In the context of Vietnam’s increasingly open investment environment, investment activities in the form of a business cooperation contract (the “BCC Contract”) have been selected and applied by many investors across a wide range of investment and business sectors. By its nature as a cooperation arrangement that does not require the establishment of a new legal entity, investment in the form of a BCC Contract offers significant flexibility in designing the investment structure, particularly in allocating responsibilities, benefits and governance mechanisms among the participating parties. However, this very flexibility also gives rise to a number of practical challenges, especially from a tax perspective. The absence of an independent legal entity means that tax obligations are not determined centrally, but instead depend on each participating party as well as the manner in which the transaction is structured and implemented. This may create difficulties in determining declaration and tax payment obligations, while increasing the risk that the tax authorities may re-characterise the substance of the transaction.

Within the scope of this article, we provide an overview of investment in the form of a BCC Contract and clarify tax issues that domestic and foreign enterprises should take into account when structuring and implementing such contracts.

1. Overview of BCC Contracts

1.1. Definition of a BCC Contract

The definition of a BCC Contract is provided in both the Civil Code and the Law on Investment, specifically as follows:

a. Article 504.1 of Civil Code No. 91/2015/QH13 adopted by the National Assembly on 24 November 2015 provides: “A cooperation contract is an agreement between individuals and legal entities on jointly contributing assets and efforts to perform certain work, jointly benefiting from and jointly bearing responsibility for such work.”

b. Article 3.14 of Law on Investment No. 143/2025/QH15 adopted by the National Assembly on 11 December 2025 (the “Law on Investment 2025”) provides: “A business cooperation contract (hereinafter referred to as a BCC contract) means a contract signed between investors for business cooperation, profit sharing and product sharing in accordance with law without establishing an economic organisation.”

Accordingly, in the broadest sense, a BCC Contract is an agreement between investors whereby the parties jointly contribute capital, jointly manage business operations, jointly share profits and jointly bear risks during the course of investment and business without establishing a new legal entity. Investment in the form of a BCC Contract is a form of direct investment and is governed by the provisions of the BCC Contract entered into by the investors.

1.2. Characteristics of BCC Contracts

A BCC Contract has all the general characteristics of a contract, namely an agreement between the contracting parties, or in other words, a meeting of the minds of the investors. The participating parties voluntarily and freely express their intentions. The contractual parties are primarily business entities (traders) and have legal capacity to perform their contractual obligations. The person signing the contract must be the lawful representative of the contractual parties. The contents of a BCC Contract must comply with applicable law and have the following characteristics:

First, investment in the form of a BCC Contract is a form of direct investment established on a contractual basis. Investors not only contribute capital but also directly participate in the management of the investment activities. Such investment activities must always involve cooperation between two or more investors. This cooperation is the result of a negotiation process leading to the execution of the contract, with all fundamental rights and obligations recorded in a legally binding document, namely the BCC Contract.

Second, the substance of the investment relationship under a BCC Contract comprises agreements reflecting the nature of “business cooperation”, including agreements to contribute capital for joint business, jointly bear risks and jointly share business results. Investors jointly contribute capital, jointly conduct business activities, jointly enjoy profits as agreed in the BCC Contract, and jointly bear risks arising during the cooperation process.

Third, during the course of investment under a BCC Contract, investors use their own legal status on a wholly independent basis. Although, in the course of business cooperation, the parties may agree to establish a coordination committee to supervise the performance of the Contract, such coordination committee is not the legal representative of the investors.

Fourth, the parties to a BCC Contract are investors, including domestic investors and foreign investors (“FIs”). The number of parties to each contract is not limited; the contractual parties may comprise two or more investors having a business cooperation relationship with one another, depending on the scale of the project as well as the needs, capabilities and intentions of the investors.

Fifth, the purpose of the parties participating in a BCC Contract is to conduct profit-seeking business cooperation through the contract without establishing a new legal entity.

