The 2026 Law on Urban Development takes effect on October 1, providing a new institutional framework for reforming city management models and strengthening power decentralisation. The law gives Ho Chi Minh City and other special-class urban areas greater decision-making authority to pursue coordinated development in institutions, infrastructure, economy, and society, while Hanoi operates under the Capital Law. Other cities may apply specific mechanisms within a regulated scope, and provinces hosting special economic zones can implement policies to promote development inside those zones.
Greater autonomy for municipal administrations
Municipal authorities gain the right to independently determine staffing quotas, allowing civil servant and public employee payrolls to expand by up to 20 per cent beyond central allocations. Local governments must cover all additional salary expenses from their own budgets and can decide on their own organisational structures. They may also adopt supplementary income policies for the public sector and apply pilot mechanisms that differ from national laws, as long as the period does not exceed five years. This authority does not apply to national defence, security, foreign affairs, or religion.
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Municipalities can now allocate budget funds for independent compensation and resettlement projects tied to high-capacity transit routes. Land-use intensity metrics in these Transit-Oriented Development zones may exceed statutory limits, and the transfer of planning land-use quotas is explicitly permitted. This shift supports a more integrated approach to city planning, where a single integrated master plan governs the entire urban environment, including underground, low-altitude, and high-altitude spaces. By anchoring urban expansion directly to mass transit nodes, the law aims to optimise land efficiency and drive the growth of emerging urban areas.
Authorities may also broaden the scope of modern marine economic models, permitting advanced reclamation projects with an operational duration not exceeding 70 years. These developments must comply with spatial planning principles, national defence, and maritime interests, and projects may proceed only after assessments of natural conditions, ecological systems, and climate change adaptation capabilities. Enterprises operating within free trade zones can quote prices and make foreign-currency payments to one another by bank transfer, and goods exchanged between functional zones may qualify for tax incentives.
Investment incentives
Project revenues are entitled to a preferential corporate income tax rate of 10 per cent, with exemptions for up to four years and a 50 per cent reduction of payable amounts for no more than nine subsequent years. Experts, scientists, individuals with exceptional talent, and innovative entrepreneurs will enjoy a five-year personal income tax exemption on salaries and wages paid by innovative start-ups, science and technology organisations, innovation centres, and intermediary organisations supporting innovative start-ups.
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Strategic investors in projects with total investment capital of VND 30 trillion or more, excluding commercial housing projects, may implement a project for up to 70 years, and foreign contractors engaged in major projects implemented by strategic investors will also be exempt from construction permit requirements.
Streamlined approval procedures
The legal framework establishes a new institutional foundation to reform urban development and management models. The system comprises 66 articles arranged in five chapters, introducing breakthrough mechanisms that grant cities greater decision-making authority and broader development space. This structure aims to unlock resources and enable Vietnamese cities to develop on the basis of productivity, technology, and regional connectivity.