Termination of FDI Investment Projects in Vietnam: Legal Perspectives and Key Steps Introduction

Over the past years, Vietnam has attracted substantial foreign investment thanks to its stable business environment and competitive costs. However, in practice, not all projects achieve their expected outcomes. In such cases, foreign-invested enterprises (FDI) may need to consider exiting the market by terminating their investment projects.

It is important to note that “closing a project” is not merely about ceasing business operations. It involves a series of legal obligations across multiple regulatory authorities. If not handled properly, the process may be prolonged or expose the enterprise to unforeseen legal risks. 

1. Initial Step: Notification of Project Termination

Following the internal decision, the enterprise must submit a termination notice to the investment registration authority within 15 days from the decision date, together with the Investment Registration Certificate.

However, submitting the notice does not mean the project is immediately closed. In practice, the authority will review the entire implementation of the project, including: 

1.1. Capital contribution and mobilization of funds

1.2. Project implementation progress

1.3. Construction status and commissioning/operation (if applicable)

1.4. Operation status (if already in operation)

1.5. Financial obligations to the State, including taxes, fees, land rental payments made and outstanding

1.6. Periodic reporting obligations as required by law 

1.7. Finicial obligations to other relevant parties (if any)

Any discrepancies from the originally registered content (e.g., delayed capital contribution or failure to meet project timelines) may lead to delays or administrative penalties. Failure to fully comply with legal obligations may prolong the termination process and create potential legal risks.

Therefore, enterprises should conduct a thorough review of the project’s history before filing, to avoid unexpected issues or penalties. 

2. Asset Disposal and Financial Settlement 

Upon project termination, the enterprise must comprehensively address all matters relating to assets and cash flows, including: 

2.1. Inventory and liquidation of machinery, equipment, and stock

2.2. Termination of ongoing contracts and settlement of outstanding loans

2.3. Fulfillment of financial obligations to partners 

This step is essential to ensure that no legal liabilities or disputes remain after the project ends. 

3. Tax Finalization - A Practical Bottleneck

One of the most time-consuming steps is tax finalization and tax code closure.

The enterprise is required to: 

3.1. Complete all tax obligations

3.2. Work with tax authority for inspection and finalization

3.3. Carry out procedures to terminate the tax identification number

In many cases, failure to complete tax obligations with halt the entire termination process.

4. Employee-Related Obligations

Alongside administrative procedures, enterprises must fully settle employee rights: 

4.1. Notify termination of labor contracts

4.2. Pay salaries and statutory allowances

4.3. Complete social insurance obligations

4.4. Finalize social insurance records 

If not handled property, this area poses a high risk of disputes.

5. Land and Infrastructure Matters

5.1. Terminate lease agreements

5.2. Return the land or premises to the State or industrial zone

5.3. Settle relevant costs (e.g., infrastructure fees)

These steps should be carried out in parallel with other procedures to avoid ongoing obligations.

6. Fulfillment of Obligations with Authorities

In addition to tax authorities, enterprises must also work with other regulatory bodies, including:

6.1. Customs authorities: submit final reports on imported materials and exported goods, and fulfill related financial obligations

6.2. Insurance authorities: complete payment of insurance contributions and coordinate to settle employee benefits

6.3. Tax authorities: finalize taxes and close the tax code

All reports and financial obligations must be fully completed before proceeding to the next stage. 

7.  Enterprise Dissolution (if applicable)

If the enterprise does not intend to continue its legal presence in Vietnam, dissolution procedures must be carried out after completing tax obligations. 

The process includes: 

7.1. Submitting the dissolution decisions to the Business Registration Office

7.2. Public announcement of dissolution

7.3. Completing procedures with the business registration authority

8. Remittance of Profits Abroad (if any)

Foreign investors may remit profits abroad after terminating direct investment activities in Vietnam, provided that the enterprise has fully fulfilled its financial obligations in accordance with Vietnamese law. Additionally, audited financial statements and corporate income tax finalization dossiers must be submitted to the tax authority, and all obligations under the Law on Tax Administration must be complied with. 

8.1. Prepare documentation proving the lawful source of funds

8.2. Engage with the bank in advance to avoid rejected transactions

Although often underestimated, this step directly affects the investor's cash flow.

9. Conclusion

Terminating an investment project in Vietnam is a cross-disciplinary process, involving not only investment procedures but also tax, labor, financial, and banking aspects.

An effective approach requires a comprehensive plan from the outset, including: 

9.1. Reviewing legal obligations

9.2. Sequencing implementation steps

9.3. Proactively engaging with authorities and banks

In many cases, working with professional advisors can significantly reduce time and mitigate potential risks.

For legal advisory services, please contact Lexsol for direct support.