Special Policies Applicable to the International Financial Centre (Part 2)

POLICIES	KEY REGULATIONS		NOTES/ASSESSMENT
Tax Policy	Corporate Income Tax (CIT)	- Projects in prioritized sectors:  CIT rate: 10% - 30 years Tax exemption: up to 4 years – 50% reduction for up to 9 subsequent years - Projects not in prioritized sectors: CIT rate: 15% - 15 years Tax exemption: up to 2 years – 50% reduction for up to 4 subsequent years	-  CIT incentives at the IFC apply special preferential tax rates (10% or 15%), which are lower than the rates under the 2025 Corporate Income Tax Law (15%–20% based on revenue). These incentives apply exclusively to income generated from new investment projects within the IFC and are accompanied by clearly defined tax exemption and reduction periods. - Vietnam’s current Personal Income Tax (PIT) rate can reach 35% (applicable to senior executives), making tax costs a national competitiveness bottleneck. With PIT exemptions at the IFC, this policy goes beyond tax incentives and becomes a tool to attract global talent, enabling Vietnam to compete with Singapore – Hong Kong – Dubai. →  A “special tax zone” with the most generous incentives in Vietnam’s history.
	Personal Income Tax (PIT)	- 100% PIT exemption until the end of 2030 on employment income (salary and wages) earned from work performed at the IFC (excluding income from other sources). - PIT exemption until the end of 2030 for income from the transfer of shares, capital contributions, or capital contribution rights to IFC members. (Tax exemption does not apply to transfers of shares in public/listed companies; transfers involving the sale of entire enterprises associated with real estate are subject to real estate transfer tax.). Eligible beneficiaries: Managers, experts, scientists, and highly qualified professionals working at the IFC, regardless of nationality. The Chairperson of the IFC Executive Authority is authorized to certify and select eligible beneficiaries in accordance with issued criteria.
Foreign Exchange Policy	General Principles	1. Transparency of capital flows: IFC members, foreign investors, and transaction participants involved in investment, borrowing, lending, or capital transfers must clearly state the purpose of each transaction. 2. Verification and control obligations of member banks: IFC member banks must verify and retain transaction documentation consistent with actual transactions and bear full responsibility for any misuse of funds. 3. Decentralized foreign exchange management at the IFC: The IFC Executive Authority issues regulations, guidance, and oversees activities including foreign borrowing, overseas lending, outbound investment, and foreign-currency bond trading.	- Mandatory declaration of transaction purposes applies to all foreign exchange transactions within the IFC. - Transition from ex-ante control by the State Bank of Vietnam (SBV) to self-control by member banks with ex-post state supervision, enabling extremely fast banking transactions. - For the first time, foreign exchange management authority is delegated from the SBV to the IFC Executive Authority. No prior approval or registration is required—only declaration. ----- One single capital account for the entire capital ecosystem within the IFC, unlike outside the IFC where each investment requires a separate account. No restriction on opening multiple foreign-currency accounts.  ----- Free use of foreign currencies for payments within the IFC, making it Vietnam’s only legally recognized “dollarized zone”. This creates a controlled experimental zone for monetary liberalization, fully contained within the IFC. ----- - The IFC will gradually transform Vietnam into a regional capital transit hub, attracting international banks, funds, and treasury centers. - The IFC helps the State increase foreign exchange reserves, absorb USD inflows, and function as a foreign-currency banking hub for domestic enterprises. ------ - Segregation of the IFC from domestic Vietnam in foreign exchange terms: IFC enterprises investing into Vietnam are treated as FDI enterprises, ensuring clear separation of USD flows and avoiding distortion of monetary policy. IFC enterprises investing abroad operate as offshore companies. - Advantages for international investors who are IFC members: Extremely fast capital inflows and withdrawals No caps or quotas Legal framework nearly equivalent to domestic operations - Establishment of a global investment market within Vietnam’s territory, enabling access to international bond trading within the IFC. → Vietnam will gradually shift from a capital-receiving country to a capital transit center.
	Opening and Use of Foreign Currency Accounts	- IFC enterprises must open one foreign-currency capital account at one IFC member bank for all cross-border and domestic capital transactions, including: foreign borrowing, overseas lending, lending into Vietnam, outbound investment, and investment into the rest of Vietnam. - IFC enterprises may open multiple foreign-currency accounts at multiple member banks for other business transactions. - IFC enterprises may also open foreign-currency accounts at banks outside the IFC.
	Use of Foreign Currency	- Member banks may quote, advertise, price, value, settle, and transfer funds in foreign currencies for all IFC financial services. - Member enterprises may transact in foreign currencies with other IFC members and with individuals and organizations outside Vietnam’s territory. →  Internal IFC payments must be processed through member banks.
