The Week in Review: Policy Shifts and Updates from Vietnam - June 27th 2025

This week has seen developments in Vietnam's legal and administrative landscapes, with the National Assembly passing crucial legislation and various ministries proposing major reforms. From stricter data protection to administrative restructuring and an upcoming wage review, here's a concise look at the top stories shaping the nation.

New Personal Data Protection Law Takes Effect Soon

The National Assembly officially passed the new Law on Personal Data Protection on June 26, set to come into effect from January 1, 2026. This law introduces robust measures against data misuse, notably:

• Buying or selling personal data may be fined up to 10 times the illicit gain. If there's no gain or the calculated fine is lower than the maximum, a flat 3 billion VND penalty applies.
• Cross-border data transfers may be fined up to 5% of the previous year’s revenue, capped at 3 billion VND.
• Other personal data protection violations can incur a maximum fine of 3 billion VND. Individuals committing these acts will face fines equal to half the amount levied on organizations.
• Beyond administrative penalties, organizations and individuals who violate personal data protection regulations may also face criminal prosecution and charges.
• The law outlines specific cases for cross-border data transfer, including moving data from storage in Vietnam to foreign systems, Vietnamese entities transferring data abroad, or using foreign platforms to process data collected in Vietnam.

Concerns were raised during the drafting about the fines being too low compared to international standards, but the National Assembly Standing Committee acknowledged the need for higher penalties, especially for large multinational corporations, to ensure deterrence.

Major Reorganization Proposed for Tax and Other Local Agencies by Vietnam Government

The Ministry of Finance has put forward a proposal to restructure 20 regional tax branches into 34 provincial-level units—adding 14 new branches. Similar changes apply to statistics and social insurance agencies, each consolidating into 34 provincial branches.

Reasons for these proposed changes include:

• Current regional branches cover wide, scattered areas, causing high workloads and poor coordination.
• Existing boundaries don’t match the planned 34-province model.
• The goal is to create a leaner system aligned with Vietnam’s new two-tier local government, easing staff management and office use.

National Wage Council to Discuss 2026 Minimum Wage Increase

The National Wage Council is scheduled to convene on June 26 for its first session to deliberate on a potential increase to the regional minimum wage for 2026. The current regional minimum wage rates, effective since July 1, 2024, are:

• 4.96 million VND/month for Region I
• 4.41 million VND/month for Region II
• 3.86 million VND/month for Region III
• 3.45 million VND/month for Region IV

These rates represent an average increase of 6% compared to 2023. The regional minimum wage serves as the lowest threshold that employers must pay employees who work full-time and meet their work quotas.

According to the Ministry of Internal Affairs, the average monthly wage for workers in 2024 was estimated at 8.88 million VND, a 4% increase from 2023.

Easier Path to Vietnamese Citizenship and Dual Nationality

A draft amendment to the Law on Vietnamese Nationality proposes easing conditions for re-acquiring Vietnamese citizenship. Key change: applicants would no longer need to renounce their foreign nationality, allowing dual citizenship if permitted by the other country and if it doesn't harm Vietnam's interests.

The goal is to attract overseas Vietnamese and foreign talent to invest and work in Vietnam, aligning with global trends and supporting innovation.

However, dual nationals seeking public office, Vietnam government jobs, or military roles must give up foreign citizenship and live permanently in Vietnam. All applicants will undergo background checks by the Ministry of Public Security.

Stricter Penalties for Social and Health Insurance Evasion

Effective July 1, 2025, the amended Social Insurance Law 2024 and Health Insurance Law 2024 will introduce significantly harsher penalties for late payments and evasion of social and health insurance contributions.

• The new laws clearly differentiate between "late payment" and "evasion".
• Employers who fail to pay or underpay will be required to pay the full outstanding amount.
• Additionally, they will incur an interest charge of 0.03% per day on the unpaid amount for the duration of the delay.
• Violators will also face administrative fines and will be ineligible for state emulation titles or awards.
• Crucially, for acts of evasion, employers may now face criminal prosecution. This is a new and significant deterrent compared to previous regulations.
• The new, stricter regulations will apply to any outstanding social and health insurance debts accrued before July 1, 2025, if they are not fully settled by that date.

These enhanced penalties aim to deter non-compliance, protect the legitimate rights and benefits of employees, and foster a transparent and fair environment in social security contributions. The Vietnam Social Security agency notes that evasion tactics can be sophisticated, and enforcement faces challenges like uncooperative financial institutions.

What are these updates mean for SMEs and Business in Vietnam?

Opportunities

• Wider talent and investment access: Dual nationality reforms could attract overseas Vietnamese and foreign investors.
• Trust through data compliance: Strong data protection can build customer and partner confidence.
• Simplified administration (long-term): Agency restructuring aims to streamline procedures and improve coordination.
• Fairer playing field: Tougher insurance laws discourage evasion and support compliant businesses.

Challenges

• High compliance costs: New data laws include steep fines and potential criminal charges.
• Rising labor costs: 2026 minimum wage increase under discussion may impact labor-intensive sectors.
• Short-term administrative disruption: Transition to new agency structures may cause delays and confusion.
• Strict insurance penalties: Outstanding dues before July 1, 2025, may face daily interest and prosecution.

These updates signal a proactive approach by the Vietnam government in strengthening legal frameworks, streamlining administration, and safeguarding citizen rights and welfare, open more opportunities for investors in Vietnam.

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Disclaimer:

The information provided in this article is for general informational purposes only and does not constitute legal, tax, or investment advice. While every effort has been made to ensure accuracy at the time of publication, laws and regulations may change. Readers are encouraged to consult with qualified legal or financial advisors before making decisions related to foreign investment or share transfers in Vietnam. United Consulting is not liable for any actions taken based on this content