Vietnam's Digital Technology Industry Law: A Strategic Move to Digital Economy?

Vietnam has enacted the Law on Digital Technology Industry, passed on June 14, 2025, and set to take effect on January 1, 2026. The Digital Technology Law establishes a legal framework designed to accelerate Vietnam's digital transformation. Central to this framework is the "Make in Vietnam" initiative, which targets the development of 150,000 digital technology enterprises by 2035.

The legislation introduces a multi-tiered support system across the digital value chain. Domestic startups receive up to 50 percent subsidies for technology acquisition and prototype development. Small and medium-sized enterprises access support through public procurement preferences and infrastructure investment assistance.

Foreign-invested enterprises are positioned within this framework through technology transfer mandates and collaborative partnerships with domestic firms. These entities receive long-term corporate income tax reductions and investment incentives, facilitating integration into global supply chains while promoting technology localization.

Fiscal Architecture and Investment Incentives

The law introduces a fiscal framework that prioritizes high-tech and innovation-driven projects through government-backed funding mechanisms. This includes tax breaks and import duty exemptions for essential equipment and research and development activities.

The fiscal incentive structure operates across multiple dimensions:

• Corporate Tax Optimization: Foreign-invested enterprises meeting technology transfer requirements receive multi-year corporate income tax reductions.

• Technology Acquisition Support: Startups and SMEs can access reimbursement for up to 50 percent of advanced technology acquisition costs and prototype development expenses.

• Import Duty Exemptions: High-tech equipment used in production or research and development activities may qualify for import duty exemptions.

• Infrastructure Investment Support: Government support for infrastructure investment costs, coupled with prioritized procurement for qualified SMEs.

• Grant Funding: State-backed funds provide financial support for approved projects focused on technological innovation and digital transformation.

Workforce Development and Global Talent Attraction

The legislation addresses workforce development as a component of digital transformation. Vietnamese digital technology professionals receive a five-year personal income tax exemption during their initial employment period.

Foreign expertise is encouraged through streamlined visa processes. Foreign experts receive five-year visas and exemptions from work permit requirements, reducing administrative barriers.

The government commits to digital education funding, including curriculum development, certification programs, and upskilling initiatives. Companies investing in digital workforce training can access financial support and tax relief.

Risk-Based Approach to Artificial Intelligence Regulation

Vietnam's Digital Technology Law adopts a risk-based regulatory framework for artificial intelligence applications. AI systems are categorized into high-risk and non-high-risk classifications, with high-risk applications subject to compliance obligations, technical standards, and regulatory oversight.

The legislation mandates clear labeling of AI-powered products to ensure accountability and transparency, while establishing prohibited uses and ethical standards. Government funding for AI research and data center infrastructure supports sector growth while maintaining regulatory oversight.

However, further guidance from Vietnamese government authorities is needed to evaluate the practical effects and detailed implications of these AI regulations on business compliance requirements.

Digital Asset Regulation and Financial Innovation

The law introduces a legal framework for digital assets, including virtual assets and cryptocurrencies. The legislation distinguishes between different asset categories while mandating regulation by state agencies to ensure cybersecurity, prevent financial crimes, and combat illicit activities.

A regulatory sandbox mechanism allows select businesses to test new virtual asset technologies under state-approved conditions. Participants receive temporary exemptions from certain legal obligations, enabling innovation testing. This approach facilitates the integration of blockchain, decentralized finance, and fintech solutions into Vietnam's formal economy.

The framework includes rules for ownership, financial transparency, and consumer protection, with oversight to prevent financial crimes and ensure market integrity. The practical implementation of these digital asset regulations requires additional guidance from competent authorities to clarify specific compliance obligations for businesses operating in this sector.

Global Market Integration and Strategic Positioning

The law mandates the establishment of Vietnamese digital technology representative offices in major global markets, coordinating with international cooperation programs to assist domestic firms in achieving multinational competitiveness.

Digital technology zones, operating similarly to special economic zones, will be developed with favorable regulatory and fiscal policies to attract investment. These zones focus on semiconductor production, software development, and eco-friendly technology.

Strategic Implications for Global Investment

Vietnam's Digital Technology Law represents a national strategy to establish the country as a digital technology hub. The integration of workforce incentives, technology transfer requirements, cryptocurrency regulation, AI standards, and startup support demonstrates a structured approach to digital governance.

This framework creates opportunities for technology investment, digital manufacturing, and innovation-driven business development. The law's emphasis on global integration, combined with domestic capacity building, offers a value proposition for international investors seeking to establish operations in the region.

The legislation's effectiveness will depend on implementation and the government's ability to maintain regulatory flexibility while ensuring compliance with international standards. Critical to successful implementation will be the issuance of detailed guidance and implementing regulations by Vietnamese government authorities. Without such guidance, businesses face uncertainty regarding specific compliance requirements and practical operational implications across the various regulated areas.

For global businesses, Vietnam's approach to digital technology regulation presents both opportunities and challenges that require careful strategic consideration and local expertise to navigate successfully, particularly given the need for clarification on implementation details.

Terix Institute specializes in analyzing emerging policy frameworks and their implications for global business strategy. Our experts provide guidance on navigating complex regulatory environments and capitalizing on emerging opportunities in dynamic markets.