially more freedom for responsible communication and branding.

5. Revised Law on Bankruptcy

What it is: A modernization of Vietnam’s bankruptcy framework, aiming to enhance efficiency, fairness, and investor protection in business restructuring and insolvency proceedings.
Why it matters: A more efficient and fair bankruptcy process is essential for risk management, investor protection, and business restructuring. This reform will enhance Vietnam’s reputation as a safe and mature investment destination.

Implications for Foreign Direct Investors

✅ Improved Legal Certainty

The inclusion of these laws in the 2025 legislative agenda reflects Vietnam’s intent to harmonize its legal system with international standards. This reduces legal ambiguity and enhances investor confidence.

✅ Stronger Data Governance

The upcoming Personal Data Protection Law will provide a clear legal basis for data-driven businesses, helping foreign companies operate with confidence in Vietnam’s digital economy.

✅ Support for Innovation and Digital Economy

The revised Press Law and legal reforms around digital governance indicate a pro-business stance toward innovation, media, and technology sectors.

✅ Enhanced Risk Mitigation

With a modernized bankruptcy law, investors can expect better legal recourse and asset protection in the event of business failure or restructuring.

Timeline and Legislative Process

All the newly added laws and resolutions are scheduled for:

Discussion at the 9th session of the National Assembly (May 2025)
Passage at the 10th session (October 2025)

This timeline gives investors a clear window to prepare for compliance, engage with policymakers, or adjust business strategies accordingly.

Strategic Takeaways for Investors

Monitor Legal Developments: Stay updated on the progress of these draft laws to anticipate regulatory changes.
Engage Local Advisors: Work with legal and consulting firms like Viettonkin to interpret and implement new compliance requirements.
Leverage Incentives: Explore opportunities in agriculture, tech, and media where legal reforms may unlock new incentives or reduce barriers.
Plan for Data Compliance: Begin aligning your data practices with expected requirements under the new Personal Data Protection Law.

Conclusion: A More Predictable and Investor-Friendly Vietnam

Resolution 59/2024/UBTVQH15 is more than a procedural update—it’s a signal of Vietnam’s maturing legal infrastructure and its commitment to creating a transparent, innovation-friendly, and globally integrated business environment.

At Viettonkin Consulting, we are here to help you navigate these changes and seize the opportunities they bring. Whether you're entering Vietnam for the first time or expanding your operations, understanding the legal landscape is key to long-term success.

Vietnam is accelerating its transformation into a regional innovation powerhouse. With the issuance of Resolution No. 57-NQ/TW in December 2024, the country has committed to a bold, strategic overhaul of its science, technology, and innovation (STI) ecosystem. For foreign direct investors (FDIs), this resolution is more than a policy document—it’s a roadmap to a more dynamic, tech-driven, and globally integrated Vietnamese economy.

A National Strategy for Innovation and Digital Transformation

Resolution 57-NQ/TW outlines Vietnam’s vision to become a science- and technology-led nation by 2030, with a longer-term goal of achieving global competitiveness by 2045. The resolution is part of a broader national effort to:

Modernize the economy
Enhance productivity
Foster sustainable development
Strengthen national digital sovereignty

This strategic pivot is designed to attract high-quality investment, especially in sectors that align with Vietnam’s innovation priorities.

Key Goals and Timelines

Target Year	Strategic Milestone
By 2030	Vietnam becomes a developing country with modern industry and upper-middle income, driven by STI • R&D investment to reach 2% of GDP • Digital economy to contribute 30% of GDP • Top 3 in ASEAN for AI research and development • 100% of public services at level 4 available online • At least 70% of enterprises using digital platforms
By 2045	Vietnam becomes a developed, high-income country with a globally competitive innovation ecosystem • Top 30 globally in Global Innovation Index (GII) • At least 5 Vietnamese tech firms with regional/global influence • Digital economy contributes over 50% of GDP • Science and technology workforce accounts for 1.5% of total labor force

What Resolution 57-NQ/TW Means for Investors

1. A Favorable Legal and Policy Environment

The resolution mandates the removal of institutional bottlenecks and the creation of a synchronized legal framework for science, technology, and innovation. This includes:

Simplified procedures for technology transfer and licensing
Stronger intellectual property protection
Incentives for R&D investment and innovation hubs

For FDIs, this means lower compliance risks, greater legal clarity, and enhanced protection of proprietary technologies.

