Exit Strategies for Foreign Investors in Vietnam

Most foreign-investor exits from Vietnam fall into one of four categories.

Share sale (most common). The foreign investor sells its shares in the Vietnamese subsidiary to a third-party buyer (strategic, financial, or management). The Vietnamese entity continues; only the ownership changes. This is the fastest and cleanest exit route for most situations.

Asset sale. The Vietnamese entity sells its operational assets (and possibly liabilities) to a buyer; the entity is then wound down. Used where the buyer wants the operating business but not the legal entity (often because of unresolved liabilities, unfavourable contracts, or tax history concerns).

Liquidation. The investor winds up the Vietnamese entity, pays creditors, and remits the residual capital. Used where there is no viable buyer or where the operations have run their course. Slower than a share sale but cleaner where the underlying business is no longer commercially viable.

Initial public offering (IPO). A minority of foreign-invested entities list on the Ho Chi Minh City Stock Exchange (HOSE) or Hanoi Stock Exchange (HNX) and the foreign investor partially or fully exits through the public market. Used principally for large, mature businesses with sustainable scale.

The choice between these options depends on the buyer landscape, the entity's tax and licensing position, and the investor's timing constraints. A share sale is the default; the alternatives are used where the share sale is unavailable or sub-optimal.

The share-sale transaction is governed by a Share Purchase Agreement (SPA) between the seller (the foreign investor) and the buyer. The SPA is typically governed by Vietnamese law where the target is a Vietnamese entity, with selected provisions (representations and warranties, indemnities, dispute resolution) sometimes drafted on common-law lines but adapted to be enforceable under Vietnamese law.

Key SPA terms. Purchase price and payment mechanism (typically cash at closing, with a portion in escrow against indemnity claims); representations and warranties from the seller (corporate, regulatory, contractual, tax, employment, IP, litigation); seller indemnities for breach of warranty and for specified risks; conditions precedent to closing (regulatory approvals, due-diligence completion, third-party consents); covenants between signing and closing; closing mechanics; post-closing adjustments (working capital, completion accounts).

M&A approvals. Vietnamese law requires M&A approval (sometimes called 'M&A registration') for transfers of shares in foreign-invested enterprises that result in a change of control or in foreign-ownership levels above defined thresholds. Approval is sought from the Department of Planning and Investment of the location of the target. Documentation includes the SPA (Vietnamese-language version), buyer corporate documents, sectoral-condition compliance evidence, and the parties' M&A approval application.

Approval timing. Standard M&A approval timing is 15-30 working days from a complete application. In practice, the application is rarely complete on first submission and there is typically one or two rounds of supplementary information requests. Realistic planning: 60-90 days from signing to approval.

Sectoral conditions. Even where the seller has held the shares for years, the buyer is treated as a new foreign investor for sectoral-condition purposes. If the target operates in a conditional sector with foreign-ownership caps or sub-sectoral approvals, the buyer's eligibility must be verified and any sectoral approvals secured before M&A approval can issue. This is a frequent source of delay and the principal reason for involving Vietnamese counsel early in any M&A transaction.

Closing. Closing occurs once M&A approval has issued and any other conditions precedent are satisfied. The shares are transferred, the purchase price is paid, the ERC is amended to reflect the new ownership, and post-closing matters (transition services, escrow management) commence.

Asset sales are used in two principal scenarios: where the buyer specifically wants to avoid acquiring the legal entity (typically because of unresolved liabilities or unfavourable contracts), or where regulatory considerations make a share sale impossible or unattractive (for example, where the target has a sub-licence that cannot be transferred).

Mechanics. The Vietnamese entity sells specified assets to the buyer through one or more asset-purchase agreements. Assets may include real property (subject to LURC formalities), tangible movable property, intangible assets (IP, contracts, customer lists), and inventory. Liabilities are typically retained by the selling entity unless the buyer specifically agrees to assume them.

