2025 Enterprise Law Amendments: New Rules for Management, Bonds, and Transparency

To enhance the legal framework for business and foster sustainable development, on 17 June 2025, the National Assembly passed the Law amending and supplementing certain articles of the Law on Enterprises (“2025 Amended Law on Enterprises”), effective from 1 July 2025. Notable updates include:

Allowing public employees in scientific organizations to contribute capital and manage enterprises

Previously, the 2020 Law on Enterprises prohibited officials, public servants, and public employees from establishing, contributing capital to, or managing enterprises. To support the commercialization of scientific research under Resolution 193/2025/QH15, the amended law now permits public employees of scientific organizations to contribute capital and participate in the management of enterprises established by those organizations, provided they obtain approval from the head of the respective organization.

Stricter conditions for bond issuance by non-public joint stock companies

Unlike public joint stock companies, which are already subject to strict bond issuance rules under the Law on Securities, non-public joint stock companies faced looser regulation, raising risks for the market and investors. The amended law now requires that, for non-public joint stock companies, total liabilities (including the proposed bonds) must not exceed five times their owner’s equity, based on the latest audited annual financial statements. This limit does not apply to state-owned enterprises or bonds issued for real estate projects.

Introducing regulations on beneficial owners of enterprises

Following the FATF’s 2023 recommendation to enhance financial transparency and strengthen anti-money laundering measures, the amended law introduces the concept of a beneficial owner—an individual who ultimately owns or controls an enterprise, excluding state representatives in state-owned or state-invested entities.

Enterprises are now required to collect, update, and keep records of their beneficial owners at their headquarters or another designated location, and to provide such information upon request by competent authorities.

For enterprises established before 1 July 2025, beneficial owner information must be supplemented when amending business registration or notifying changes, unless voluntarily provided earlier. In practice, detailed procedures for notifying and updating this information are still pending government guidance.

The 2025 Amended Law on Enterprises addresses practical obstacles in corporate governance, supports innovation and growth, and demonstrates Vietnam’s commitment to anti-money laundering and international transparency standards.

 

Business Impacts of the 2025 Provincial Restructuring

Since 1 July 2025, Vietnam has officially operated under a new structure of provincial-level administrative units, following Resolution No. 202/2025/QH15 on the restructuring of provincial-level administrative units and the implementation of a two-tier local government model (provincial level and grassroots level).

According to Resolution 202, Vietnam now comprises 34 provincial-level administrative units, including 28 provinces and 6 centrally governed cities. Of these, 19 provinces and 4 cities were formed through mergers and consolidations, while the remaining 11 provinces and cities remained unchanged.

This restructuring has several important implications for enterprises, particularly concerning administrative procedures and boundaries.

Changes to registered addresses. The adjustment of administrative boundaries directly affects the registered addresses stated in enterprises’ legal documents, such as the Enterprise Registration Certificate, Investment Registration Certificate, company seals, signage, invoices, and product labels. As clarified by the Ministry of Finance in Official Letter No. 4370/BTC-DNTN dated 5 April 2025, enterprises are not required to immediately update their registered address solely because of the State’s boundary changes, and previously issued certificates remain valid. Enterprises may update their address at a convenient time or in conjunction with other business registration changes. However, it is advisable that enterprises proactively update their address soon to ensure consistency across all business documents, seals, and materials, thereby minimizing confusion and avoiding operational disruptions.

Changes in administrative procedure contact points. With the new administrative structure, many provincial-level government agencies such as the Departments of Industry and Trade, Construction, Finance, Agriculture and Environment, and Home Affairs have been reorganized to reflect the new boundaries. As a result, enterprises may now need to interact with newly designated agencies, which may involve changes in contact points, practices, and processing timelines. In this early phase, local authorities are still finalizing their internal arrangements and managing an increased workload, which may lead to delays in administrative procedures.