2. Strategic Investment in High-Tech Sectors

Vietnam is prioritizing investment in:

Semiconductors and microelectronics
Artificial intelligence and robotics
Biotechnology and pharmaceuticals
Green energy and environmental technologies
Digital platforms and cybersecurity

Foreign investors in these sectors can expect preferential policies, tax incentives, and access to national innovation programs.

3. Public-Private Partnerships and Global Integration

Resolution 57 encourages international cooperation and public-private partnerships (PPPs) to:

Co-develop innovation infrastructure (e.g., science parks, R&D centers)
Facilitate technology transfer and joint ventures
Integrate Vietnam into global value chains

This opens the door for FDIs to collaborate with Vietnamese institutions, co-invest in innovation ecosystems, and scale regionally from a Vietnamese base.

4. Digital Transformation as a National Priority

Vietnam is embedding digital transformation across all sectors. The resolution supports:

Smart manufacturing and Industry 4.0
E-government and digital public services
Digital skills development and workforce upskilling

Investors in digital infrastructure, cloud services, fintech, and edtech will find a rapidly expanding market with strong government backing.

Institutional Reforms and Governance

To ensure effective implementation, the resolution proposes:

A centralized governance model for STI policy
Enhanced inter-ministerial coordination
A national innovation fund to support startups and R&D

These reforms aim to streamline decision-making, reduce bureaucratic delays, and ensure accountability—key concerns for foreign investors.

Opportunities for Foreign Direct Investors

FDIs can benefit from Resolution 57 in several ways:

Early-mover advantage in emerging sectors
Access to government-backed innovation zones
Participation in national digital transformation projects
Collaboration with Vietnamese universities and research institutes

Vietnam’s growing middle class, digital-savvy population, and strategic location in ASEAN further enhance its attractiveness as an innovation hub.

Challenges to Watch

While the resolution is ambitious, investors should be mindful of:

Implementation gaps at the local level
Talent shortages in high-tech fields
Regulatory adaptation to fast-evolving technologies

However, the government’s commitment to institutional reform, international cooperation, and human capital development suggests these challenges are being actively addressed.

Conclusion: A New Era for Investment in Vietnam

Resolution 57-NQ/TW marks a turning point in Vietnam’s development strategy. It signals a clear shift toward a knowledge-based economy, where science, technology, and innovation are central to national growth.

For foreign investors, this is a unique opportunity to align with Vietnam’s long-term vision, tap into a vibrant innovation ecosystem, and contribute to shaping the future of one of Asia’s most promising economies.

At Viettonkin Consulting, we are ready to help you navigate this evolving landscape—whether you're entering Vietnam for the first time or expanding your innovation footprint.

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Donald Trump’s second term as U.S. President has ushered in a wave of sweeping policy changes under the banner of “America First.” His administration’s renewed focus on protecting domestic industries, fostering energy independence and recalibrating international trade relations has had significant implications worldwide. Among the nations most affected by these changes is Vietnam, a vital trade partner of the United States. With tariffs emerging as a cornerstone of Trump’s policies, the economic and trade relationship between Vietnam and the U.S. is set to evolve in complex ways. This Blog Article examines Trump’s broad policy landscape and its specific impact on Vietnam-U.S. trade relations, with a focus on the administration’s tariff-centric approach.

Implications to Vietnam

From the outset of his second term, Trump signaled a strong commitment to reshaping U.S. trade policy. Central to this effort is the “America First Trade Policy,” which prioritizes reducing trade deficits and protecting American industries through expanded use of tariffs. His administration has proposed investigations into global trade imbalances, with measures such as a "global supplemental tariff" to address them. Vietnam, which ranks third among nations contributing to the U.S. trade deficit, faces potential tariffs ranging from 10% to 20%. This places Vietnam in a challenging position, as higher tariffs could significantly impact key export sectors like textiles, electronics, and furniture. These industries, which are critical to Vietnam’s economy, may lose their competitive edge in the U.S. market due to increased costs.

