On 14 June 2025, the National Assembly of Vietnam officially passed the Amended Corporate Income Tax Law, effective from 1 October 2025 (the “Amended CIT Law”), with several notable new provisions aimed at addressing the shortcomings of the current regulations and practical challenges. The key amendments and supplements focus on:
- Expansion of the scope of taxpayers;
- Preferential corporate income tax rates for small and medium-sized enterprises;
- Clarification of entities eligible for tax incentives; and
- Amendment to policies on tax exemption and reduction.
Expansion of Taxpayers
The Amended CIT Law supplements a completely new category of taxpayers based on the provision regarding permanent establishments of foreign enterprises conducting business in Vietnam. Specifically, “E-commerce platforms and digital technology platforms through which foreign enterprises provide goods and services in Vietnam” are now subject to Corporate Income Tax (CIT).
This provision is intended to enhance tax management over the income of foreign enterprises generated from e-commerce and digital business activities in Vietnam, as well as to curb tax losses from cross-border e-commerce transactions, which are increasingly common in Vietnam.
Corporate Income Tax Rates
Under the Amended CIT Law, there are three applicable CIT rates: 20%, 17%, and 15%. Under the prevailing law, the 15% and 17% tax rates were only applied to specific tax-incentivized cases. However, under the Amended CIT Law, these rates are now linked to annual revenue thresholds, which aim to create a more supportive tax environment for small and medium-sized enterprises (SMEs).
The detailed CIT rates are as follows:
- CIT rate of 20%: applicable to standard enterprises that are not eligible for tax incentives;
- CIT rate of 15%: applicable to enterprises with total annual revenue not exceeding VND3 billion; and
- CIT rate of 17%: applicable to enterprises with total annual revenue of over VND3 billion but not exceeding VND50 billion.
The following cases are not eligible for the preferential tax rates of 15% and 17%:
- Income from capital transfers, equity transfers, and real estate transfers (except social housing); income from transfers of investment projects (except mineral processing projects), rights to participate in investment projects, and rights to explore, exploit, and process minerals; and income from business activities conducted outside Vietnam;
- Income from the exploration and exploitation of oil, gas, and other rare natural resources;
- Income from the production and trading of goods and services subject to special consumption tax (excluding projects related to automobile, aircraft, yacht manufacturing and assembly, and oil refining); and
- Enterprises that are subsidiaries or related parties whose the controlling entity does not meet the conditions to apply the 15% or 17% tax rates.
Tax Incentives by Business Sectors and Geographical Areas
Article 12 of the Amended CIT Law introduces a new provision outlining the principles and eligible subjects for CIT incentives, based on two criteria: business sectors and geographical areas.
CIT Incentives by Business Sectors
There are 21 eligible sectors for CIT incentives, including the following key areas:
- High-tech application and incubation;
- Production of key information technology products and services; cybersecurity;
- Production of renewable energy, clean energy, energy from waste treatment;
- High-tech enterprises and agricultural enterprises applying high technology; science and technology enterprises;
- Investment to support SMEs, including: technical facilities, incubators, and co-working spaces supporting innovative start-ups; and
- Publishing and journalism, including advertising in newspapers.
CIT Incentives by Geographical Areas
The Amended CIT Law categorizes geographical areas eligible for CIT incentives as follows:
- Areas with especially difficult socio-economic conditions;
- Areas with difficult socio-economic conditions; and
- Economic zones, high-tech parks, high-tech agricultural zones, and centralized digital technology zones established by a decision of the Prime Minister.
The classification of sectors and regions eligible for CIT incentives is intended to promote investment in priority industries and underdeveloped areas.
Tax Exemption and Reduction Periods
Article 14 of the Amended CIT Law replaces the current provisions on tax exemption and reduction mechanisms with more specific and flexible regulations.
Specifically:
- A maximum tax exemption period of 4 years and a 50% tax reduction for up to 9 subsequent years apply to income subject to the preferential tax rate of 10% for 15 years. For new investment projects in certain sectors, the Prime Minister may extend the tax exemption and reduction period by up to 1.5 times the standard duration; and
- A maximum tax exemption period of 2 years and a 50% tax reduction for up to 4 subsequent years apply to income subject to the 17% tax rate for a period of 10 years.
These policies encourage investment in prioritized sectors and support enterprises in stabilizing their financial position during the early years of operation.
Conclusion
The Amended CIT Law introduces several important reforms to meet practical demands. However, for these new regulations to be effectively implemented, detailed and consistent guidelines are essential, particularly in managing the tax obligations of foreign enterprises operating on digital platforms.
For further information, please contact:
Nguyen Thi Hong Duong, Indochine Counsel
duong.nguyen@indochinecounsel.com