1.3. Procedures for implementing a BCC Contract

A BCC Contract executed between domestic investors shall be implemented in accordance with civil law and other relevant laws. Where one of the parties to a BCC Contract is an FI, the parties must carry out the procedures for obtaining an Investment Registration Certificate in accordance with law[1].

Investors participating in a BCC Contract may elect to establish a coordination committee to implement the BCC Contract. The functions, duties and powers of the coordination committee shall be agreed by the parties and set out in the BCC Contract[2]. In addition, an FI may establish an operating office in Vietnam to implement the BCC Contract[3]. Accordingly, the FI shall submit an application for establishment of the operating office to the investment registration authority of the locality where the operating office is expected to be located[4]. This location shall be determined by the FI itself in accordance with the requirements for implementing the BCC Contract[5]. Within 10 working days from receipt of a valid application dossier, the investment registration authority shall issue an Operating Office Registration Certificate to the FI[6]. The operating office of an FI established to implement a BCC Contract has a seal, may open bank accounts, recruit employees, enter into contracts and conduct business activities within the scope of the rights and obligations provided in the BCC Contract and the Operating Office Registration Certificate[7].

2. Typical investment models in the form of BCC Contracts in Vietnam

In practice, in the context of many investment projects requiring rapid implementation, facing restrictions on procedures for asset transfer, or needing to leverage complementary advantages among participating entities, a BCC Contract becomes an appropriate legal instrument for parties to cooperate while maintaining the legal independence of each party. Unlike the joint venture company model, a BCC Contract allows the parties to proactively agree on governance mechanisms, revenue sharing, cost allocation, rights to exploit assets and legal responsibilities without creating an additional intermediary legal entity.

Furthermore, this model helps minimise procedures relating to capital contribution by land use rights, transfer of asset ownership or corporate restructuring – matters that frequently encounter numerous practical obstacles in investment activities. For this reason, BCC Contracts are commonly applied in component-based real estate projects, specialised operation and exploitation projects, or projects requiring the participation of a cooperation partner with particular expertise, brand value or operational capacity.

Based on our practical experience in advising domestic corporate clients investing in existing real estate projects in Vietnam, we summarise below certain common practical circumstances in which the BCC Contract form is recommended because it offers more advantages than other investment forms.

2.1. Real estate projects associated with exploitation and operation activities:

One of the most common models today is cooperation between a project owner holding land use rights and the right to develop a real estate project, and an operator with operational capacity, for the purpose of jointly investing in and exploiting each component of the project through a BCC Contract. Operators may include hotel management companies, shopping mall operators, schools, hospitals or specialised service brands. Under this model, the project owner is usually responsible for project legal matters, land use rights and development of infrastructure works, while the cooperation partner contributes capital, technology, brand value or management and operational capacity to exploit the project after completion. Selecting a BCC Contract helps the parties avoid having to carry out procedures for amending project legal dossiers associated with the transfer of all or part of the project, while also avoiding the need to establish a joint venture legal entity or contribute capital by land use rights.

This approach offers various practical benefits, including:

• Maintaining the project owner’s control over the land bank and the project;
• Leveraging the cooperation partner’s operational expertise, brand and customer network;
• Limiting legal risks relating to the transfer of land use rights or transfer of assets;
• Increasing flexibility in the allocation of revenue, profits and project management responsibilities.

Notably, under the Law on Land 2024, the parties to a BCC Contract may agree on the establishment of ownership over construction works after completion, whereby the cooperation partner (which is not the project owner holding land use rights) may still become the owner of the construction works on the land if there is a sufficient legal basis, such as a BCC Contract or approval of the project owner[8]. This mechanism allows land use rights and ownership of construction works to be separated, thereby increasing flexibility in the investment structure and creating a clear legal basis to protect the interests of the cooperation partner participating in the operation and exploitation of the project.

