Following Part 1, which discussed the legal matters that individuals and organizations need to pay attention to when establishing a technology company in Vietnam in order to enjoy tax incentives, in Part 2 below, we will provide you with all the information related to the timeline and the steps for you to start your business operations in Vietnam. At the same time, we will guide you on how to lease an office to set up your head office, so as to avoid potential risks in the leasing process.
1. Operational term of Investment Projects
Article 44 of the Law on Investment 2020 stipulates the operational term of investment projects as follows:
The operational term of investment projects in economic zones shall not exceed 70 years.
The operational term of investment projects outside economic zones shall not exceed 50 years. For projects located in areas with difficult or extremely difficult socio-economic conditions; projects with large investment capital but slow capital recovery; projects involving the construction and business of infrastructure in high-tech parks, high-technology industrial zones, concentrated digital technology zones; and projects eligible for special investment incentives under point a, clause 2, Article 20 of this Law, the operational term may be extended but shall not exceed 70 years. For projects where investors are allocated or leased land by the State but the land handover is delayed, the period of delayed handover shall not be counted toward the project’s operational term or its implementation schedule.
2. Legal consequences of late extension of Investment Project term Risk of Project Termination
Under Article 48 of the Law on Investment, an investor shall terminate investment activities or terminate an investment project in the following cases: the investor decides to terminate the project; per conditions stated in contracts or the enterprise’s charter; and upon expiry of the project’s operational term.
In addition, Article 57 of Decree 31/2021/ND-CP (“Decree 31”) provides:
The termination of an investment project shall be carried out in accordance with the following procedure: In cases where the project is terminated pursuant to clause 2, Article 48 of the Law on Investment, the investment registration authority shall issue a decision to terminate the project and concurrently revoke the IRC issued for such project. The IRC shall cease to be valid from the effective date of the termination decision. If the investor fails to carry out the termination procedures as prescribed at point (b), clause 2 of this Article, the investment registration authority shall proceed with the termination procedures as prescribed at point (c), clause 2 of this Article..
Therefore, if investors delay conducting the termination procedures when the project term expires, the investment authority (Department of Finance, Economic zone authorities, etc.) will unilaterally process the termination. This poses significant risks because administrative termination results in the investor losing control over asset disposition, contract settlement, and labor arrangements and may lead to adverse legal and financial consequences such as forced land handover, mandatory asset liquidation, business disruption, and disputes with partners and employees.
Furthermore, for projects implemented through the establishment of an economic organization, termination of the investment project also requires the enterprise to undergo dissolution procedures. This is a mandatory, separate procedure requiring investors to fulfill all financial, reporting, labor, and tax obligations before approval.
Although statutory processing time is 50–60 working days from submission, the actual duration may be much longer—especially in large jurisdictions such as Ho Chi Minh City, Hanoi, or provinces with high numbers of active enterprises. The primary reason is that tax authorities must conduct a comprehensive review of outstanding tax obligations. Any obstacles must be resolved before tax code closure is approved.
This process is time-consuming and requires substantial investor coordination with tax, accounting, auditing, and other authorities. In many cases, prolonged dissolution procedures disrupt business plans, hinder restructuring, and increase administrative costs. Therefore, this risk must be seriously considered when investors delay extending the project term or let the project lapse unintentionally.
Risk of Administrative penalties
According to clause 2, Article 19 of Decree 122/2021/ND-CP (“Decree 122”):
“2. A fine ranging from VND 70,000,000 to VND 100,000,000 shall be imposed for any of the following violations:
- a) Failure to correctly comply with the written approval for investment guidelines, written approval for both investment guideline adjustment and investor change, written approval for investor or investment registration certificate;
- b) Failure to follow the procedures for liquidating the investment or project and discharge financial obligations to the State as prescribed by law;
- c) Suspending an investment project for a total period of more than 12 months.”
If the investor delays the extension but remains bound by obligations to partners, customers, or employees, or is performing existing contracts, they may be forced to continue operating to avoid civil or commercial breaches.
However, continuing project activities after the project term has expired or before the extension is approved constitutes non-compliance with the IRC and is a violation under point (a), clause 2, Article 19 of Decree 122—subject to fines between VND 70,000,000 and 100,000,000.