Recommendations for enterprises. Although the newly formed provincial and city governments officially commenced operations on 1 July 2025, detailed surveys and final demarcations of boundaries in some areas are still underway. This transitional period may pose challenges for enterprises seeking to update their records in line with the new boundaries. Enterprises are encouraged to carefully review how the new administrative map affects their operations, monitor official updates from local authorities, and prepare plans to adjust legal documents, signage, seals, invoices, and product labels to ensure compliance and smooth business operations.

Continuation of 2% VAT Reduction Until the End of 2026

In response to the significant negative impacts of U.S. tariff measures, global conflicts, and political instability on the Vietnamese economy, the National Assembly passed Resolution No. 204/2025/QH15 on 17 June 2025, extending support for businesses through a reduction of value-added tax (“VAT”).

Specifically, the National Assembly approved a 2% reduction in the VAT rate, applicable from 1 July 2025 through 31 December 2026. Unlike previous resolutions that applied the reduction in six-month intervals, this resolution provides for an 18-month reduction period, allowing businesses greater certainty in planning and implementing long-term strategies.

Notably, Resolution No. 204/2025/QH15 also expands the scope of goods and services eligible for the reduced VAT rate of 8%. Starting 1 July 2025, additional categories such as gasoline, coke, information technology products and services, and chemical products will benefit from the lower VAT rate, compared to earlier VAT reduction policies.

At present, the detailed implementation guidelines are still pending, as the Government is expected to issue a Decree to ensure consistent application of the policy. Nonetheless, the Decree is anticipated to adhere to the spirit and objectives of supporting businesses as articulated in Resolution No. 204/2025/QH15.

Groundbreaking Reforms under the Law on Corporate Income Tax 2025

On 14 June 2025, the National Assembly of Vietnam officially passed the amended Law on Corporate Income Tax 2025 (“Law on CIT 2025”), demonstrating the State’s strong commitment to enhancing support for the private sector, particularly small and medium-sized enterprises (“SMEs”), and promoting the conversion of household businesses into enterprises. This is one of the key measures to implement Resolution 68-NQ/TW, reaffirming the private sector as a significant driver of the national economy.

Under the current legal framework, a uniform 20% corporate income tax (CIT) rate is applied to all enterprises, regardless of size or revenue. This, to some extent, has not encouraged the growth of SMEs, as the tax burden does not align with the financial capacity of this type of enterprise. To promote SME development, the Law on CIT 2025 introduces two preferential tax rates: a 15% tax rate applicable to enterprises with total annual revenue not exceeding VND 3 billion, and a 17% tax rate applicable to enterprises with total annual revenue exceeding VND 3 billion but not exceeding VND 50 billion. However, to prevent large enterprises from establishing SME subsidiaries solely to take advantage of these preferential tax rates, the law stipulates that such rates will not apply to subsidiaries or affiliated enterprises if the remaining enterprises within the affiliated group do not simultaneously meet the revenue criteria mentioned above. The implementation of preferential tax rates for SMEs is expected to provide significant financial support to the private sector, enabling SMEs to retain more capital for reinvestment and business expansion.

To facilitate the operations of small enterprises and reduce their compliance burdens concerning accounting and tax obligations, the Law on CIT 2025 also introduces a simplified tax calculation method based on a percentage of revenue. Accordingly, enterprises with total annual revenue not exceeding VND 3 billion are permitted to choose the method of declaring and paying CIT based on a fixed percentage of their revenue. The applicable rates vary depending on business activities: 0.3% for the distribution and supply of goods; 1.2% for manufacturing, transportation, services associated with goods, and construction activities where the contractor supplies materials; 1.5% for services and construction activities where the contractor does not supply materials; 4% for property leasing, insurance agency, lottery agency, and multi-level marketing agency activities; and 0.5% for other activities. This policy is anticipated to reduce compliance burdens and accounting costs while aligning with the small scale and limited management capacity of these enterprises.

