Vessel Leasing in Vietnam: Structures, Tax and Risk

Vessel leasing in Vietnam has moved from a niche tool to a mainstream way for shipowners, logistics groups and lenders to refresh fleets without buying every hull outright. Yet vessel leasing in Vietnam sits at the intersection of maritime, banking, customs, foreign exchange and tax rules, and a structure that works in London or Singapore can fail on registration, cabotage or withholding tax when it lands in a Vietnamese port.

This guide sets out how bareboat charters, finance leases and container leases are built, secured and taxed, and what lenders will expect before they fund.

Table of Contents

Table of Contents

Why vessel leasing in Vietnam is growing

Vietnamese carriers and logistics groups need tonnage and boxes faster than their balance sheets can fund. Vessel leasing converts a large upfront purchase into predictable periodic payments, preserves borrowing capacity and lets an owner match asset life to contract life. For international lessors, vessel leasing offers deep cargo flows but also unfamiliar legal and tax risk.

Who uses vessel leasing and why

Typical lessees include bulk and general-cargo operators, offshore service providers and feeder companies. Typical lessors include foreign leasing houses, shipping funds, ship-owning special purpose vehicles, and licensed Vietnamese finance leasing companies. Each type of lessor brings different regulatory, tax and security consequences, so the first decision in any vessel leasing deal is who owns the asset and under which law.

The legal sources you must read together

No single statute governs vessel leasing in Vietnam. The core sources are the Vietnam Maritime Code 2015 (Law No. 95/2015/QH13, in force since 1 July 2017), the Civil Code 2015 on leases and security, the Law on Credit Institutions 2024 and its implementing rules for finance leasing companies, the Law on Investment 2020 and the foreign exchange framework of the State Bank of Vietnam. Tax is layered on top, and so are the conventions Vietnam has joined, including those of the International Maritime Organization.

Core structures: bareboat charter and finance lease

In vessel leasing, the commercial label matters less than the legal substance. Tax authorities and lenders look at who bears operating risk, who is registered, and whether title passes. Four structures dominate vessel leasing in Vietnam.

Bareboat charter Vietnam: control without ownership

Under a bareboat charter, Vietnam’s Maritime Code treats the charterer as taking over possession, crewing, operation and maintenance, while the owner keeps title and receives hire. A bareboat charter Vietnam structure is attractive where a Vietnamese operator wants to run a foreign-owned vessel, or a Vietnamese owner wants to place a hull with an offshore financier.

Key clauses cover delivery condition, redelivery, class maintenance, insurance, sub-chartering, liens created by the charterer, and the owner’s right to terminate and repossess. A purchase option, if included in this form of vessel leasing, can recharacterise the deal as a finance lease for tax and accounting.

Finance lease through a licensed lessor

A finance lease transfers substantially all risks and rewards of ownership. In Vietnam, regulated finance leasing is carried on by licensed finance leasing companies under the credit institutions framework, usually bank subsidiaries. Foreign lessors leasing directly to a Vietnamese lessee sit outside that perimeter, but payments, registration and tax rules still apply. The State Bank of Vietnam may look at whether a long-term foreign lease operates like foreign borrowing, so structure and registration should be tested early.

Operating lease and sale-and-leaseback

An operating lease is shorter, leaves residual risk with the lessor, and suits tonnage or boxes needed for a cycle. Sale-and-leaseback vessel leasing lets a Vietnamese owner release equity from an existing ship. It raises extra issues: transfer of registration, release of the existing mortgage, and VAT and income tax on the sale.

Comparison of the main structures

Feature	Bareboat charter	Finance lease	Operating lease	Sale-and-leaseback
Title during term	Owner	Lessor (often to transfer at end)	Lessor	Lessor after sale
Operating risk	Charterer	Lessee	Mixed or lessor	Lessee
Typical term	3 to 15 years	5 to 12 years	1 to 5 years	5 to 12 years
Purchase option	Optional	Common	Rare	Common
Registration issue	Bareboat registration or flag suspension	Lessor and lessee interests	Limited	Transfer and mortgage release
Main tax issue	Foreign contractor tax on hire	Interest and principal split	Foreign contractor tax on rent	VAT and income tax on sale

The Vietnam Maritime Code 2015: registration and ship mortgage

The Vietnam Maritime Code 2015 is the backbone for registration, mortgage, liens, arrest and bareboat chartering of seagoing ships. Implementing rules, notably Decree 171/2016/ND-CP on ship registration and the decrees on maritime transport business conditions, add the procedure. Anyone structuring vessel leasing in Vietnam should map each step to these instruments, then confirm the current text, because decrees are amended often.

Registration and flag in vessel leasing

Seagoing ships are entered in the national ship registry, which records ownership, nationality and registered rights. The Code and its decrees provide for ordinary registration, and for registration of a vessel under bareboat charter in a way that links the charterer to the flag.

