Corporate income tax (CIT) is a core obligation for every enterprise operating in Vietnam. On 14 June 2025, the National Assembly enacted Law No. 67/2025/QH15 on Corporate Income Tax — replacing the previous CIT Law entirely. The new Law took effect on 1 October 2025 and applies from the 2025 tax year onward. Implementing guidance followed through Decree 320/2025/NĐ-CP (effective 15 December 2025) and Circular 20/2026/TT-BTC (effective 12 March 2026, applying from tax year 2025).
This guide covers Vietnam’s CIT framework as it applies to foreign-invested enterprises under the fully updated 2025–2026 rules — drawing exclusively from the primary legal texts.
|
20% Standard CIT rate |
200% R&D super deduction cap |
5M Non-cash payment threshold (VNĐ) |
5 yrs Max loss carryforward |
20% S&T fund cap (of taxable income) |
Who pays CIT in Vietnam
Under Article 2 of Law 67/2025, CIT payers include all enterprises established under Vietnamese law — wholly foreign-owned companies, joint ventures, and branches — as well as foreign enterprises with or without a permanent establishment (PE) in Vietnam that have Vietnam-sourced income. Enterprises established in Vietnam pay CIT on worldwide income.
A significant change under Law 67/2025: foreign enterprises engaged in e-commerce or digital platform businesses are now explicitly subject to CIT on Vietnam-sourced income even without a physical PE. Digital platforms through which foreign enterprises supply goods or services in Vietnam are themselves classified as permanent establishments under Article 2(3)(e) of the Law. E-commerce platform operators and digital marketplace managers are designated as withholding agents (người nộp thuế thay) under Article 2 of Decree 320.
CIT rates in Vietnam 2026
The standard rate is 20%. There are two distinct mechanisms that produce preferential rates — it is important to understand that the same rate number (15% or 17%) can arise from completely different legal bases:
Part A — Revenue-based rates (Article 10, Law 67/2025): apply to the entire enterprise
These rates apply to all income of an enterprise based on its total prior-year revenue. The enterprise does not need a specific investment project — the rate replaces 20% across the board.
| Rate | Condition | Notes |
|---|---|---|
| 20% | All enterprises not meeting conditions below | Standard rate |
| 15% | Total annual revenue of the enterprise ≤ VNĐ 3 billion in the preceding tax year | Does NOT apply to subsidiaries/affiliates of larger non-qualifying groups. Revenue = total sales + financial income + other income on prior-year CIT finalization return. Newly established enterprises may project for current year. |
| 17% | Total annual revenue of the enterprise VNĐ 3–50 billion in the preceding tax year | Same affiliate exclusion applies. This rate also applies to credit unions, microfinance institutions, and cooperative banks on an ongoing basis (Article 13(5) of Law 67/2025). |
Part B — Investment incentive rates (Article 13, Law 67/2025): apply only to qualifying income from specific projects or sectors
These rates apply only to specific income streams from qualifying investment projects or sectors. The enterprise must separately account for incentivised and non-incentivised income (Article 18(2) of Law 67/2025). All other income remains subject to the standard 20% rate.
| Rate | Who qualifies | Duration & tax holiday |
|---|---|---|
| 10% | New investment projects in: high-tech zones, digital technology zones, high-tech agricultural zones; SEZs in difficult/extremely difficult areas; extremely difficult socio-economic areas; high-tech enterprises, semiconductor R&D and manufacturing, AI data centres, software, cybersecurity; qualifying large manufacturing projects (≥ VNĐ 12,000 billion) | 15 years from first revenue year. Holiday: 4 years exempt + 9 years 50% reduction (4 miễn 9 giảm) before 10% starts |
| 10% | Ongoing (no time limit): social housing construction; publishing; press/media including advertising; qualifying cooperatives in agriculture/forestry/fisheries outside incentive areas; agro-processing in difficult areas | No expiry — applies as long as qualifying conditions are maintained |
| 15% | Ongoing: income from agro-processing and aquaculture activities that do NOT qualify for the 10% incentive rate (i.e., not located in a difficult/incentive area) | No expiry — permanent preferential rate for this specific income type only |
| 17% | New investment projects in: steel manufacturing, energy-saving products, agricultural machinery, animal feed, auto/vehicle assembly, other digital technology products; new projects in “difficult” (not extremely difficult) socio-economic areas; new projects in SEZs NOT in difficult/extremely difficult areas | 10 years from first revenue year. Holiday: 2 years exempt + 4 years 50% reduction (2 miễn 4 giảm) before 17% starts |
Tax holiday timing: The exemption and reduction period starts from the first year of taxable income from the investment project. If no taxable income is generated in the first three years from the year of first revenue, the holiday automatically starts in year four (Article 14(4) of Law 67/2025).