Approvals and consents. Asset sales avoid the M&A approval procedure but trigger different consents: real-property transfer formalities (notarisation, LURC registration); IP-transfer registration; contract assignments (often requiring counterparty consent); employee transfer arrangements (governed by the Labour Code 2019, which requires consultation and offers employees the option to follow to the buyer or remain with the seller).

Tax treatment. Asset sales are typically less tax-efficient for the seller than share sales. The selling entity recognises gain on each asset transferred (subject to corporate income tax at 20%), and the proceeds are then distributed to the foreign parent (subject to withholding considerations). Share sales avoid the entity-level gain by transferring the shares directly to the buyer.

Wind-down of the selling entity. After an asset sale, the selling entity typically holds only the proceeds and any retained liabilities. The entity is then wound down through liquidation — paying remaining creditors, settling tax obligations, and distributing residual capital to the parent. This adds 6-12 months to the overall exit timeline beyond the asset sale itself.

Vietnamese foreign-exchange control is administered by the State Bank of Vietnam under the Foreign Exchange Ordinance and supporting regulations (most recently consolidated in Circular 06/2019/TT-NHNN and subsequent amendments). For foreign investors, the framework controls inbound capital, outbound profit remittance, and outbound capital remittance on exit.

Inbound capital flow. Foreign capital must be brought into Vietnam through a Direct Investment Capital Account (DICA) opened in the name of the foreign-invested enterprise at a licensed bank. The DICA records the capital contribution and provides the documentary basis for later remittance. Capital not contributed through the DICA is effectively trapped — remittable only through complex and uncertain procedures, if at all.

Outbound profit remittance during ownership. Annual profits, after corporate income tax and after any required reserves, can be remitted to the foreign parent. The remittance requires audited financial statements, evidence of tax compliance, board resolutions authorising the dividend, and DICA-mediated transfer. Withholding tax considerations apply.

Outbound capital remittance on exit. Sale proceeds (or liquidation proceeds) can be remitted abroad through the DICA, subject to: evidence of the original capital contribution (documentation that proves the funds being remitted match capital that was originally brought in, plus permitted gains); evidence of tax compliance on the gain; M&A approval (for share sales) or liquidation approval (for liquidations); and bank-level documentation supporting the transfer.

The DICA documentation imperative. The single most important forex-control point for foreign investors planning exit is to ensure that the DICA documentation is complete and accurate from day one. Capital contributions that were not properly recorded at the DICA — even if otherwise lawful — can become difficult or impossible to remit. I recommend an annual DICA reconciliation as part of basic foreign-investor compliance, particularly where capital has been contributed in tranches or through complex structures.

Vietnamese tax on exit transactions falls under the Law on Corporate Income Tax (for entity-level gains in asset sales) and the Law on Personal Income Tax / capital-gains rules (for share-sale gains by the foreign investor).

Share-sale gains. Capital gains from the sale of shares in a Vietnamese entity are subject to Vietnamese taxation. For corporate sellers, the gain is taxed at 20% (corporate income tax rate); for individual sellers, at the 0.1% deemed rate on the sale price for listed shares, or 20% on actual gain for unlisted shares. The buyer is typically required to withhold the tax at closing and remit it to the tax authorities, providing the seller with the documentation needed for foreign tax-credit purposes.

Treaty relief. Vietnam's network of double-taxation treaties (DTAs) covers more than 80 countries. Several DTAs provide relief from Vietnamese taxation on capital gains in defined circumstances — typically where the underlying entity does not derive its value principally from Vietnamese real property, and where the seller meets the treaty's residency and substance requirements. Treaty relief is not automatic; it requires advance application to the Vietnamese tax authorities with supporting documentation.

Asset-sale tax. Asset sales generate corporate income tax at 20% on the gain at the entity level, plus VAT on the transfer of taxable assets (with exemptions for certain real-property and going-concern transfers), plus other transaction taxes (stamp duty on real-property transfers, registration fees).

