Urgent Economic Policies Launch with New Governance Model

Starting from July 1, Vietnam will adopt a dual-tier local governance system along with new economic regulations targeting crucial areas like taxation, planning, minerals, e-commerce, and agriculture.

These reforms aim to establish a clearer legal environment, enhance business and production activities, and improve the effectiveness of government management.

Beginning on July 1, the two-tier governance framework will be officially launched, streamlining the administrative system and facilitating greater decentralization from provincial authorities to local communities.

This transformation is backed by new laws, decrees, and circulars aimed at securing a legal foundation for business operations and public administration.

The 2024 Value-Added Tax (VAT) Law brings several modifications. Certain items, including fertilizers, agricultural machinery, offshore fishing vessels, and security services, are now liable for 5% or 10% VAT, losing their previous tax-exempt status. In contrast, imported goods used for charitable activities will now be exempt.

VAT for imports will now be calculated on the entire value of the goods, which includes import tax, special consumption tax, and environmental protection tax.

Goods and services offered at promotional rates will benefit from a 0% VAT rate, relieving some pressure on businesses. Additionally, the law necessitates cashless transactions for any VAT credit and refund claims.

According to Decree 117/2025/ND-CP regarding e-commerce tax management, platforms such as Shopee, Lazada, and Tiki will be required to withhold and pay VAT and personal income tax (PIT) for sellers.

The VAT rates will be set at 1% for goods, 5% for services, and 3% for transportation and related services, while PIT rates will vary from 0.5% to 2%, depending on business type.

This initiative aims to enhance transparency and equal opportunities between e-commerce and conventional retail.

The Law on Geology and Minerals introduces more stringent safety protocols for mining operations. High-risk mining sites must engage trained personnel, utilize equipment appropriate for the geological environment, and maintain emergency response teams.

The Urban and Rural Planning Law requires all plans to be made public within 15 days post-approval. It forbids unlawful actions, forgery, or mismanagement of planning funding. Comprehensive regulations will govern zoning objectives, housing distribution, infrastructure, and environmental safeguards.

Decree 151/2025/ND-CP empowers the chairpersons of commune-level People’s Committees to issue land use rights certificates, covering both initial allocations and adjustments. This decree also extends agricultural financial support, permitting unsecured loans and easing evaluation processes, with future assets allowable as collateral.

Circular 86/2024/TT-BTC replaces traditional tax codes with personal identification numbers, streamlining administrative tasks.

According to the National Assembly Resolution 204, VAT will be reduced by 2% for goods and services initially subjected to 10% VAT from July 1, 2025, to December 31, 2026, with exceptions for industries like telecommunications, finance, and real estate.

The introduction of the two-tier governance structure along with the new economic frameworks indicates a pivotal moment for state administration and business practices, significantly impacting the economy, companies, and citizens.

The Urban and Rural Planning Law’s requirement for a 15-day public disclosure will help deter speculation and manipulation of land prices, particularly in major cities such as Ho Chi Minh City and Hanoi. Real estate companies will have to comply with clear planning standards, promoting transparent and sustainable development that benefits buyers and helps stabilize the market, minimizing risks of a real estate bubble.

Decree 117/2025 promotes the growth of e-commerce while counteracting tax evasion by mandating that platforms manage seller taxes, ensuring equitable competition between online and traditional markets.

Platforms like Shopee, Lazada, and Tiki will need to enhance their systems to comply with these regulations, thereby building confidence among consumers. Both logistics and digital marketing sectors stand to gain from this standardization, while sellers will be compelled to declare their incomes more openly. However, smaller individual sellers may initially struggle due to heightened tax responsibilities.

In the agricultural and rural development sectors, Decree 156/2025/ND-CP broadens credit opportunities for businesses and cooperatives, simplifying processes and allowing future assets as collateral, thus promoting high-tech farming and digital changes in rural settings. Provinces in mountainous or remote areas will receive advantageous funding to encourage sustainable rural development.

The Law on Geology and Minerals enhances essential oversight within mining operations, necessitating strict technical criteria. This will require companies to invest in advanced technology and skilled labor, which raises initial costs but leads to safer working conditions and mitigated environmental repercussions. Resource-abundant provinces like Quang Ninh and Thai Nguyen will particularly gain from these stricter regulations.

Switching from tax codes to personal IDs and decentralizing land certificate issuance to local levels will lighten the workload at provincial and district offices, while also speeding up procedures for citizens. Small enterprises and individual entrepreneurs are expected to benefit from swift, clearer tax processes.

Tax authorities and local governing bodies will also be compelled to develop digital infrastructure to maintain synchronized data systems.

Circular 39/2025/TT-BCT enforces a cap on promotional discounts at 50%, addressing concerns related to artificially inflated prices prior to sales promotions. Retailers and e-commerce platforms will need to revise marketing tactics, promoting transparency. This serves to protect consumers and support fair competition, particularly among large retail chains and supermarket enterprises.

These measures reflect a comprehensive movement towards modernizing governance, advancing digital practices, and fostering transparency. The two-tier governance model is set to enable faster and more cohesive policy implementation, benefiting both businesses and the public. Key sectors and major urban areas are poised for considerable transformation.