Deductible expenses — three conditions and key changes
Under Article 9 of Law 67/2025 and Articles 9–10 of Decree 320, an expense is deductible if it meets all three of the following conditions:
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Condition 1 — Actually incurred The expense must be actually incurred and directly related to the enterprise’s production and business activities. R&D expenses are included under specific rules (see below). |
Condition 2 — Valid documents Must have valid invoices and supporting documents (contracts, delivery records, payment evidence) retained in original, certified copy, or electronic form per Circular 20/2026/TT-BTC. |
Condition 3 — Non-cash payment Transactions of VNĐ 5,000,000 or more per transaction must be paid via banking or electronic payment channels. This applies from 15 December 2025 (Decree 320 effective date). |
R&D super deduction — 200% of actual costs
Article 9(a1) of Decree 320/2025 introduces a double deduction for R&D: qualifying R&D expenses incurred in the tax year are deductible at up to 200% of actual costs (excluding expenses already drawn from the S&T Development Fund). Two conditions must be met:
- After applying the additional deduction, the enterprise must not be in a loss position — the supplementary deduction cannot create or increase a loss.
- The R&D activities must be defined per the law on science, technology, and innovation.
Key deductible and non-deductible items
| Expense type | Treatment | Limit / condition |
|---|---|---|
| Salaries, wages and payroll | Deductible | Must be in labour contract; paid via bank; actually disbursed by finalization deadline |
| Welfare benefits for employees | Deductible up to cap | Max 1 month average salary per year for direct welfare items (travel, health support, etc.) |
| Voluntary supplementary retirement insurance / life insurance | Deductible up to cap | Cap raised from VNĐ 3M to VNĐ 5M/month/person under Decree 320 |
| R&D, technology development, digital transformation | Deductible up to 200% of actual costs | Must not result in a loss after applying the additional deduction; defined per science & technology law |
| S&T Development Fund appropriation | Deductible (pre-tax appropriation) | Up to 20% of annual taxable income (increased from 10% under Law 67/2025) |
| Fixed asset depreciation | Deductible per MOF-approved schedule | Asset must be registered and in use for business; proper documentation maintained |
| Related-party loan interest | Deductible subject to cap | Subject to thin capitalisation rules under transfer pricing regulations (Decree 20/2025) |
| Sponsored donations (education, health, culture, disaster relief, R&D) | Deductible with documentation | Must use Confirmation Form (Mẫu 01/TNDN per Circular 20). Recipient must be a legally established organisation |
| Carbon reduction / net-zero expenses | Newly deductible under Law 67/2025 | Must be directly related to business operations; internal decision and project documentation required |
| Cash payments ≥ VNĐ 5,000,000 | NOT deductible | Must use non-cash payment; applies from 15 December 2025 |
| Administrative fines and late payment interest (tax) | NOT deductible | Traffic, registration, accounting and tax violations all excluded |
| Expenses already paid from S&T Fund | NOT deductible | Cannot double-claim: S&T Fund disbursements may not also be treated as operating expenses |
New exempt income categories under Law 67/2025
Article 4 of Law 67/2025 and Article 4 of Decree 320 expanded the list of income exempt from CIT. In addition to existing exemptions, the following are now explicitly exempt:
| Exempt income category | Condition |
|---|---|
| Income from R&D contracts, digital transformation, and innovative technology products | Exempt for up to 3 years from first income. Products using new technology must be confirmed by competent authority |
| Grants from non-affiliated entities for R&D, technology development, digital transformation | Grantor must have no related-party relationship with the recipient |
| Direct support from the State budget and from the Investment Support Fund (Quỹ Hỗ trợ đầu tư) established under Decree 182/2024 | Must be used for intended purpose; misuse triggers tax recovery |
| Income from first-time transfer of carbon credits and green bonds after issuance | Enterprise must be the original credit/bond holder; does not apply to secondary transfers |
| Interest income from green bonds | Unconditionally exempt |
| Dividends received from Vietnamese domestic enterprises after those enterprises have already paid CIT | Prevents double taxation at the corporate level; applies regardless of whether the payer enjoyed CIT incentives |
Capital transfer tax — two different regimes
The treatment of capital transfer income depends critically on whether the seller is a Vietnamese-incorporated entity or a foreign enterprise without a PE in Vietnam.
CIT rates for foreign enterprises without PE — Foreign Contractor Tax
Under Article 12(3) of Decree 320 and Article 7 of Circular 20, foreign enterprises without a PE in Vietnam (including foreign contractors) pay CIT as a percentage of gross taxable revenue in Vietnam. The Vietnamese paying party withholds and remits. Note: Circular 20/2026/TT-BTC abolishes the hybrid method (phương pháp hỗn hợp) that previously allowed some contractors to deduct Vietnam-sourced costs. For contracts signed from 12 March 2026, only the deemed revenue percentage method applies.