A foreign-flag ship bareboat chartered by a Vietnamese operator can generally be registered in Vietnam for the charter period, while a Vietnamese owner may suspend Vietnamese registration and register the ship under a foreign flag on charter. These vessel leasing routes carry documentary requirements, including the charter, proof of the owner’s consent and deletion certificates from the prior registry, and approvals depend on vessel age and type.

Ship mortgage Vietnam: how the security works

Ship mortgage Vietnam practice is governed by the Vietnam Maritime Code 2015 together with the Civil Code and the decrees on security transactions. A mortgage over a registered seagoing ship is created by written contract and perfected by registration in the ship registry. It extends to the hull and equipment, and the mortgagee typically takes assignments of insurances and earnings alongside it. A lessor financing the asset will want its ownership, any lender’s mortgage and the lessee’s rights all visible on the registry.

Maritime liens and priority

The Code ranks certain maritime claims, such as crew wages, salvage, port dues and some personal injury claims, as maritime liens that follow the ship and generally rank ahead of a registered mortgage. That ranking is the main reason a lender or owner will not simply rely on the lessee’s covenant to keep the ship lien-free. Practical protections include a no-lien covenant, payment evidence and step-in rights.

Flag-state and cabotage constraints on foreign-owned vessels

Foreign ownership is the source of the most expensive surprises in vessel leasing in Vietnam. Two separate questions arise: can the ship be registered in Vietnam, and can it trade where the lessee wants it to trade.

Who may own a Vietnamese-flag ship

In vessel leasing, eligibility rules tie registration to the owner’s nationality, legal presence in Vietnam and, for foreign-invested enterprises, the foreign ownership share. A foreign lessor that wishes to hold title to a Vietnamese-flag vessel directly may find it ineligible, which is why many deals use a bareboat charter with a foreign-flag ship, or a Vietnamese vehicle with eligible ownership. Confirm the percentage thresholds in the current Code and decrees, because they interact with Vietnam’s WTO and CPTPP commitments on maritime transport.

Cabotage and vessel leasing: domestic carriage is reserved

Domestic maritime transport between Vietnamese ports is generally reserved for Vietnamese-flag ships. Foreign-flag vessels may be allowed in limited cases, for example when Vietnamese tonnage is unavailable, and only with a permit from the transport authorities. A bareboat charter does not by itself solve this problem: if the ship stays foreign-flagged, the domestic-trade restriction applies to the charterer.

Lessees planning coastal vessel leasing should therefore build the right flag, permit and conditions precedent into the lease and set a termination right if the permit is not granted.

Age limits and import conditions for vessel leasing

Vietnam applies age limits to imported second-hand vessels, with limits that differ by vessel type, and used tonnage must be classed by a recognised society and pass inspection. A lease should treat these as conditions precedent, not as post-signing tasks, since a rejected vessel leaves the lessee paying hire on an asset it cannot use.

Container leasing from international lessors

Large lessors in the Triton and Textainer mould supply dry, reefer and special containers to carriers and shippers worldwide. Vietnamese operators use them for flexibility and to avoid tying up capital in idle boxes.

What a container leasing agreement covers

A container leasing agreement is usually a master lease with schedules for each delivery. It sets lease rates, drop-off and pick-up locations, per-diem rates, return conditions, damage and repair tariffs, and cross-border insurance. Check whether the lessor can recover boxes after default, and whether the lease clearly states that title remains with the lessor and that the boxes are never part of the lessee’s assets for insolvency.

Governing law is commonly English or New York law, with offshore arbitration; Vietnam is a party to the New York Convention, which supports enforcement of awards.

Customs, safety and boxes in Vietnamese hands

Leased containers normally enter Vietnam under temporary import and re-export procedures for transport equipment, so tracking and re-export timing matter. Boxes must carry a valid safety approval plate under the International Convention for Safe Containers and be inspected on a regular cycle. If the lessee interchanges boxes with other carriers, the lease should state who bears loss and who may repossess.

Security, arrest and enforcement risk

Financiers care about what happens when vessel leasing goes wrong. Vessel leasing in Vietnam carries three recurring risk categories.

Arrest of ships

The Maritime Code allows arrest of a ship for specified maritime claims, following the model of international arrest conventions. A ship can be arrested by a creditor of the operator even when the owner is a separate lessor, because claims linked to the vessel can attach to it. A lessor should therefore require early notice of any claim, an obligation to bond off an arrest promptly, and a clear indemnity.

Repossession and deregistration in vessel leasing

Owner-friendly documents include an irrevocable deregistration power of attorney, an undertaking by the lessee to cooperate, quiet enjoyment wording for the lender, and cross-default to related contracts. Registries do not always process these quickly, so confirm which documents the registry accepts.

Insolvency and priority in vessel leasing

If a Vietnamese lessee enters bankruptcy under the Law on Bankruptcy 2014, the question is whether the lessor holds an asset it owns or a security interest in assets of the debtor. Clear title language, registration, and a finance lease structure that matches the actual economics reduce the risk of recharacterisation.

Tax treatment: FCT and VAT on charter hire

Tax is where the cost of vessel leasing in Vietnam is most easily mispriced. In vessel leasing, a foreign lessor receiving hire from a Vietnamese lessee can be a foreign contractor under Vietnamese tax rules.

