Foreign Direct Investment Landscape, Visa and Work Permit Reforms, and Special Consumption Tax Law in Vietnam

Providing A Blueprint For a New Era Of FDI

Vietnam’s foreign direct investment (FDI) landscape has never looked more dynamic than in the first half of 2025. From the manufacturing heartlands of the Red River Delta to the bustling commercial corridors of Ho Chi Minh City, the country is positioning itself as ASEAN’s most strategic investment gateway.

This is not a matter of mere optimism – it is the culmination of years of targeted policy adjustments, trade network expansion, and market maturation. While global capital flows remain shrouded in economic uncertainty and geopolitical fragmentation, foreign investors in Vietnam are deepening their commitments.

In a recent article for Vietnam Investment Review, Mr. Leif Schneider, Country Head of Luther Vietnam, shared his perspective on the drivers behind Vietnam’s FDI surge in the first half of 2025 and what lies ahead for the second half.

Read more

Contributed by Luther Vietnam Law LL.C.

Vietnam's latest visa and work permit reforms

Vietnam is taking a decisive step to attract top international talent while easing administrative hurdles for businesses. The government has rolled out two major reforms that reshape the visa and work permit landscape for foreigners working and residing in the country.

 

Effective 15 August 2025, Decree 221/2025/ND-CP (“D.221”) introduces fixed-term visa exemptions for high-profile foreigners contributing to socio-economic development. 

 

Effective immediately, Decree 219/2025/ND-CP (“D.219”) streamlines work permit procedures and expands exemptions for foreign professionals in priority sectors.

To ensure your business and foreign employees stay fully compliant under these new regulations, read more insight from Luther Vietnam team.

Read more

Contributed by Luther Vietnam Law LL.C.

Vietnam’s 2025 Special Consumption Tax Law: Public Health and Sustainable Growth

On 14 June 2025, Vietnam’s National Assembly passed the new Special Consumption Tax Law (“SCT Law”), effective 1 January 2026. The law seeks to regulate consumption patterns, protect public health, and promote sustainable socio-economic growth.

The SCT scope has been revised. High-sugar beverages and gliders (excluding aircraft) are now taxable, while only air conditioners from 24,000 to 90,000 BTU remain subject to tax.

For the first time, the law applies both ad valorem and specific taxes to tobacco, aiming to tighten market control and curb smuggling. Cigarettes and cigars will bear a 75% ad valorem rate plus a specific levy that will increase from VND 2,000 per pack in 2027 to VND 10,000 by 2031.

The beverage sector also sees an increased SCT taxation, with non-alcoholic drinks to be taxed at 8% from 2027 and 10% from 2028, while alcohol and beer will see SCT rates rise from 65% in 2018 to 90% in 2031, reflecting stricter control over harmful consumption.

Overall, the SCT reforms’ impact is expected to reduce health risks, support environmental goals, and reduce unnecessary market barriers.

Contributed by RBA WTS Vietnam

Navigating Distribution Agreements in Vietnam: Key Legal Considerations

Navigating distribution agreements in Vietnam requires careful consideration of legal and competition issues. The country is an appealing market for foreign manufacturers, but exclusivity clauses in distribution agreements can raise concerns under the Vietnamese Competition Law.

Typically, distributors buy goods from suppliers to resell, sometimes with conditions attached. While exclusive distribution is allowed, it becomes problematic if it’s deemed anti-competitive, such as preventing market entry or eliminating competitors. In such cases, only the exclusivity clause may be invalidated, but penalties can still apply. The National Competition Commission evaluates anti-competitive effects by examining factors like market share, barriers to entry, and industry-specific impacts.

Notably, exclusivity agreements are generally permissible if both parties each hold less than a 15 percent market share, providing a “safe harbor” for smaller enterprises. However, larger companies must assess competitive risks before implementing exclusivity. Ultimately, exclusive distribution can facilitate growth in Vietnam but requires compliance with the nation’s competition rules. Businesses are advised to review market thresholds and consult legal experts to ensure their distribution agreements are enforceable and commercially viable.

Contributed by Rödl & Partner Vietnam

Subscribe "Law & Taxes Vietnam" on LinkedIn or via email to receive the next releases!