| Income type | CIT rate on gross revenue |
|---|---|
| Services (general) | 5% |
| Restaurant, hotel, casino management services | 10% |
| Supply and distribution of goods in Vietnam (import/export at-site or Incoterms) | 1% |
| Royalties (intellectual property, technology transfer) | 10% |
| Loan interest | 5% |
| Aircraft, helicopter, yacht, ship rental | 2% |
| Machinery and equipment rental (other than above) | 5% |
| Securities transfer; reinsurance | 0.1% |
| Financial derivatives | 2% |
| Capital transfer (foreign enterprise without PE) | 2% |
| Construction, transport, and other activities | 2% |
Loss carryforward — rules and restrictions
Under Article 16 of Law 67/2025 and Article 7 of Decree 320, losses may be carried forward subject to the following rules:
| Rule | Detail |
|---|---|
| Maximum period | 5 consecutive years from the year after the loss year. Any unabsorbed loss after year 5 is permanently lost. |
| Carry forward in full | Must be carried forward in full and continuously — losses cannot be deferred or selectively applied. |
| Quarterly provisional carryforward | Losses between quarters within the same year may be offset provisionally during quarterly tax calculations. Final settlement occurs at annual finalization. |
| Key restriction — incentivised activities | Losses from real estate transfer, investment project transfer, and right-to-invest transfers cannot be offset against income from activities currently enjoying CIT incentives. |
| Restructuring | On merger, split, or ownership conversion, accumulated losses transfer to the successor entity for the remaining carryforward period, allocated by equity ratio on split/demerger. |
Science and Technology Development Fund — updated rules
Under Article 17 of Law 67/2025 and Article 22 of Decree 320:
| Item | Rule |
|---|---|
| Maximum annual appropriation | Up to 20% of annual taxable income (raised from 10% under Law 67/2025) |
| Tax treatment | The appropriation reduces taxable income in the year of transfer. Amounts drawn from the Fund are NOT deductible again as operating expenses — no double deduction |
| Usage deadline | Fund must be used within 5 years of appropriation |
| Recovery — unused or under-used | If unused or less than 70% used after 5 years: recovery of CIT on unused amount plus treasury bond interest (5-year or 10-year rate, whichever is available, at the rate published closest to recovery date) for 2 years |
| Recovery — wrong use | CIT on misused amount plus late payment penalty rate (from date of appropriation to date of recovery) |
| Fixed assets from Fund transferred to operations | Remaining book value of the asset counts as other income in the year of transfer; the remaining value may then be depreciated and deducted as a business expense (per Article 9(1) of Circular 20) |
CIT filing and payment — deadlines
Common CIT compliance mistakes for FDI companies
| Mistake | Root cause | Consequence |
|---|---|---|
| Using old VNĐ 20M non-cash payment threshold | Accounting systems not updated; threshold dropped to VNĐ 5M from 15/12/2025 | Expenses above 5M paid in cash are disallowed — increased taxable income |
| Quarterly provisional payments below 80% of annual liability | Underestimating taxable income; no declaration form creates less visibility | Late payment interest on the shortfall from Q4 deadline |
| Still expecting industrial zone to qualify for incentives | Law 67/2025 removed the old manufacturing investment incentive from 1/10/2025 | CIT underpayment; loss of claimed incentive on audit |
| R&D deduction creating a loss position | 200% deduction incorrectly applied without checking the no-loss condition | Excess R&D deduction is disallowed; recalculation required |
| Assuming 15%/17% rates apply to FIE subsidiaries | These rates explicitly exclude subsidiaries/affiliates of non-qualifying larger companies | Underpayment of CIT at standard 20% rate; penalties on audit |
| BDS losses offset against incentivised income | Not separating losses from real estate/investment project transfer from incentivised activities | Incorrect tax reduction; audit finding with back-tax and interest |
| Double-deducting S&T Fund disbursements | Amounts drawn from the Fund treated both as Fund deduction AND operating expense | Disallowed; CIT recovery + penalties |
| Missing annual finalization deadline | Underestimating time needed to obtain audited financial statements | Penalty up to VNĐ 25 million + late interest on unpaid CIT balance |
Managing corporate income tax for your Vietnam entity?
At TrustlineAX Advisory, we handle the full CIT compliance cycle for foreign-invested companies — quarterly provisional payments, annual CIT finalization and audited financial statement coordination, deductibility reviews, incentive eligibility assessment, transfer pricing documentation, and S&T Fund management. We keep your CIT position accurate, defensible, and fully aligned with Law 67/2025/QH15, Decree 320/2025/NĐ-CP, and Circular 20/2026/TT-BTC. Contact us for a free consultation.
This guide is based exclusively on Law No. 67/2025/QH15, Decree 320/2025/NĐ-CP (effective 15 December 2025), Circular 20/2026/TT-BTC (effective 12 March 2026), and Official Letter 720/CST-TN dated 27 March 2026 of the Ministry of Finance. All provisions apply from the 2025 tax year. Please consult a qualified tax advisor for advice specific to your company’s situation.
Need expert CIT compliance and tax advisory for your Vietnam operations? TrustlineAX Advisory provides dedicated Tax Compliance Services in Vietnam for foreign-invested companies — contact us for a free 30-minute consultation.