From Strategy to Policy: How Resolution 198 Sets the Stage for Private Sector Breakthroughs in Vietnam

On May 4, 2025, Vietnam’s Politburo released Resolution 68-NQ/TW, affirming Vietnam’s strategic goal of building a strong, self-reliant, and innovation-driven private sector. This resolution highlighted the private sector as a vital engine of economic growth, one that must be empowered through improved institutions, fair competition, and access to critical resources.

In close succession, the National Assembly adopted Resolution 198/2025/QH15, providing the initial legislative backbone to implement that vision. While Resolution 198 is not a full legal codification, it is a landmark effort to translate political commitment into actionable policy mechanisms – with immediate implications for businesses, investors, and local governments alike.

A Groundbreaking Legal Framework for the Private Economy

Resolution 198 introduces a sweeping package of incentives, protections, and support programs aimed at removing long-standing bottlenecks and energizing private sector growth. Rather than piecemeal changes, it offers a cohesive and coordinated approach across six major pillars:

1. Simplifying Oversight and Protecting Law-Abiding Businesses

The resolution mandates that enterprises, regardless of size, may be subject to no more than one inspection and one audit per year, unless there are clear signs of legal violations. It also bans overlapping inspection and audit for the same issue within a year.

In a transformative step, it prioritizes remote inspections and digital oversight, and even waives in-person checks for compliant businesses. All inspection plans and outcomes must be publicly disclosed. The government also commits to punishing any abuse of inspection powers and explicitly bans harassment or misinformation by authorities or the media.

2. Regulatory Reform: From Pre-Approval to Post-Monitoring

A major shift outlined in Resolution 198 is the transition from pre-licensing (pre-check) to post-licensing (post-check) regulatory models – reducing bureaucratic drag on business formation and operation. It also reflects a policy orientation toward eliminating unnecessary licensing requirements, and shifting gradually to a regulatory model based on public disclosure and post-monitoring.

3. Empowering Innovation Through Tax Incentives and Financial Relief

To spur innovation and entrepreneurship, Resolution 198 introduces a range of tax breaks:

• Corporate income tax (CIT) exemptions for the first 2 years and 50% reduction for the next 4 years for income from innovative startups, including activities for startup innovation activities by startups, fund managers, and supporting intermediaries.
• Capital Gain Tax exemptions for income from transferring shares or capital in innovation startups.
• PIT relief (2 years of PIT exemption and 4 years of 50% reduction) for experts and scientists working in R&D and innovation centers.
• CIT exemptions for newly registered SMEs for their first 3 years.
• Tax deductibility for large enterprises that invest in SME upskilling and training.

It also ends presumptive tax schemes for household businesses by 2026 and abolishes business license fees from 1 January 2026.

On the financial side, enterprises working on green, circular, or ESG-compliant projects can access loans with a 2% interest subsidy per year. The SME Development Fund is empowered to support startups, incubators, and venture capital, including receiving entrusted funds from contributors.

4. Access to Land and Production Space

The government is extending support to SMEs, supporting industries, and innovative startups by enabling access to unused public land and buildings for business use. Local governments are also authorized to use public budgets to support for developing industrial infrastructure and incubators. In addition private high-tech firms, SMEs, and startups may receive at least 30%  land rent reductions for five years, subsidized by the state.

5. Public Procurement Preferences for SMEs

Public contracts under VND 20 billion are now reserved for SMEs, especially those led by women, youth, minorities, or based in remote mountainous, border, and island regions. If no qualified SME bids are received, a second round of bidding can proceed without SME restrictions.

6. Investing in Innovation and Human Capital

To build long-term competitiveness, the resolution is rolling out key support measures for businesses:

• Enterprises may allocate up to 20% of taxable income to set up internal funds for science, technology, innovation, and digital transformation. These funds can be used in-house or outsourced under product-based contracts, in line with corporate tax regulations.
• R&D expenses are 200% tax deductible, helping reduce innovation costs and encouraging private-sector research investment.
• Free access to standard digital platforms and accounting tools for micro and small businesses.
• A national program to train 10,000 CEOs by 2030.
• Free legal, tax, accounting and administration consulting services for micro and small enterprises.

7. Toward a New Class of Vietnamese Business Champions

Beyond supporting small and medium players, Resolution 198 aims to nurture globally competitive firms. It outlines government-led programs to support:

• The development of 1,000 pioneering enterprises in science and technology, innovation, digital transformation, green transition, high-tech industries, and supporting industries.
• A “Go Global” initiative to help Vietnamese companies in expanding abroad through assistance in market access, capital, technology, logistics, branding, legal expertise, and M&A support.

What Comes Next?

The resolution includes clear implementation timelines:

• By the end of 2025, Vietnam must eliminate at least 30% of business conditions, 30% of compliance costs, and 30% of administrative processing time, with further significant cuts expected in the following years.
• By the end of 2026, legal frameworks on land, planning and investment must be fully reviewed and aligned with Resolution 68’s vision.

Accountability is also emphasized: officials who follow procedures in good faith are protected from undue liability, while corruption, delays, and policy manipulation will be strictly sanctioned.

Final Thoughts

Resolution 198 is a strong signal that Vietnam is now serious about reshaping the private sector landscape, not just through promises, but through concrete, practical reforms. From cutting red tape and easing compliance to providing real financial and institutional support, the government is laying the groundwork for a business environment where entrepreneurship can realistically thrive.

Of course, much depends on how effectively these policies are rolled out on the ground. But if implementation keeps pace with intent, 2025 could become a turning point that forever shifts the focus onto Vietnam’s private sector under underpins real and sustained growth for the future.

For any further questions you may have, please reach out to us at vietnam@alitium.com

********

This article is intended to provide an overview of recent updates and announcement. While it aims to present useful insights, it is important to note that the content shared here should not be considered as formal legal or financial advice. For specific guidance on tax obligations or legal matters related to your business, we strongly recommend consulting with a qualified professional, such as a tax advisor or legal expert or directly reach out to us.