U.S.-China Trade War: A Blessing In Disguise for Vietnam

At the same time, Trump’s policies have also created opportunities for Vietnam. The ongoing U.S.-China trade war has led many multinational corporations to seek alternative manufacturing hubs, and Vietnam has emerged as a prime destination. With its strategic location, competitive labor costs and robust industrial infrastructure, Vietnam is well-positioned to attract investments diverted from China. This shift could bolster Vietnam’s industrial real estate and logistics sectors, enabling the country to strengthen its role in global supply chains. However, the potential benefits are tempered by risks of increased scrutiny. Concerns over the use of Chinese-origin materials in Vietnamese exports may lead to stricter trade investigations, complicating Vietnam’s trade relationship with the U.S.

Climate, Energy and the Environment

Energy policy is another area where Trump’s administration is driving significant changes with implications for Vietnam. The push for energy dominance includes boosting domestic production of fossil fuels and expanding exports, particularly liquefied natural gas (LNG). These measures offer Vietnam an opportunity to diversify its energy imports while addressing its trade surplus with the U.S.

Energy cooperation could become a cornerstone of the bilateral relationship, fostering closer economic ties. Simultaneously, Vietnam must also navigate the broader challenges posed by Trump’s fiscal and monetary policies. A strengthened U.S. dollar, resulting from these policies, could make Vietnamese goods more expensive in the U.S. market, potentially reducing their competitiveness and impacting export revenues.

Foreign Direct Investment

vietnam's relations with the united states — *Photo: The Economic Times*

Foreign direct investment (FDI) also plays a critical role in Vietnam’s economic growth, and Trump’s policies have indirect implications in this area. As companies seek to diversify supply chains and reduce reliance on China, Vietnam has become an attractive destination for FDI. U.S. businesses have already invested over $12 billion in Vietnam across sectors such as manufacturing, technology, and services. This trend is likely to continue, further bolstering Vietnam’s industrial growth and economic resilience. However, Vietnam must address regulatory and compliance risks to maintain its position as a reliable trade and investment partner. Transparent practices and adherence to international trade norms will be essential in navigating these complexities.

The economic relationship between Vietnam and the U.S. has deep roots, with trade and investment ties expanding significantly over the years. In 2022, bilateral trade reached $142.1 billion, with the U.S. importing $127.5 billion worth of goods from Vietnam. Key Vietnamese exports included textiles, electronics and furniture, which have consistently driven growth in trade relations. The U.S., on the other hand, exported $11.4 billion worth of goods to Vietnam, including raw cotton, soybeans and high-tech products. Services trade has also seen substantial growth, with U.S. exports to Vietnam totaling $2.4 billion in 2022, driven by sectors like travel, transportation and financial services.

Despite these impressive trade figures, the imposition of tariffs under Trump’s second-term policies could disrupt the balance. Higher costs for Vietnamese goods in the U.S. market may dampen demand, forcing Vietnam to explore new markets or innovate to maintain its competitive edge. Additionally, the U.S. administration’s focus on investigating trade deficits and unfair practices could lead to further challenges. Vietnam’s reliance on Chinese-origin materials in its exports may invite stricter regulatory scrutiny, requiring the country to implement measures to address these concerns proactively.

Conclusion

Looking ahead, the relationship between Vietnam and the U.S. will hinge on how both nations adapt to the evolving trade landscape. Vietnam’s ability to attract FDI, enhance its industrial infrastructure and comply with international trade norms will be crucial in maintaining its position as a key U.S. trade partner. For the U.S., fostering a balanced and mutually beneficial trade relationship with Vietnam aligns with its broader strategic goals in the Asia-Pacific region.

Trump’s second-term policies represent a significant shift in the global trade paradigm, with tariffs as a central tool for achieving economic and political objectives. For Vietnam, these changes present both challenges and opportunities. By leveraging its strengths and addressing potential risks, Vietnam can navigate this complex landscape and continue to thrive as a vital player in global trade.

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