Take-or-pay clause in Vietnamese law contracts
In Vietnam, take-or-pay arrangement is quite common in long term supply or off-take contracts especially those relating large scale infrastructure projects with foreign sponsors which require project financing. A take-or-pay arrangement is essentially an agreement whereby the buyer agrees to either: (1) take, and pay the contract price for, a minimum contract quantity of goods annually (the TOP Quantity); or (2) pay the applicable contract price for such TOP Quantity (TOP Liability) if it is not taken during the applicable year.
It is not clear under Vietnamese law if the payment of TOP Liability by the buyer under in a long term contract could be viewed as a penalty. This is because:
- Article 300 of the Commercial Law defines “penalty for breach” as a remedy whereby the aggrieved party requires the defaulting party to pay a penalty sum for breach of contract if so agreed in the contract; and
- One can argue that the buyer’s failure to take TOP Liabilities is a breach of the long term contract and therefore the TOP Liability is a penalty to be paid by the Buyer.
If the TOP Liability is characterised as a penalty for breach then it is subject to a limit of 8% of the value of obligations which are in breach. To avoid this potential characterisation, the parties to a long term contract with a take-or-pay arrangement may consider characterising TOP Liability payment as adjustment to the sale price or payment for reservation of supplying capacity of the supplier.
On 18 December 2025, the Vietnamese government issued Decree 323/2025 on the establishment of Vietnam International Financial Center (VIFC). Decree 323/2025 takes effect immediately and provides guidance for Article 8 and 9 of Resolution 222/2025 of the National Assembly on VIFC. In this post, we discuss some interesting points of Decree 323/2025
1. Single or multiple units
The National Assembly intends that VIFC is one single unit. To confirm this intention, Decree 323/2025 provides that VIFC is a unified legal unit (thực thể pháp lý thống nhất in Vietnamese). However, Vietnamese law does not have definition of legal unit (thực thể pháp lý). In addition, this provision of Decree 323/2025 also seems to contradict with Resolution 222/2025 which defines VIFC as an area with defined geographical boundaries.
However, by locating that single unit into two separate location, putting it under management of multiples authorties, and giving each location a different set of priorities, it is doubtful on how the operation of VIFC can be unified. This is evidenced by:
The VIFC is oddly named as “Viet Nam International Financial Center in Ho Chi Minh City (VIFC-HCMC) and Viet Nam International Financial Center in Da Nang City (VIFC-DN)” which compries two individual names within one single entity name.
The Operating Authority and Supervisory Authority of VIFC have legal person status, which implied that these authorities’ legal responsibility is independent with VIFC’s legal responsibility.
The Law on Artificial Intelligence (AI Law), which was passed by the National Assembly on 10 December 2025, is arguably among the most anticipated pieces of legislation of Vietnam in 2025.
Unfortunately, similar to the Law on Digital Technology Industry, Vietnam’s AI Law still feels like a half-baked legislation, which makes it hard to clearly identifying the key players in the artificial intelligence (AI) value chain. This article would examine several key terminologies under the AI Law.
To retain talent after investing in expensive training, employers often require employees to sign a training contract covering, among other things, work commitment and reimbursement of training costs. In that context, the critical legal question arises if there is a conflict between the provisions of the training contract and the employment contract which of the two will prevail. For example, if an employee exercises their right to terminate the employment contract under the Labor Code, can they disregard the work commitment and avoid reimbursement penalties stipulated in the training contract?
Under Data Law 2024 and the Law on Personal Data Protection 2025 (PDPL 2025), several data-related services, including “personal data processing service” (dịch vụ xử lý dữ liệu cá nhân), personal data protection service (DPO Service), data intermediary service, data trading floor and data synthesis and analysis service (collectively, New Data-Related Services) are now designated as conditional business sectors. The New Data-Related Services (which could include dozen of sub-services) are subject to specific licenses and operational conditions. In the past, data processing or exploitation services in Vietnam were not classified as conditional business lines, allowing providers to operate with limited regulatory prerequisites.
In short, the Government has arguably created (or at least intended to create) more than just a regulatory system; it has established a complex compliance economy. This new framework tethers businesses to a costly ecosystem of mandatory intermediaries, from licensing consultants to training centers and credit rating agencies. To remain operational, enterprises must now absorb the dual burden of initial licensing fees and the recurring costs of maintaining qualified staff and ratings. As these obligations mount, the pressing question remains: will this expensive bureaucracy actually reduce the daily scam calls and messages suffered by Vietnamese citizens, or simply increase the cost of doing business?
We are still waiting for the official Decree guiding the Corporate Income Tax Law 2025 (CIT Law 2025). However, the New Draft Decree of the Government dated 5 September 2025 (New Draft Decree) and the Official Letter 4685 of the Tax Department dated 29 October 2025 (Official Letter 4685) provide critical updates.
For foreign investors, the rules for selling capital in Vietnam are shifting. The new rules broaden the tax scope while offering potential - though ambiguous - exemptions. Below is our analysis of the key changes.
1. Clarifying the Scope: Direct vs. Indirect Transfers
In our previous post, we highlighted the uncertainty regarding whether “indirect transfers” (selling the offshore parent) and “direct transfers” (selling the Vietnam entity) would be taxed differently. The previous Draft Decree was ambiguous, applying the 2% revenue tax rate only to transactions where the owner “does not directly manage the business.” This implied that direct transfers might face a different tax rate.
The New Draft Decree resolves this uncertainty with two key changes:
· Unified Tax Treatment: Article 3.3 of the New Draft Decree explicitly states that taxable income for foreign companies includes income from capital transfers, whether direct or indirect. This confirms a unified approach: whether a foreign investor transfers capital in a domestic entity or in an offshore holding company, the tax treatment is identical.
· New exemptions replacing the “management” test: Article 11.2(i) of the New Draft Decree clarifies that the 2% tax on revenue applies to all capital transfers, with three specific exceptions: (i) restructuring (tái cơ cấu), (ii) internal financial arrangements of the seller (dàn xếp tài chính nội bộ của bên chuyển nhượng), or (iii) consolidation of the seller’s parent company (hợp nhất của công ty mẹ của bên chuyển nhượng).
While this appears helpful for internal group restructuring, investors should note that terms like “restructuring” and “internal financial arrangements” are not clearly defined in Vietnamese law. Without specific definitions, the determination of these exemptions will remain subject to the tax officers’ discretion.