The government released a draft decree on the implementation of the law which activists fear will be used to restrain and intimidate users of social media.
The draft requires tech firms to set up offices in Vietnam and store data locally, making it vulnerable to seizure by government authorities.
The law was passed by the National Assembly in June despite street protests and objections from foreign tech giants. It is due to come into effect at the beginning of next year after a two month consultation period on the latest draft.
Vietnam says the law is necessary to protect against cyber attacks but has made clear it will also be used to control “slander” against the government and “fake news”, terms increasingly used to describe any criticism of the government.
The ministry said that enemy and “reactionary forces” were exploiting social media to incite unrest and terrorism.
The law will require Facebook, Google and others to remove anti-state content and anything the authorities consider to be slanderous.
The requirement that extensive data about users be stored in country, including contact details, credit card information and biometric data, has alarmed rights activists who fear the data will be vulnerable to seizure by the state.
Tech companies had hoped that the provisions would be softened because of warnings that the law will scare off foreign business and stifle innovation and growth in Vietnam.
US companies say the law contains some of the most draconian data localisation provisions in the world.