	Borrowing and Lending Activities	- Members may borrow foreign currency from any foreign individual or organization without registering the loan with the SBV—only declaration and reporting to the IFC Executive Authority are required. - Members with 100% foreign ownership may freely lend overseas by declaration only; other members must meet overseas lending conditions. - Domestic lending: + Ordinary enterprises: may borrow medium- and long-term loans from the IFC + Banks: may borrow both short- and long-term loans
	Investment Activities	1. Inbound investment into the IFC:: - All capital inflows, profits, and divestments by foreign investors must pass through one IFC capital account. - IFC enterprises are treated as foreign investors when investing into the rest of Vietnam. 2. Outbound investment from the IFC: - Members with 100% foreign ownership may invest abroad freely as offshore companies (no registration required—declaration only). Two-way capital flows via the IFC capital account. - Members not 100% foreign-owned must register foreign exchange transactions and obtain approval for the investment form. 3. Trading of international bonds by IFC member banks: - Foreign banks: unrestricted trading - Vietnamese banks: capped at 7% of own capital, subject to international credit rating requirements
Banking Activities	1. Licensing: - Foreign banks and domestic commercial banks must establish one single presence within the IFC (100% foreign-owned banks are permitted). - IFC member banks are licensed by the IFC Executive Authority, not the SBV. The operating license also serves as the IFC membership certificate. Licensing time: 120 days (vs. 180 days under SBV licensing outside the IFC). - License term: up to 99 years. - Licensing conditions and procedures are governed by IFC-specific regulations, not the Law on Credit Institutions. - Member banks may not expand branch networks or relocate headquarters outside the IFC. 2. Banking Operations: - Banks must commence operations within 12 months of licensing or the license becomes invalid. Charter capital must be fully deposited into a non-interest-bearing escrow account at the SBV at least 30 days prior to commencement. - Banks may conduct all banking and related services specified in their licenses. - Governance and management are subject to IFC-specific rules, separate from domestic banking law. - Internal control systems and technology suitable for international operations are mandatory. - AML/CFT compliance must meet international standards; banks are responsible for establishing their own procedures.		- Licenses of up to 99 years create long-term legal certainty for major financial institutions. → Creates a legally secure environment for large financial institutions to establish long-term headquarters. Domestic banks do not have this framework, as their operating terms are typically conditional upon business performance under continuous regulatory supervision. - Licensing by the IFC Executive Authority shortens timelines and increases flexibility, while the SBV retains macro-level supervision. → SBV continues to oversee overall monetary and regulatory policy but does not directly grant licenses.  - Separation of IFC and domestic banking markets enables freer foreign exchange and capital flow policies. → This arrangement allows foreign exchange policy and capital flows to operate more freely. - Allowing 100% foreign-owned banks removes typical foreign ownership caps (commonly 30%), lowering barriers for international capital and enhancing competition, governance standards, products, and technology in Vietnam’s financial system. → It reduces legal barriers to international capital, increases competition, and drives improvements in governance standards, financial products, and technology across the domestic financial system.
Securities Business Activities	1. Licensing: - Domestic or foreign securities firms may establish a single-member limited liability company as an IFC member to conduct securities business exclusively within the IFC. - The IFC Executive Authority acts as the licensing authority, replacing the State Securities Commission. 2. Licensing Conditions: (i) Vietnamese securities firms:  Equity ≥ VND 5,000 billion Capital adequacy ratio ≥ 300% for 3 consecutive months Profitable and not under special supervision for 2 years IFC legal entity capital ≥ VND 800 billion (ii)  Foreign securities firms: Equity ≥ USD 200 million Supervised by an IOSCO member authority (mandatory) Profitable and not under supervision for 2 years IFC legal entity capital ≥ VND 800 billion 3. Securities Operations: - Must commence operations within 12 months of licensing - IFC serves only foreign investors and IFC-based organizations; services to individuals or entities outside the IFC are prohibited. - Separate IFC accounting regime applies; no consolidation with Vietnamese parent companies; not included in parent company financial safety ratios. - M&A allowed only for qualified IFC investors (no retail takeovers). - Dissolution, liquidation, and bankruptcy are supervised by state authorities; clients are protected ahead of company creditors.		- The IFC operates under a fully separate licensing and regulatory regime from Vietnam’s domestic securities market. - Complete legal separation between IFC entities and parent companies enables a closed international financial ecosystem.  - High entry standards ensure participation by regional or global institutions, not small or experimental firms. - Exclusion from the domestic market prevents conflicts, money laundering, and currency manipulation. - No financial consolidation facilitates risk containment. → The IFC is designed not to create another stock market, but to establish an international financial jurisdiction within Vietnam, operating under global standards.
