Legal Framework for Technology Investment Funds in Vietnam: Key Regulations for International Investors

The article analyzes the legal framework for technology investment funds in Vietnam, including the Investment Law, Securities Law, and regulations on foreign ownership and tax incentives. Despite its attractiveness, international investors face challenges such as legal risks and complex procedures. To maximize opportunities, they should study regulations, collaborate with legal advisors, and choose the appropriate investment model.

Introduction

Vietnam is emerging as an attractive destination for technology investment funds, driven by strong economic growth and a rapidly evolving startup ecosystem. However, international investors must understand the legal framework to ensure compliance and maximize investment opportunities.

Vietnam’s Legal Landscape for Technology Investment Funds

· Investment Law 2020: Regulates conditional investment sectors and licensing mechanisms for foreign investment funds.

· Decree 31/2021/ND-CP: Provides guidance on the Investment Law, including foreign ownership restrictions and registration processes.

· Securities Law 2019: Governs investment fund activities, including venture capital and private equity funds.

· High Technology Law 2008: Encourages investment in high-tech industries with tax incentives and government support.

Key Regulations Affecting Foreign Investors

· Foreign ownership restrictions: Certain technology sectors impose limits on foreign ownership, particularly in cybersecurity and data-related industries.

· Fund registration requirements: Foreign investment funds must obtain approval from the Ministry of Planning and Investment or the State Securities Commission.

· Profit repatriation: International investors can transfer profits abroad but must comply with tax and foreign exchange regulations.

· Tax incentives: Some high-tech investment projects may benefit from corporate income tax exemptions of up to 15 years.

Challenges and Compliance Considerations

· Evolving legal landscape: Vietnam continuously updates its investment policies to align with global economic trends.

· Regulatory uncertainties: Ambiguities in certain laws may create compliance challenges for foreign investors.

· Complex administrative procedures: Obtaining investment licenses may be time-consuming and require extensive documentation.

Recommendations for Investors

· Thorough legal research: Investors should conduct in-depth analysis of regulatory requirements before entering the market.

· Engage local legal advisors: Partnering with law firms specializing in foreign investment ensures compliance and smooth transactions.

· Choose the right investment model: Investors should evaluate whether to establish a new fund or invest through existing funds in Vietnam.

Conclusion

Vietnam is increasingly welcoming technology investment funds, but investors must navigate a complex regulatory environment. Understanding the key legal requirements and preparing accordingly will help international investors optimize returns and mitigate risks when entering this high-potential market.

Written: Nguyen Tran Ngoc Thach - Legal Senior Assistant

Date: 14/02/2025