In addition, in practice, for socialisation projects in the fields of education and training, vocational training, healthcare, culture, physical training and sports, and environment, if a project owner holding land use rights and developing infrastructure conducts business cooperation with operators through a BCC Contract, the parties may jointly enjoy the incentive policies applicable to the project, including incentives on land use levy/land rent, corporate income tax (“CIT”) incentives and other relevant incentive policies[9].

Investment in the form of a BCC Contract is also considered an optimal option where the cooperation partner only wishes to invest in a specific investment project of the project owner. In such case, the project owner is responsible for establishing an accounting ledger system separate from its general accounting activities to account for all transactions of the cooperation project, record revenue and expenses of the cooperation project, separately monitor the business results of the business cooperation activities and conduct tax finalisation in accordance with applicable law.

However, for this model to operate effectively, the parties should pay particular attention to:

• The mechanism for determining ownership of assets to be formed in the future;
• The right to exploit the works and the right to dispose of assets;
• Financial obligations arising from investment and operation activities;
• The mechanism for handling cases where a party terminates the cooperation or breaches its obligations;
• Conditions for registration and issuance of certificates of ownership over construction works.

2.2. Housing development projects and investment capital mobilisation:

In the field of housing development, BCC Contracts are also used as a lawful capital mobilisation instrument for project owners. Pursuant to Articles 114.1(a) and 115 of the Law on Housing 2023, a project owner implementing a housing development project may seek partners to mobilise capital through a BCC Contract. However, current law imposes relatively strict limitations on this model to prevent “circumvention of the law” in capital mobilisation or unlawful sharing of real estate products. Specifically, a cooperation partner under a BCC Contract may only share profits in cash or shares on the basis of its capital contribution ratio as agreed in the BCC Contract, and may not receive housing products, priority registration, deposits, rights to purchase housing, or land use rights in the project[10].

Pursuant to Decree No. 95/2024/ND-CP dated 24 July 2024 of the Government detailing a number of articles of the Law on Housing 2023 (“Decree 95”), the project owner of a commercial housing construction investment project may commence capital mobilisation in the form of a BCC Contract once it has obtained (1) a land allocation or land lease decision and (2) approval of the investment policy for the project (if any)[11]. In addition, the project owner is required to deregister any existing mortgage over the commercial housing project before signing a capital mobilisation agreement in the form of a BCC Contract. This requirement is intended to protect the cooperation partner by preventing other creditors from having priority over the BCC Contract cooperation partner.

In addition, the housing project owner may not authorise the cooperation partner to carry out real estate business activities falling within the legal scope of the project owner, such as signing housing lease, lease-purchase or purchase and sale contracts, deposit agreements for housing transactions, conducting business in land use rights in the project, or distributing products on behalf of the project owner[12].

These restrictions reflect the strict regulatory approach of State authorities towards capital mobilisation activities in the real estate sector, while also aiming to protect homebuyers and limit disputes arising from product sharing that is inconsistent with law.

Accordingly, in practice, the parties should carefully structure the BCC Contract, particularly with respect to:

• The mechanism for capital contribution and capital return to the parties;
• The method for determining profits to be distributed to the parties;
• The timing of profit distribution;
• The scope of the cooperation partner’s right to participate in management;
• Commitments securing the project owner’s performance of its obligations.

3. Tax issues to note when investing in the form of a BCC Contract

3.1. Entities responsible for tax registration, declaration and payment arising from a BCC Contract

As a BCC Contract does not create an independent legal entity, tax registration, declaration and payment obligations are determined depending on the status of the participating parties and the mechanism for implementing the contract, specifically as follows:

a. Where all parties to the BCC Contract are domestic investors

The parties are not required to carry out separate tax registration procedures for implementation of the BCC Contract. Tax declaration and payment shall be carried out in the same manner as ordinary production and business activities of each enterprise, on the basis of the income portion distributed under the BCC Contract.

b. Where the parties to the BCC Contract include an FI

Tax registration shall be carried out on a case-by-case basis as follows:

• Where a domestic investor participates in the BCC Contract and the FI does not establish an operating office in Vietnam: the parties shall agree for the domestic investor to conduct tax registration, withholding, declaration and payment on behalf of the foreign investor in accordance with regulations. The deadline for tax registration is within 10 working days from the date the responsibility to withhold and pay tax on behalf of the FI arises under the BCC Contract[13].
• Where all participating parties are FIs, the parties or one of the parties shall establish an operating office in Vietnam and conduct tax registration, declaration and payment in accordance with regulations. Tax registration must be carried out within 10 working days from the date on which the FI is issued the Operating Office Registration Certificate[14].

3.2. Determination of tax obligations arising from a BCC Contract

Currently, for a BCC Contract cooperation partner that is an enterprise, the determination of tax obligations in respect of income from the BCC Contract is made in accordance with Law on Corporate Income Tax No. 67/2025/QH15 adopted by the National Assembly on 14 June 2025 (the “Law on CIT 2025”) and its implementing instruments. Accordingly, income from a BCC Contract is determined as “other income”, falling within the scope of CIT-taxable income under the Law on CIT 2025[15], and is determined as the total revenue under the BCC Contract minus the total expenses related to generating revenue from the BCC Contract[16].

Depending on the method of profit distribution under the BCC Contract, the tax declaration and payment obligations of the parties may arise differently. Therefore, from the transaction structuring stage, the parties should carefully consider the needs, roles and practical conditions of each participating party in order to select an appropriate distribution mechanism that both ensures investment efficiency and limits risks arising during the performance of tax obligations.

3.3. Certain tax considerations when implementing a BCC Contract

The determination of tax obligations of the parties to a BCC Contract depends not only on the form of benefit sharing but also on the actual substance of the contract, the rights and obligations of each party, and the method by which the business cooperation activities are organised and implemented. Therefore, from the stage of negotiation and drafting of the BCC Contract, the parties should pay particular attention to the following issues:

First, the implementation mechanism of the BCC Contract should be clearly determined

In practice, although the arrangement may be a BCC Contract in name, the accounting and tax consequences may be entirely different depending on the nature of the cooperation and the degree of control of the parties. According to Circular No. 99/2025/TT-BTC of the Ministry of Finance dated 27 October 2025 guiding the corporate accounting regime, a BCC Contract may be implemented under the following principal mechanisms:

• Jointly controlled assets: The parties jointly purchase, construct or use an asset for the purpose of implementing the BCC Contract and jointly enjoy benefits from the exploitation of such asset. In this case, each party recognises on its financial statements the portion of the value of the jointly controlled asset to which it is entitled and separately recognises the corresponding revenue and expenses.
• Jointly controlled business operations: The parties jointly carry out business activities without establishing a new business establishment; each party both implements the BCC Contract and maintains its ordinary business activities. The parties separately recognise their distributed revenue, expenses incurred from the jointly controlled business operations, and related obligations.
• Post-CIT profit sharing: The parties may only share profits after the business activities under the BCC Contract are profitable and tax obligations have been fulfilled. In this case, the parties must appoint a representative party to record all revenue and expenses, issue invoices and declare and pay taxes for the activities under the BCC Contract.
• No joint control: One participating party does not have the right to jointly control the business operations under the BCC Contract and only receives benefits dependent on business results or receives fixed benefits. In such case, the income received may be recognised as a financial investment, revenue from asset leasing or interest from lending activities, depending on the actual substance of the transaction.

Each of the above mechanisms will lead to different accounting recognition and tax obligations for each party participating in the BCC Contract. Therefore, properly determining the model for implementing the BCC Contract is not only an accounting matter but also an important basis for the parties to develop a benefit distribution plan and provide for responsibilities for tax declaration and payment in an appropriate and effective manner.

Second, the risk that the tax authorities may re-characterise the substance of the transaction

In practice, the tax authorities do not rely solely on the name or form expressed in the contract, but will consider the actual substance of the transaction in order to determine the corresponding tax obligations of the parties participating in the BCC Contract.