Land Policy	1. Land Authority: - Investment projects within the IFC in prioritized sectors or of large scale may be allocated or leased land for up to 70 years; other projects up to 50 years (extensions considered upon expiry). - Chairpersons of the People’s Committees of Ho Chi Minh City and Da Nang are authorized to decide on land allocation, leasing, land-use conversion, extension, and adjustment for IFC members. 2. Procedures and Role of the IFC Executive Authority: - IFC members submit land dossiers to the IFC Executive Authority in HCMC or Da Nang. - The IFC Executive Authority acts on behalf of members to complete land procedures and returns decisions and certificates. - Municipal land authorities issue land-use right certificates and ownership certificates for assets attached to land.		- Unlike Vietnam’s conventional land regime requiring multiple ministerial approvals, IFC land decisions are decentralized to city authorities, improving speed and transparency. - IFC acts as a single focal point for land procedures, significantly reducing administrative burden. → This significantly shortens project implementation timelines—critical for large international financial projects.
Labor, Employment, and Social Security	1. Free Recruitment Employers at the IFC may freely recruit Vietnamese and foreign workers based on labor needs, with no cap on foreign labor ratios, provided national security is not affected. 2. Work Permits and Exemption Certificates: - The IFC Executive Authority in HCMC and Da Nang has authority to issue, renew, reissue, and revoke work permits and exemption certificates. - Processing time: within 3 working days upon receipt of complete dossiers. - Certain prioritized foreign workers may be exempt from work permit procedures and only need to notify the IFC Executive Authority.  - Maximum validity of work permits or exemption certificates: 10 years. 3. Social Insurance: - Vietnamese and foreign workers at the IFC participate in mandatory social insurance. - Foreign workers may suspend participation after 12 months or receive lump-sum benefits in eligible cases. - Foreign workers already insured abroad may be partially exempt from mandatory contributions if covered by applicable international treaties.		- No cap on foreign labor and fast processing (3 days) enhances global talent attraction. - Long work permit validity (up to 10 years) is unprecedented (current law: max 2 years). - Partial exemption from social insurance contributions reduces costs for foreign workers. → These policies create a flexible, open, and internationally aligned labor environment to attract high-quality talent.
Entry, Exit, and Residence Policy	1. Eligible Subjects: a) Foreign key investors, experts, managers, and highly skilled workers employed by IFC-based organizations and their accompanying family members; b) Foreign key investors, experts, scientists, exceptional talents, and senior managers working long-term at IFC-based organizations. 2. Policies: - Eligible foreigners are granted UĐ1 visas or temporary residence cards valid for up to 10 years; immediate family members receive UĐ2 cards aligned with UĐ1 validity. Processing time: within 3 working days. - Permanent residence may be considered after 3 consecutive years of work at an IFC-based organization. Processing time: 2 months, extendable by up to 1 month for verification.		- Long-term visas/residence (up to 10 years) far exceed Vietnam’s general framework (1–5 years). - IFC applies a one-stop mechanism with superior speed and clarity. - Clear and favorable criteria for permanent residence compared to general foreign resident regulations.
Dispute Resolution	Dispute Resolution Bodies at the IFC: 1. Specialized Court (to be governed by a dedicated law); - Part of Vietnam’s People’s Court system, specializing in IFC disputes. - Structure: First-instance court and appellate court. - Jurisdiction includes investment, business, and financial disputes arising at the IFC, including: Disputes among IFC members; Disputes between IFC members and non-members; Recognition and enforcement of foreign arbitral awards and IFC arbitral decisions. - Judges may be Vietnamese or foreign judges, a major departure from traditional domestic practice. - Foreign law may be applied in certain cases in accordance with international standards. 2. International Arbitration Centre of the IFC (There will be a Decree governing the International Arbitration Center under the IFC.). - Established with at least 5 qualified founding members. - Licensed by the Minister of Justice; independent legal entity with separate seal and accounts. - Operates under the Law on Commercial Arbitration, Resolution 222/2025/QH15, and Decree 328/2025/NĐ-CP. - May apply foreign law in dispute resolution. - Parties may waive the right to request court annulment of arbitral awards; in such cases, courts will not entertain annulment requests.		- Specialized Court: The Specialized Court at the IFC is not merely a new judicial mechanism but a strategic legal pillar that enables Vietnam to: Create a transparent, secure, and attractive legal environment for international investment; Reduce reliance on foreign courts; Enhance investor confidence in the domestic judicial system. - Establishment of an Independent Arbitration Institution within the IFC: An independent arbitration institution will be established directly within the IFC. This center is not part of the state court system, but an independent international arbitration institution, authorized to apply foreign law and to allow parties to contractually exclude traditional judicial review. + The International Arbitration Center of the IFC (IAC-IFC) will handle disputes related to investment, trade, financial services, and business activities conducted within the IFC, thereby creating a favorable legal environment aligned with international standards. + This mechanism provides a fast and efficient dispute resolution framework, consistent with international financial models, and reduces dependence on traditional court systems.