Foreign contractor tax on charter hire

Foreign contractor tax, usually called FCT, is governed principally by Circular 103/2014/TT-BTC. FCT combines VAT and corporate income tax, collected by withholding on payments. For leasing, the deemed rates depend on the nature of the payment, so characterising hire as rent, service or interest changes the outcome. Double tax agreements can reduce or remove corporate income tax where a treaty applies, provided the lessor supplies treaty-residency documents in the form the authorities require.

Without those documents, the lessee withholds at statutory rates, and the lessee’s gross-up clause then becomes a cost issue.

VAT and customs

VAT rules have favoured vessels that cannot be produced in Vietnam and are imported or leased from abroad for business, treating them as outside the taxable base or exempt, subject to conditions. Confirm the current VAT law, since the Law on VAT 2024 and guidance changed the framework from 1 July 2025. Import duty and VAT on vessels and containers also need checking, since temporary import relief depends on timely re-export.

ship mortgage Vietnam — Photo: Wikimedia Commons (public domain / CC0)

Tax allocation in vessel leasing contracts

Because the burden of foreign contractor tax can sit with either party, the lease should say who bears FCT, whether payments are grossed up, who obtains the treaty paperwork and when, and what happens if the tax authority later reassesses. For a finance lease, record the interest and principal elements separately, because the tax treatment of each differs.

IMO, class and lender compliance

A vessel that fails international standards is unfinanceable. Lenders in vessel leasing will test technical compliance as closely as legal compliance.

Class, flag and IMO conventions for vessel leasing

Vietnamese-flag ships are surveyed and classed through the Vietnam Register or a recognised classification society. Lenders expect the ship to remain in class with an IACS member or the Vietnam Register, to comply with SOLAS, MARPOL, the ISM and ISPS Codes and the Maritime Labour Convention, and to hold valid statutory certificates. Environmental rules keep tightening: the 0.5 per cent sulphur cap, EEXI and CII ratings and IMO greenhouse gas work affect residual value.

What lenders require in a vessel leasing package

Typical lender conditions for vessel leasing are a first-priority mortgage, assignment of hire and insurances, hull and machinery and P&I cover with the lender noted as loss payee, a security trustee, covenants on class and flag, valuation tests, and a technical manager acceptable to the bank. Banks may add foreign exchange registration and account pledges. Early engagement with the banking team avoids rework; see our banking and finance advisory practice for how these packages are structured.

Practical deal checklist

For vessel leasing, decide who will own the vessel or boxes, and test eligibility for Vietnamese registration before signing.
Confirm the intended trading pattern against cabotage rules and obtain any permit as a condition precedent.
Draft the bareboat charter or finance lease with registration, mortgage, lien and arrest mechanics built in.
Model foreign contractor tax, VAT and customs, and allocate them clearly in the contract; our tax advisory team can test the numbers.
Agree class, flag, insurance and environmental covenants that match lender requirements.

Frequently Asked Questions

Can a foreign lessor own a Vietnamese-flag vessel under vessel leasing?

Not always. Registration eligibility depends on ownership, legal presence and foreign-capital thresholds under the Maritime Code and its decrees. Many foreign lessors in vessel leasing instead keep a foreign flag under a bareboat charter, or use an eligible Vietnamese vehicle.

Is a bareboat charter the same as a finance lease?

No. A bareboat charter transfers possession and operation without necessarily transferring title. A finance lease transfers substantially all risks and rewards of ownership, often with a purchase option. Tax and accounting follow substance.

Can a foreign-flag vessel leasing arrangement carry domestic cargo?

Generally no. Domestic carriage between Vietnamese ports is reserved for Vietnamese-flag ships, with limited exceptions requiring a permit. Vessel leasing of a foreign-flag ship does not remove that restriction.

Is charter hire paid abroad subject to Vietnamese tax?

It can be. Foreign contractor tax may apply to hire paid to a foreign lessor, subject to the character of the payment and any double tax agreement. Confirm treaty relief and the contract’s tax allocation before payment.

Do leased containers need special approvals?

Containers need a valid safety approval plate, and customs handling normally follows temporary import and re-export rules. The container leasing agreement should set tracking, inspection and return obligations clearly.

Planning a lease of vessels or containers in Vietnam? IVLF Advisors LLC offers a confidential preliminary consultation to review your proposed structure, registration route, security package and tax position before you sign. Contact our banking and finance team through this website to arrange it.

Vessel leasing rewards early structuring: the next step is to prepare a one-page term sheet listing the asset, flag, trading area, lessor and lessee entities, and security package, and send it to your advisers for a legal and tax gap review before any commercial commitment is signed. For authoritative reference material, see the International Maritime Organization and the Vietnam Register.

Disclaimer: This article provides general information only and is not legal, tax or financial advice. Laws and regulations change, and the position in a particular transaction depends on its facts. Please obtain advice from qualified professionals before acting.