Another notable point of the Law on CIT 2025 is the corporate income tax exemption for enterprises formed through the conversion of household businesses, aiming to encourage household businesses to convert into enterprises in line with the Government’s policies. Specifically, enterprises established through the conversion of household businesses, with total annual revenue not exceeding VND 50 billion, will be exempt from CIT for two consecutive years starting from the first year they generate taxable income. To ensure this tax exemption policy is applied to the appropriate beneficiaries, the law requires that household businesses must have operated continuously for at least 12 months before converting into an enterprise. Additionally, this exemption will not apply if the newly converted enterprise has its legal representative, largest capital-contributing member, or general partner simultaneously holding one of these positions in another operating enterprise or in another enterprise that was dissolved within 12 months prior to the registration date for the conversion.

Overall, the Law on CIT 2025 brings groundbreaking reforms, marking a significant step in improving the business environment, enhancing competitiveness, and promoting sustainable development for the private sector in Vietnam. The new policies will provide substantial support to SMEs, particularly household businesses transitioning into formal enterprises, thereby expanding the formal economy and contributing to long-term economic growth.

New Rules Every Household Business

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E-Invoices, Social Insurance, and New Rules Every Household Business Must Know

Starting from mid-2025 and especially from 2026, household businesses in Vietnam will face a series of major regulatory changes in tax and social insurance obligations. These reforms mark the end of the long-standing fixed tax method and the beginning of a more transparent, declaration-based system aligned with actual revenue. To ensure compliance and avoid penalties, household businesses must understand and prepare for these changes in a timely manner.

Mandatory e-invoices and electronic cash registers from 1 June 2025

From 1 June 2025, household businesses with annual revenue of at least VND 1 billion, operating in sectors such as food and beverage, hotels, supermarkets, retail, passenger transport, and personal services, must use e-invoices generated by electronic cash registers directly connected to the tax authority’s system. They will also be required to declare taxes monthly or quarterly, maintain simplified accounting books, issue e-invoices in compliance with Decree 123/2020/ND-CP, and self-calculate and pay VAT, personal income tax (PIT), and business license fees where applicable. This reform replaces subjective fixed-tax assessments with a fairer, more transparent system based on actual revenue.

Abolition of the fixed tax method from 1 January 2026

Effective 1 January 2026, the fixed tax method will be abolished under Resolution 198/2025/QH15 and Decree 70/2025/ND-CP. All household businesses must comply with general tax management requirements, including tax registration, declaration, payment, invoicing, and periodic reporting as prescribed by law.

Higher VAT and PIT exemption threshold from 1 January 2026

Under the new Law on VAT 2024, the threshold for VAT and PIT exemption will double from VND 100 million to VND 200 million per year. Although businesses earning no more than VND 200 million annually will be exempt from VAT and PIT, they remain obligated to register, declare, maintain accounting books, and issue e-invoices in accordance with the Law on Tax Administration 2019.

Mandatory social insurance for owners from 1 July 2025

For the first time, household business owners directly involved in regular business activities will be required to participate in mandatory social insurance, alongside their employees (if any). This requirement, effective 1 July 2025 under the Law on Social Insurance 2024, underscores the State’s intent to extend social security coverage to all economically active individuals.

Key compliance actions to prepare

To adapt to this new regulatory environment, household businesses should promptly review and update their tax registration details with local tax authorities, including adjustments to their registered business codes if actual operations differ. They must also ensure they have the proper equipment and software for issuing compliant e-invoices connected to the tax authority’s system. Even under the simplified accounting regime, they must maintain complete records of revenues and expenses to support tax declarations and facilitate inspections. Businesses should declare taxes accurately and on time, avoiding underreporting or delays, which could incur penalties.

For household businesses with large, stable operations and regular employment, it may be worth considering a transition to a formal enterprise structure under the Law on Enterprises. This change could offer additional benefits, including improved access to credit, stronger legal protections, and clearer obligations.

In summary, from mid-2025 — and particularly from 2026 — household businesses must be ready to move away from the outdated fixed tax method toward a modern, transparent tax and social insurance regime. Adopting e-invoicing systems, maintaining proper records, fulfilling declaration and reporting obligations, and planning for social insurance contributions are all critical steps to ensure smooth and compliant operations during this transition.