VIETNAM Law and Practice Contributed by: Minh Duong, Phong Nguyen and Justin Gisz, Asia Counsel Vietnam Law Company Limited
ciated with its investment project. The change of own - ership may require an amendment to the investment registration certificate to reflect the new ownership structure. 7.2 Criteria for National Security Review Vietnam’s foreign investment review regime considers Foreign investment in Vietnam is governed by both international treaties (such as Vietnam’s WTO commit - ments, the EU-Vietnam Free Trade Agreement and the CPTPP) and domestic regulations. These restrictions typically take the form of: • foreign ownership limitations – certain industries have restrictions on the percentage of ownership allowed by foreign investors; • presence limitations – in some cases, foreign investors may be required to partner with a local company or invest through a specific type of entity (eg, joint venture); and several key criteria. Foreign Restrictions • sub-licence requirements – additional approvals or licences may be needed for specific activities within an investment, such as opening additional outlets. Planning and Incentives Guided by socio-economic needs, the Vietnamese government periodically updates lists of: • conditional business lines – these require specific criteria (eg, licensing) to be met before operation can commence; • banned sectors – certain industries are entirely closed to foreign investment; and • investment incentives – specific businesses and locations may be offered benefits to attract invest - ment. The Law on Investment 2020 currently identifies 234 conditional business lines and 10 banned sectors. National Security Investments involving land use often undergo a nation - al security review to ensure they do not pose any
threats to Vietnam’s defence or security. This review is a crucial factor in determining project approval. 7.3 Remedies and Commitments Investor Commitments and Conditions The Investment Licence details the investor’s commit - ments to the authorities, typically including: • capital contribution – the total investment amount and schedule for injecting funds; • project objectives – the intended purpose and out - come of the investment; and • an implementation timeline – the planned time - frame for completing the project. These commitments are binding, and the investor must adhere to all terms and conditions stated in the Licence. If specific conditions precede project initia - tion, the investor must fulfil them first. Investment Incentives While applying for the licence, investors can also request access to investment incentives. However, these benefits are only available for new or expanded projects, excluding FDI through capital contribution or share acquisition. Potential incentives include: • tax breaks – preferential tax rates or temporary corporate income tax holidays; • import duty exemptions – eliminating or reducing import taxes on equipment and materials; • land fee and tax relief – lower rates or complete exemption from land-use fees and taxes; and • increased tax deductions – eligibility for additional deductions on specific expenses. To qualify for these incentives, the investment must meet at least one of the following criteria: • location – it must be situated in disadvantaged areas, industrial parks, export processing zones, hi-tech parks or special economic zones; • industry – it must be focused on prioritised areas like hi-tech activities, greenfield projects, educa - tion, healthcare or pharmaceuticals; and
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