Risk of breaching obligations to Third parties
As mentioned above, failure to extend the project term may seriously affect civil and commercial relationships between the investor and third parties. When the project term expires without extension, the enterprise, in principle, is not permitted to continue business operations. This means it cannot perform service contracts, sales contracts, business cooperation agreements, or fulfill obligations to employees. This places the enterprise in a “dilemma”: continuing operations risks violating investment regulations; suspending activities risks breaching contractual obligations.
Operational suspension or disruption caused by delayed extension may lead to numerous adverse consequences, including breach of contract, claims for damages, penalties, premature termination, labor disputes, reduced production progress, and reputational harm. In dispute scenarios, the lack of legal basis for operation due to expiration of the project term may be considered the investor’s fault—significantly weakening their ability to protect their interests.
These risks not only impact existing commercial relationships but also undermine investor credibility with potential partners, affecting future expansion or reinvestment.
3. Procedures for extending the Investment Project term
The extension procedure includes the following steps:
Step 1: Preparation of Dossier
- Written request for project adjustment;
- Report on project implementation status to date;
- Pre-adjustment monitoring report;
- A decision of the investor regarding the adjustment of the investment project, applicable where the investor is an organization. This includes the resolution/decision and a valid copy of the minutes of the meeting of the Members’ Council/General Meeting of Shareholders/Partners/Owner of the economic organization implementing the investment project on the project adjustment, or another lawful document as prescribed by law.
- Explanation documents and supporting materials regarding adjustments, including:
The investment project proposal includes: information on the investor or the method of selecting the investor; investment objectives; project scale; investment capital and capital-raising plan; project location; operational term; implementation schedule; information on the current land-use status at the project site and the proposed land-use demand (if any); labor demand; proposed investment incentives; expected impacts and socio-economic effectiveness of the project; and a preliminary environmental impact assessment (if required) in accordance with environmental protection laws. In cases where construction laws require the preparation of a pre-feasibility study report, the investor may submit such pre-feasibility study report in lieu of the investment project proposal;
Other documents related to the investment project, and documents demonstrating that the investor satisfies statutory conditions and capacity requirements (if any).
Step 2: Submission to the Investment Registration Authority
- Submit 01 set of document to the investment registration authority at the project location;
- The authority processes the application within 07 working days;
- Within 07 working days after receiving a valid dossier, the authority shall adjust and reissue the IRC.
Delays in extending the operational term of an investment project not only affect business progress but also directly impact the legal continuity of the enterprise and the investor’s rights in Vietnam. Once the IRC expires, the enterprise’s entire transaction framework—from land use and contract execution to tax declarations and access to credit—may be disrupted or deemed invalid. Therefore, extending the project’s operational term must be managed as a mandatory compliance process, monitored early, and completed before the project approaches the end of its current term. Proactively reviewing documentation, preparing project implementation reports, plans for continuing the investment, and relevant supporting materials will help the enterprise avoid risks, maintain uninterrupted operations, and safeguard its legal rights.
CDLAF accompanies foreign-invested enterprises throughout the entire IRC extension process—from dossier review and report preparation to working with investment authorities—helping investors maintain their projects with confidence, operate stably, and remain fully compliant with Vietnamese law.
Time of writing: 10/11/2025
The article contains general information which is of reference value, in case you want to receive legal opinions on issues you need clarification on, please get in touch with our Lawyer at info@cdlaf.vn
Why choose CDLAF’s service?
- We provide effective and comprehensive legal solutions that help you save money and maintain compliance in your business;
- We continue to monitor your legal matters even after the service is completed and update you when there are any changes in the Vietnamese legal system;
- Our system of forms and processes related to labor and personnel is continuously built and updated and will be provided as soon as the customer requests it;
- As a Vietnamese law firm, we have a thorough understanding of Vietnam’s legal regulations, and grasp the psychology of employees, employers, and working methods at competent authorities;
- CDLAF’s team of lawyers has many years of experience in the field of labor and enterprises, as well as human resources and financial advisory.
- Strict information security procedures throughout the service performance and even after the service is completed.
You can refer for more information:
- Foreign investors and how to establish a technology company in Vietnam
(Part 2) - Foreign investors and how to establish a technology company in Vietnam
(Part 1) - Obligations to Comply with Personal Data Protection in the Labor Outsourcing Sector
- Non-Compliance with Social insurance regulations in Vietnam: Legal risks for FDI Enterprises
