Many BCCs begin as a market test, and when the test succeeds the parties want to ‘upgrade’ into a joint venture or a 100% foreign-owned company to gain a separate legal entity, easier borrowing and room to expand. The question is whether a direct conversion procedure exists. The honest answer: Vietnamese law does not design a procedure to convert a BCC into an enterprise, because a BCC is not an organisation that can be converted. ‘Conversion’ in practice is a chain of transactions: incorporate a new enterprise, move the BCC’s assets and activity into it, then liquidate the old BCC.
A transaction chain instead of conversion: incorporate, transfer, liquidate
Step one is establishing the new economic organisation under the Law on Investment 143/2025/QH15 and the Law on Enterprises 59/2020/QH14: obtain an Investment Registration Certificate for the project to be implemented by the new enterprise (where there is a foreign investor), then register the enterprise with the intended final ownership — a joint venture between the old parties, or 100% owned by one party after it buys out the other’s BCC interest. Step two is transferring the activity: BCC assets are valued and moved into the new enterprise by capital contribution in kind or by asset sale; contracts with customers and suppliers are transferred by tripartite agreements because contracts do not automatically follow the activity; labour is handled by termination or transfer arrangements under the Labour Code 45/2019 with full entitlements for employees. Step three is closing the old BCC: finalising the whole activity under the Law on Tax Administration 108/2025/QH15, liquidating the BCC and terminating the BCC project on the old IRC if any. The three steps must be scheduled with sensible overlap so business is not interrupted — especially for sector licences, the new enterprise must hold its own licence before the old BCC stops operating in conditional sectors.
Tax and the values most easily lost in the transfer
Transferring assets from a BCC to a new enterprise is a transaction with real tax consequences, not a tax-free internal manoeuvre: assets sold may incur value added tax and income tax on the difference between transfer price and residual value, except for assets contributed as capital into the new enterprise under the in-kind contribution mechanism with a valuation accepted by the parties and the tax authority. Investment incentives the BCC project enjoys do not automatically follow into the new enterprise — the new project must register and have its incentives confirmed on its own conditions, and this is where many deals are most complacent. The second easily lost value is customer contracts with anti-assignment clauses: large customers may refuse to let contracts move to the new enterprise, so a review of all live contracts must precede any announcement of the conversion plan. The third easily lost value is people: the BCC’s operating team are legally employees of the individual parties, and moving them to the new enterprise needs clear agreement on seniority, entitlements and the successor employer. Done well, conversion is a natural upgrade; done carelessly, the new enterprise is born with half the old BCC’s value dropped along the transfer road.
Frequently asked questions
1. How is a BCC converted into a JV or 100% foreign-owned company?
There is no direct conversion procedure. The practical process has three steps: incorporate the new enterprise and obtain an IRC for the new project under the Law on Investment 143/2025; transfer assets, contracts and labour from the BCC to the new enterprise by separate agreements; finalise tax and liquidate the old BCC, terminating the project on the old IRC.
2. What happens to the BCC’s common assets on conversion?
Assets are valued and moved into the new enterprise by one of two routes: contribution as capital in kind, or purchase of the assets by the new enterprise. Each route has different tax and valuation consequences, so the choice must be made and recorded in the overall conversion plan.
3. Is tax finalisation required on conversion?
Yes. Closing the old BCC requires finalising the whole activity under the Law on Tax Administration 108/2025, and the asset transfer itself may incur VAT and income tax on price differences. Only a properly executed in-kind capital contribution is not treated as an ordinary sale.
4. Do the BCC project’s investment incentives move to the new company?
Not automatically. The new enterprise and project must register and have incentives confirmed by the registration authority on the conditions at the new time. The parties should seek confirmation in parallel with incorporation, to avoid the new project operating without knowing which incentives it holds.
5. How is BCC labour handled on conversion?
Employees legally belong to the individual BCC parties or the operator. Moving them to the new enterprise needs agreement on terminating or transferring labour contracts under the Labour Code 2019, preserving seniority and entitlements to avoid disputes and unbudgeted allowance costs.
Key takeaways for investors
- There is no direct BCC-to-company conversion — only the chain: incorporate, transfer, liquidate.
- Asset transfers carry real tax; in-kind contribution is a separate route that must be done properly.
- Investment incentives do not follow automatically — the new project must be confirmed on its own merits.
- Review anti-assignment clauses in customer contracts before announcing the plan.
This article has been quality-reviewed by the FLAW AI Legal Council