Guidance on determining investment incentive areas following administrative unit reorganization
On April 9, 2025, the Ministry of Finance issued Official Letter No. 4525/BTC-PC to officially guide state management agencies and investors on how to determine areas eligible for investment incentives in the event of administrative boundary changes due to the reorganization and consolidation of administrative units. The Official Letter clarifies several important points as follows:
Continuation of current incentives for projects already granted investment registration certificates (“IRC”):
The Ministry of Finance affirms the principle that, regardless of administrative boundary changes, investors who have already been granted IRC will continue to enjoy the investment incentives related to the area as recorded in the IRC and the Investment Policy Approval Decision issued prior to the boundary change.
Determination of investment incentive areas for new projects:
For cases where investors register new investment projects after administrative boundaries have been reorganized compared to the list of incentive areas under Decree 31/2021/ND-CP but before the Government issues a new list of investment incentive areas, the Ministry of Finance provides the following guidance for determining investment incentive areas:
The investment incentive status of the newly established administrative unit will be determined based on classification of the majority of the former commune-level administrative units.
For example, if a new commune-level administrative unit is formed by merging several former communes, and the majority of those former communes were classified as areas with difficult socio-economic conditions, then the new commune-level unit will be classified as an area with difficult socio-economic conditions.
In cases where there is an equal number of former communes classified under different levels of investment incentive areas, the newly established administrative unit will be classified according to the area with more difficult socio-economic conditions in order to maximize investor benefits.
For instance, if a new commune-level administrative unit is formed from the merger of former communes, and the number of communes previously classified as areas with difficult socio-economic conditions is equal to the number classified as areas with especially difficult socio-economic conditions, then the newly established unit will be classified as an area with especially difficult socio-economic conditions.
Adjustment of the investment project after the change of administrative boundaries are non-mandatory
The Ministry of Finance emphasizes that investors are not obligated to carry out procedures to amend the IRC or the Investment Policy Approval Decision following administrative boundary changes. Any such amendments to update the new administrative boundaries are entirely at the investor’s discretion.
In short, Official Letter No. 4525/BTC-PC clarifies several important principles regarding the determination of investment incentive areas in the context of Vietnam’s ongoing nationwide administrative unit reorganization. Overall, the Ministry of Finance’s approach is to safeguard investors’ rights, ensuring that investors continue to enjoy the investment incentives previously granted prior to administrative boundary changes, and not requiring investors to amend investment project documents unless they wish to do so.
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