Summary Of The New Corporate Income Tax 2025

The Law on Corporate Income Tax (CIT) No. 67/2025/QH15, enacted on June 14, 2025, shall enter into force on October 1, 2025, and apply to corporate income tax periods beginning in 2025. This Law shall replace the Corporate Income Tax Law No. 14/2008/QH12 and its preceding amendments and supplements.

The new law provides detailed regulations concerning taxable entities, taxable income, non‑taxable income, tax bases, methods of tax calculation, and preferential corporate income tax policies.

Below are notable provisions in the 2025 Corporate Income Tax Law, which represent changes or innovations compared to prior regulations (note that the sources provided are provisions of the new law itself, not direct comparative texts with the previous one):

I. Scope of Application and Taxpayers

The Law explicitly defines taxpayers as including enterprises established under Vietnamese law and foreign enterprises (with or without a resident establishment in Vietnam), cooperatives, public service units, and other organizations engaged in income-producing production or business activities.

Foreign enterprises conducting e‑commerce or platform-based business without a permanent establishment in Vietnam are also subject to tax on any taxable income generated within Vietnam.

The definition of a “permanent establishment” for foreign enterprises is clarified, covering e‑commerce platforms and digital platforms through which foreign enterprises supply goods or services in Vietnam.

II. Taxable Income and Exempt Income

Taxable income includes revenue from manufacturing, business of goods and services, and other detailed income categories such as capital transfers, real estate transfers, investment project transfers, income from the use or ownership of assets (including intellectual property rights, technology transfer), interest income, foreign exchange gains, unused provisions, recovered bad debts, asset revaluation surpluses, income from business cooperation contracts (BCCs), offshore business income, income of public-service units from leasing public assets, and other types of income.

The Law provides for the concept of IIR (Inclusive Minimum Taxable Income), such that any additional CIT due under IIR rules may be offset against CIT payable in Vietnam.

Several new income categories are exempted to promote priority activities:

Income from scientific research, technological development and innovation, digital transformation; income from the sale of products originating from new technologies first applied in Vietnam (tax exemption for a maximum of 3 years).

Income from the transfer of emission reduction certificates, carbon credits upon initial issuance; interest income from green bonds; income from the initial transfer of green bonds.

Income from performing State‑assigned tasks by public financial institutions such as Vietnam Development Bank, Vietnam Bank for Social Policies, the State‑owned Asset Management Company of credit institutions, and non‑profit State financial funds.

Undistributed income of socialized establishments used to develop the establishment.

Income of public-service units from providing basic or essential public services, or operating in particularly difficult socio‑economic areas.

III. Tax Base and Calculation Methods

Determination of taxable income: Taxable income = taxable revenue − exempt income + carried-forward losses.

Loss offsetting: Enterprises may offset losses from business operations against profitable activities, though losses from real estate transfers, transfers of investment projects, or capital contribution rights may not offset against income from business operations enjoying tax incentives.

A clear distinction is made between deductible and non-deductible expenses in calculating taxable income. Notable new provisions include:

- Additional deductible R&D expenses calculated as a percentage of actual costs incurred.

- Deductible expenses related to greenhouse gas emission reductions, carbon neutrality, environmental pollution mitigation, integrated into regular business costs.

Non‑deductible expenses include administrative penalties, excessive expenses in certain cases (e.g., interest on inter‑company loans, direct welfare payments to employees, voluntary supplementary pension or life insurance for employees), and expenses not matched to taxable revenue.

IV. Tax Rates

The standard corporate income tax rate remains 20%.

Preferential rates:

- 15% for micro enterprises with annual revenue not exceeding VND 3 billion.

- 17% for enterprises with annual revenue over VND 3 billion but not exceeding VND 50 billion (based on the prior tax year).

Special rates for oil, gas, and rare resource exploitation, ranging from 25% to 50%, as determined by the Prime Minister.

V. Corporate Income Tax Incentives

The Law specifies priority sectors eligible for tax incentives: high‑tech applications, software production, semiconductor production, renewable energy, environmental protection, large‑scale investment projects, afforestation, livestock, agro‑processing, socialised education and healthcare, and social housing.

Preferential regions include areas with especially difficult socio-economic conditions, economic zones, high‑tech zones, high‑tech agriculture zones, and concentrated digital technology zones.

Specific preferential rates:

- 10% for 15 years: Applies to income from new investment projects in high-tech, software production, supporting industries, renewables, critical infrastructure, or located in especially disadvantaged areas or high‑tech zones.

- 10% (indefinite): Income from agroforestry, agro‑processing, socialised services, social housing, publishing, journalism, and certain cooperatives.

- 15%: Income from agro‑processing and fisheries outside preferential areas.

- 17% for 10 years: Applicable to new investment projects in premium steel, energy‑saving products, agricultural machinery, automobiles, other digital products, or located in less‑favored areas or economic zones not classified as preferential.

- 17% (indefinite): Income of rural credit funds, micro‑finance institutions, and cooperative banks.

Exemption/reduction rules:

- Up to 4 years exemption and 50% tax reduction for the next 9 years for projects enjoying the 10% rate over 15 years.

- 2 years exemption and 50% reduction for 4 subsequent years for projects at 17% over 10 years.

- The Prime Minister may extend exemption/reduction durations (up to 15 years) or the incentive period (up to 1.5 times) for significant projects.

Investment expansion incentives: Specific conditions are set for expansion projects to qualify based on the increase in fixed asset costs, asset ratios, or designed capacity.

New enterprises spun off from household businesses are exempt from corporate tax for 2 consecutive years from the first taxable income.

Science and technology development fund: Enterprises may allocate up to 20% of taxable income annually; unused or misused funds (less than 70% used or used improperly) within five years must be refunded to taxes plus interest.

Conditions for applying incentives: Enterprises must comply with accounting, invoicing, and tax-return requirements, separately account for incentivised income (or apply revenue/expense ratio if separation is not feasible). The incentives do not apply to income from capital transfers, real estate (excluding social housing), oil/gas, rare resources, online games, or goods/services subject to special consumption tax (with limited exceptions).

VI. Transitional Provisions

Enterprises with existing tax‑incentive projects may choose between the preferential rates and durations available at the time of initial licensing/Investment Registration Certificate or those introduced by this new Law, provided they meet eligibility criteria.