Official Letter 4525/BTC-PC: Guidance on Determining Investment Incentives and Procedures for Adjusting Investment Projects in Cases of Administrative Boundary Changes

On 09th April 2025 an Official Letter No. 4525/BTC-PC (“Official Letter 4525”) has been issued by the Ministry of Finance providing crucial guidance from the Ministry of Finance on how to handle investment incentives and project adjustments during a period of significant administrative restructuring in Vietnam.

It aims to ensure clarity and consistency in applying investment regulations, thereby minimizing disruption to investment activities and maintaining a stable investment environment. The emphasis on adhering to existing approvals and providing specific rules for new administrative units demonstrates an effort to balance administrative changes with the need to protect investor interests and promote economic development.

Key takeaways:

• Determination of Investment Incentive Areas (1.1 & 1.2):

  • For Existing Investment Projects (1.1):

    • The Official Letter 4525 reaffirms the principles of ensuring investment incentives as stipulated in Article 13 of the Law on Investment and Article 4 of Decree No. 31/2021/NĐ-CP.  

    • Investment incentives are those specified in various investment-related documents, including investment licenses, investment certificates, and investment policy approval decisions.  

    • The location-based nature of investment incentives, as defined in the investment approval documents, is emphasized.  

    • Consequently, if a newly established administrative unit results from the rearrangement or adjustment of administrative boundaries, the investment project continues to enjoy the location-based investment incentives previously granted.

  • For New Investment Projects or Adjustments to Project Locations (1.2):

    • The determination of investment incentive areas for new projects or location adjustments in newly established administrative units is guided by Clause 1, Article 21 of Decree No. 31/2021/NĐ-CP.  

    • Specific rules are provided for scenarios where the new administrative unit comprises communes from areas with differing socio-economic conditions:

      • The new unit inherits the investment incentive status of the majority of its constituent communes.  

      • If there's an equal number of communes from "especially disadvantaged" and "disadvantaged" areas, the new unit is classified as "especially disadvantaged."  

      • If there's an equal number of communes from "disadvantaged" areas and "non-incentive" areas, the new unit is classified as "disadvantaged."  

      • Similar rules apply when comparing "especially disadvantaged" and "non-incentive" areas, with the new unit inheriting the "especially disadvantaged" status.

• Adjustment of Investment Projects (2):

  • The Law on Investment and Decree No. 31/2021/NĐ-CP do not explicitly address the adjustment of investment projects due to administrative boundary changes.  

  • However, the Official Letter 4525  reiterates that existing investment projects with approved investment policies or investment registration certificates can continue to operate according to those existing approvals, based on the principles of Article 13 of the Law on Investment and Article 4 of Decree No. 31/2021/NĐ-CP.  

  • If investors wish to adjust their projects, they should follow the general adjustment procedures outlined in Clause 3, Article 41 of the Law on Investment and Section 4, Chapter IV of Decree No. 31/2021/NĐ-CP (for projects with approved investment policies).  

  • For projects implemented under Investment Registration Certificates, adjustments are governed by Article 39 and Clause 2, Article 41 of the Law on Investment, and Article 47 of Decree No. 31/2021/NĐ-CP.  

Remarks:

The Official Letter 4525 instructs relevant agencies (Ministries, ministerial-level agencies, and agencies under the Government, as well as People's Committees of provinces and centrally-run cities) to study and implement the guidance appropriately.  

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