For example, where a party contributes capital by assets and receives a fixed benefit that does not depend on the business results of the BCC Contract, the tax authorities may consider the substance of the transaction to be asset leasing rather than profit sharing from business cooperation. Similarly, if a party contributes capital in cash and receives a fixed periodic benefit, such income may be characterised as interest from lending activities. In that case, the arising tax obligations will be determined according to the actual substance of the transaction rather than as income from a BCC Contract.

This risk should be given even greater attention for investment projects in the form of BCC Contracts that are eligible for tax incentives, such as investment projects in socialisation sectors including education and healthcare. The re-characterisation of the transaction substance by the tax authorities may result in the parties no longer being entitled to the expected tax incentives, giving rise to additional tax liabilities and affecting investment efficiency. Therefore, the parties should clearly provide for the method of benefit sharing, the rights and obligations of each party, and the commercial substance of the transaction from the drafting stage of the BCC Contract in order to mitigate this risk.

Third, the entity responsible for accounting, invoicing, tax declaration and payment should be clearly identified

In many cases, particularly where the parties elect to distribute pre-tax or post-tax profits, the BCC Contract must appoint a representative party to record revenue and expenses, issue invoices and declare taxes. Failure to clearly specify this responsibility may result in tax declaration and payment obligations not being performed fully and promptly, as well as the risk of tax arrears being imposed during tax inspections or audits.

——— 

[1] Article 22.2 of the Law on Investment 2025.

[2] Article 22.3 of the Law on Investment 2025.

[3] Article 37.1 of the Law on Investment 2025.

[4] Article 78.1 of Decree No. 96/2026/ND-CP dated 31 March 2026 of the Government detailing and guiding the implementation of a number of articles of the Law on Investment (“Decree 96”).

[5] Article 37.1 of the Law on Investment 2025.

[6] Article 78.3 of Decree 96.

[7] Article 37.2 of the Law on Investment 2025.

[8] Article 149.5 of Law on Land No. 31/2024/QH15 adopted by the National Assembly on 18 January 2024 (the “Law on Land 2024”).

[9] Article 1.1 of Decree No. 69/2008/ND-CP on policies encouraging socialisation of activities in the fields of education, vocational training, healthcare, culture, sports and environment, issued by the Government on 30 May 2008 (“Decree 69”).

[10] Article 116.1(e) of Law on Housing No. 27/2023/QH15 adopted by the National Assembly on 27 November 2023 (the “Law on Housing 2023”).

[11] Article 43 of Decree 95.

[12] Article 39.6 of the Law on Housing 2023.

[13] Article 33.2(c) of Law on Tax Administration No. 38/2019/QH14 adopted by the National Assembly on 13 June 2019 (the “Law on Tax Administration 2019”).

[14] Article 33.2(a) of the Law on Tax Administration 2019.

[15] Article 3.2(l) of the Law on CIT 2025.

[16] Article 3.3(p) of Decree No. 320/2025/ND-CP detailing a number of articles and measures for organising and guiding the implementation of the Law on Corporate Income Tax, issued by the Government on 15 December 2025 (“Decree 320”).

[17] Article 3.3(p1) of Decree 320.

[18] Article 3.3(p2) of Decree 320.

[19] Article 3.3(p3) of Decree 320.

[20] Article 3.3(p4) of Decree 320.

Disclaimer: This article has been prepared by PTN Legal LLC (“PTN Legal”) solely for the purpose of providing reference information to readers. PTN Legal makes no representation or warranty as to the accuracy or completeness of this information. The contents of this article may be changed, modified or updated without prior notice. PTN Legal shall not be liable for any errors or omissions in this article or for any damages arising from the use of this article in any circumstances. Readers who wish to receive articles from PTN Legal by email may register their information here.

Article prepared by Ms. Vu Le Hien Thao, Paralegal