Vietnam Decree No. 281/2026/ND-CP: Land Compliance Checks for FDI Factories

Vietnam issued Decree No. 281/2026/ND-CP on July 13, 2026. The decree amends the administrative penalty framework for land matters and takes effect on August 31, 2026.

For foreign-invested companies operating factories, warehouses or other industrial sites, the main issue is not a new set of land-use duties. The practical change is how suspected non-compliance may be handled, including stronger authority at commune level, additional remedial measures and clearer treatment of financial gains connected with a violation.

A useful management question is whether the physical site, the lease or sublease chain, the land records and the investment project match. This is the operating-stage version of the broader site-selection checks of Vietnam company location strategy, and it matters more once a site is already in use.

Quick Reference for Directors and Factory Managers

Management question	Practical answer
Effective date	August 31, 2026.
Who should read	FDI factories, manufacturers, warehouses, logistics sites and other companies using land directly or through a lease or sublease.
What changes	Enforcement authority, remedial measures, treatment of unlawful gains and transitional handling of certain pending cases.
What it does not do	It does not automatically require every FDI company to amend its IRC, ERC or land documents.
First management step	Reconcile actual site use with the land, lease, project and licensing file before an inspection, expansion, financing or transaction.

Why Vietnam Decree No. 281/2026/ND-CP Matters at Operating Sites

Enforcement decisions can now be made at People’s Committee

The chair of a commune-level People’s Committee can now impose land-related fines up to VND 250 million within the applicable authority. Because organizational penalties under the underlying framework are generally twice the individual level, the corresponding authority can reach VND 500 million for an organization where that rule applies. This is an authority ceiling, not the automatic fine for every company or every land issue.

Under Vietnam’s two-tier local government model, district-level authority has been removed, while specialized inspection and other competent bodies receive adjusted powers. The practical point for management is that land enforcement is no longer only a provincial matter. A local inspection may now involve decision-makers with materially greater authority.

The remedy may matter more than the fine

The decree adds or clarifies measures that may accompany a penalty. Depending on the case, an authority may require restoration of the land to its earlier condition, restoration of boundary markers, repetition of a land procedure, or return of documents that were erased, altered, made misleading or false. Where false documents were used, the result of the land procedure may be canceled.

At an operating factory, a remedial order can affect access roads, yards, storage areas, utilities, construction works or the records needed for a later project amendment. The same issue may surface during financing, an insurance review, an acquisition or a project transfer. Management should therefore consider possible disruption to the business, not only the headline fine.

Financial gain is separate from the fine

Where an authority determines that a party obtained a financial benefit from a land violation, that unlawful gain may have to be paid to the State in addition to any fine. The decree clarifies that qualifying amounts already paid into the State budget in connection with the same land use may be deducted. It also addresses cases in which several parties jointly committed a violation on the same parcel.

This rule does not automatically decide how responsibility is divided among an industrial park developer, a landlord, a sublessor and an operator. The authority’s findings, each party’s conduct and the contracts still matter. A lease indemnity may allocate commercial risk between the parties, but it does not by itself prevent regulatory action.

Where Land Problems Tend to Surface at an FDI Factory

Not every mismatch is a violation. Even so, a gap that has never been resolved should be checked against the documents and the conditions on the ground before it surfaces during an inspection or business change. Common examples include:

• The approved or leased boundary does not match the area actually fenced, paved, stored on or used for access.
• A yard, warehouse, utility area, security structure or production support area was added after the original site file was prepared.
• The current use of part of the site may not match the recorded land purpose or the permitted function of the premises.
• The operator relies on a landlord or industrial park developer, but the land, sublease, handover and site records do not form a complete chain.
• The actual project location or scale no longer matches the Investment Registration Certificate in Vietnam or other project records.
• Past inspection minutes, notices or remedial commitments remain open, unclear or held by different departments.

The first task is to identify what kind of discrepancy the company has found. It may be a document error, a contractual gap, an incomplete procedure, a project-licensing issue or a potential land violation. The response should follow that diagnosis rather than start with an unnecessary filing or admission.

