Shifting Focus to Investment Quality
These tax adjustments are part of a broader strategic pivot within Vietnam’s economic governance. Mai Xuân Thanh, director general of the Department of Taxation, noted that after nearly four decades of opening the economy, the foreign-invested sector has become a cornerstone of growth, exports, and technology transfer. Yet, the focus is no longer solely on the volume of capital attracted; it has shifted toward investment quality, value creation, and sustainable development.
At a recent seminar in Hanoi, tax authorities and foreign-invested enterprises discussed these evolving priorities. Thanh emphasized that for long-term investors, taxation is not merely an expense but a component of a broader relationship requiring clear policies, predictable obligations, and consistent implementation. He highlighted the increasing complexity of cross-border operations, citing issues related to related-party transactions, double taxation agreements, and advance pricing agreements. To address these, the tax administration is moving toward greater use of data analytics, risk management, and technology to ensure transparency.
Businesses remain vigilant about these changes. Nguyễn Thanh Hưng of Scavi JSC noted that new regulations governing related-party transactions, which took effect on 1 July, have raised concerns. Companies are unsure whether their internal data sources and analytical methods for assessing these transactions will align with those used by tax authorities, creating potential compliance risks.
Real Estate and Speculation Controls
While the rental tax threshold has been raised to support individual landlords, the government is simultaneously planning policies to tackle speculation in the broader real estate market. The Housing Law, No. 27/2023/QH15, which came into effect on 1 August 2024, replaced the 2014 law and provides a legal framework that explicitly allows foreign citizens and investors to purchase property in Vietnam. This legal clarity is intended to stabilize the market, though the specific mechanisms to curb speculative buying are being refined alongside the new tax measures.
Accelerating the EV Transition
Beyond real estate and corporate taxes, Vietnam is using fiscal policy to reshape its transportation sector. The government is considering extending preferential special consumption tax rates on battery electric vehicles (BEVs) until the end of 2030. This move aims to reduce dependence on imported fossil fuels, a priority heightened by recent volatility in global fuel prices driven by the Middle East crisis.
Currently, special consumption tax rates for BEVs with up to 24 seats range between 1% and 4%. Without extension, these rates are scheduled to increase significantly to between 4% and 11% from February 2027. In a draft resolution, the Ministry of Finance proposed keeping the rate for passenger cars with up to nine seats at 3% until 2030, before it rises to 11% in 2031. For larger vehicles, rates would remain at 2% (for 10-16 seats) and 1% (for 16-24 seats) during this period, rising to 7% and 4% respectively in 2031. This stands in sharp contrast to the 10% to 150% tax rate applied to internal combustion engine vehicles.
The policy leverages Vietnam’s position as the largest BEV market in Southeast Asia. Domestic manufacturer VinFast Auto delivered more than 175,000 units to domestic customers last year, demonstrating robust consumer demand. By maintaining low tax barriers, the government seeks to accelerate the transition to zero-emission vehicles, potentially reshaping the automotive industry and reducing the nation’s energy import bill in the near term.
As these policies take hold, the outlook for foreign investors and property owners hinges on the consistency of implementation. For individuals like Marcus, the higher exemption threshold offers relief, while for corporate investors, the clarity of related-party transaction rules will determine the long-term viability of their operations in the country.