Transfer pricing on intra-group exits. Sales between related parties (for example, a foreign parent selling to another group entity) attract transfer-pricing scrutiny. The sale must be at arm's-length pricing supported by appropriate transfer-pricing documentation; non-arm's-length sales can be re-priced by the tax authorities with consequent additional liability.

Tax planning sequence. Tax planning for exit should begin 12-24 months before the targeted exit date — particularly where DTA relief is contemplated, where intra-group restructuring may improve the post-tax outcome, or where holding-period requirements (for some treaty reliefs) need to be met.

Bilateral investment treaties (BITs) and the investment chapters of regional trade agreements (CPTPP, EVIPA — the EU-Vietnam Investment Protection Agreement, in force from 2026) provide treaty-level protections that can be relevant during exit.

Protections during exit. The principal exit-relevant protections are: free transfer of capital (most BITs and the investment chapters guarantee the right to transfer capital, profits, and proceeds of liquidation, subject to applicable laws); fair and equitable treatment (against arbitrary or discriminatory regulatory treatment that might frustrate the exit); and protection against expropriation without prompt, adequate, and effective compensation (relevant where regulatory action effectively prevents exit at fair value).

ISDS access. Where the BIT or treaty provides for investor-state dispute settlement (ISDS), the foreign investor can bring a direct claim against Vietnam before an international tribunal in respect of breaches relevant to exit. The mere availability of ISDS is itself protective — it influences the conduct of regulatory authorities and provides a credible alternative to Vietnamese-court litigation.

Structuring for treaty access. Treaty access depends on the foreign investor's qualifying nationality and substance. Investors structured through a treaty-favourable holding jurisdiction (Singapore, the Netherlands, the UK, certain other jurisdictions) typically have stronger treaty protection than investors structured through non-treaty or weak-treaty jurisdictions. Restructuring into a treaty-favourable holding is possible but should be done well before any dispute arises — restructuring after a dispute has crystallised is generally rejected by tribunals as abuse of process.

Practical use in exit. In my experience, treaty protections rarely need to be invoked at exit — most exits proceed through routine M&A approval and forex remittance procedures. But the existence of treaty protection improves the negotiating position with regulators and counterparties throughout the exit, particularly where issues arise. The protection is most valuable in the cases where it does not need to be used.

A clean foreign-investor exit from Vietnam typically follows a recognisable sequence. The timeline below assumes a share sale to a third-party buyer; asset sales and liquidations adjust accordingly.

T-24 to T-12 months: pre-exit preparation. Conduct an internal vendor due diligence to identify and remediate issues in advance. Reconcile DICA records. Confirm sub-licence currency and sectoral-condition compliance. Resolve any outstanding tax assessments or audits. Document related-party transactions and pricing. Update employment contracts and insurance contributions. Implement any tax-planning steps that require holding periods.

T-12 to T-6 months: market and engagement. Engage M&A advisers and counsel. Prepare the information memorandum. Approach prospective buyers under NDA. Run a structured process or proceed bilaterally with a preferred buyer.

T-6 to T-3 months: due diligence and SPA negotiation. Buyer conducts due diligence (typically 6-10 weeks for a meaningful target). SPA negotiation runs in parallel with later-stage diligence. Sectoral-condition analysis for the buyer is conducted during this phase.

T-3 months to T-0: signing to closing. SPA is signed; M&A approval application is filed (60-90 days). Conditions precedent are satisfied. Buyer arranges financing. Closing occurs once approval issues and conditions are met.

T+0 to T+12: post-closing. Purchase price is received and remitted. Withholding tax is paid. Tax-clearance certificate is obtained. DICA closure procedures are completed. Any escrow obligations are managed. Transition services (where contracted) are provided.

Across this 24-36 month sequence, the most valuable preparation is the early stage. Investors who run the T-24 to T-12 month preparation seriously achieve cleaner, faster, higher-value exits. Investors who skip this preparation face delays, value erosion, and (in the worst cases) deal failure.