Vietnam’s Groundbreaking Digital Technology Law: A Paradigm Shift in Tech Regulation
On June 14, 2025, Vietnam achieved a significant milestone by becoming the first country in the world to pass a dedicated law for the digital technology industry. The Law on Digital Technology Industry, which will take effect on January 1, 2026, was approved by a staggering majority of 441 out of 445 deputies during the ninth session of the 15th National Assembly.
Legal Framework for a New Digital Era
The Digital Technology Law aims to provide legal certainty surrounding various sectors of the digital economy, particularly focusing on artificial intelligence (AI), digital assets, and data services. Drafted by the Ministry of Science and Technology, the law encapsulates Vietnam’s ambitions for digital transformation and is designed to propel national innovation, enhance competitiveness, and support global integration efforts.
Key Features of the Digital Technology Law
One of the primary goals of the law is to foster the development of a robust digital technology ecosystem. A striking objective is set forth: the establishment of 150,000 digital technology firms by 2035. This ambitious target aligns with the government’s “Make in Vietnam” initiative, which seeks to boost the production and global competitiveness of homegrown tech solutions.
Financial Incentives for Startups and SMEs
The law lays out a structured framework of financial incentives aimed at various stakeholders in the tech community. Domestic startups may receive up to 50% subsidies on technology acquisition and prototype development costs. Small and medium-sized enterprises (SMEs) will be granted financial support and training opportunities, along with preferences in public procurement and infrastructure investment assistance.
Foreign-invested enterprises (FIEs) are similarly encouraged to engage in technology transfer and collaboration with local firms. In exchange, these enterprises can benefit from long-term corporate income tax reductions and other investment incentives, which will help integrate them into global supply chains and promote technology localization.
A Comprehensive Fiscal Framework
The Digital Technology Law introduces a holistic fiscal framework to support innovation and digital production. Essential high-tech and innovation-driven projects will receive government-backed funding, while tax breaks and import duty exemptions will apply to crucial equipment and research and development (R&D) activities. This common framework aims to make the country an attractive destination for both local and international investors.
Workforce Development Initiatives
Recognizing the importance of human capital, the law places a strong emphasis on workforce development. Qualified digital professionals, whether local or international, will enjoy incentives such as personal income tax exemptions for the first five years of employment. Additionally, the government is committed to enhancing digital education through curriculum development, certification programs, and initiatives aimed at upskilling the workforce.
AI Regulation: Balancing Innovation and Accountability
In a forward-looking approach, the law categorizes AI systems into high-risk and non-high-risk groups, imposing stricter compliance obligations on the former. The legislation also stresses the need for transparency and accountability, requiring AI-powered products to be clearly marked. The Vietnamese government intends to allocate funds for AI research and develop data center infrastructure, ensuring the sector’s robust growth.
Crypto and Digital Assets: A New Legal Landscape
For the first time, Vietnam has laid down a legal framework for regulating digital assets, including cryptocurrencies. The law distinguishes between virtual and crypto assets while mandating stringent regulation by state agencies. These measures aim to ensure cybersecurity and prevent financial crimes, including money laundering and terrorism financing.
Innovation through a Regulatory Sandbox
A novel element introduced by the law is the establishment of a regulatory sandbox. This allows select businesses to pilot new virtual asset technologies under state-approved conditions, freeing them from certain legal obligations. This framework is a significant step in facilitating the integration of blockchain, decentralized finance (DeFi), and fintech into Vietnam’s formal economy.
Global Outreach and Market Positioning
To enhance Vietnam’s presence on the global stage, the law mandates the establishment of Vietnamese digital technology representative offices in major markets worldwide. These offices will assist domestic companies in their quest to become competitive multinational players. Moreover, the law outlines plans for developing digital technology zones—akin to special economic zones—with favorable regulatory and fiscal policies to attract significant investment in areas like semiconductor production and eco-friendly technology.
A National Strategy for Digital Transformation
The Digital Technology Law is envisioned as more than just a legislative framework; it is a comprehensive national strategy aimed at transforming Vietnam into a global leader in digital technology. The multi-faceted approach encompasses workforce incentives, technology transfer, cryptocurrency regulations, AI management, and robust support for burgeoning startups.
With such coordinated efforts, Vietnam is positioning itself as a formidable contender in Southeast Asia’s tech investment landscape, cultivating an innovation-driven business environment poised for the future.