Which Companies Should Take a Closer Look

A focused review is most useful for:

• Foreign-invested manufacturers operating on State-leased, industrial park, leased or subleased land.
• Factories, warehouses and logistics sites that have expanded their physical use since the original approvals or handover.
• Companies preparing an acquisition, financing, factory expansion, relocation, project transfer or additional land arrangement.
• Projects that have changed address, scale, schedule, land area or operating model without a full cross-check of all records.
• Sites with a history of local inspection, boundary questions, land-use complaints or incomplete remedial work.

Immediate Actions on Vietnam Decree No. 281/2026/ND-CP

1. Start with the legal site file. List every parcel and every document supporting the company’s right to occupy it, including the landowner, industrial park developer, landlord and sublessor chain.
2. Check the physical boundary. Compare surveys, handover plans and lease plans with what is actually fenced, paved, built on, stored on and used for access or utilities.
3. Reconcile the regulatory file. Check the land and lease documents against the IRC, construction, environmental, fire-safety and sector records. Record differences before deciding whether any filing is required.
4. Review past authority contact. Collect inspection minutes, requests, undertakings, penalty decisions and evidence of completed remedies. Confirm what remains open and who owns the response.
5. Plan changes before filing. If the business will expand, relocate or change project details, review the treatment of existing FDI projects under Decree 96/2026/ND-CP before approaching the authority.

Finding a difference does not necessarily mean the company should file a correction. First establish the facts, preserve the evidence and determine whether the issue belongs to the company, the landholder, another contracting party or several parties.

Frequently Asked Questions

Q1: Does the decree require every FDI factory to amend its IRC or ERC?

No. The decree changes the administrative penalty framework for land matters. A filing is needed only if the facts and the applicable investment, enterprise, land or sector rules require one.

Q2: Is a factory protected if it leases from an industrial park developer or landlord?

A lawful lease or sublease is important, but it does not end the review. The company should check the land basis, the lessor’s authority, the permitted use, the handover area and its own actual operations. Responsibility depends on the specific issue and each party’s conduct.

Q3: Does August 31, 2026 erase older land issues?

No. The decree contains transition rules for pending cases, and lighter provisions may apply in specified circumstances. An operating condition that continues after the effective date should not be treated as resolved merely because it began earlier.

Q4: Is VND 500 million the fine for a factory?

Not automatically. It is the possible commune-level authority ceiling for an organization where the organizational double-rate applies. The actual fine depends on the specific conduct, the governing penalty provision and the facts of the case. Remedial measures and recovery of unlawful gains may be more commercially significant.

Conclusion

Consider Vietnam Decree No. 281/2026/ND-CP as an enforcement alert, not as a trigger for indiscriminate amendments. The first step is a disciplined comparison of the company’s right to use the site, its actual use, its project records and any issues that remain open.

For FDI factories, the value of that review is wider than avoiding a fine. It protects continuity of operations and gives management a cleaner position before an inspection, expansion, financing, acquisition or project transfer.

About the Author

Hanh Pham is a Legal Research Specialist at ANT Lawyers with more than 10 years of experience, supporting legal teams through regulatory research, authority liaison, documentation review, and knowledge development. She has been trained in corporate law and related areas.

About ANT Lawyers, a Law Firm in Vietnam

ANT Lawyers is a Vietnam law firm with lawyers in Ho Chi Minh City, Hanoi, and Da Nang. We advise foreign companies, investors, contractors, managers, and individuals on corporate, commercial, regulatory, employment, dispute resolution, intellectual property, real estate, construction, trade, tax, and other legal matters in Vietnam. Our work combines legal analysis with practical understanding of Vietnam’s business environment, local procedures, and cross-cultural issues. We help clients protect their interests, manage legal and commercial risk, maintain regulatory compliance, and make informed decisions in transactions, operations, investments, and disputes.

General Disclaimer

This article is for general informational purposes only and does not constitute legal advice for any specific situation. Laws and practice may change, and the position is stated as of the publication date. For advice on your matter, please consult qualified counsel.