Article by Fidinam
Corporate Income Tax in Vietnam: Latest Update
Vietnam has just passed the revised Law on Corporate Income Tax (CIT), effective from October 1, 2025, applicable for the tax period of 2025 onwards. The reform introduces lower tax rates for small and medium-sized enterprises (SMEs), extended preferential periods for large projects, and strengthened safeguards to ensure fair and effective use of incentives.
1. New Incentives for SMEs
To support smaller businesses, two preferential rates are added to the standard 20% CIT rate:
15%: Annual revenue up to VND 3 billion (≈ USD 120,000).
17%: Annual revenue over VND 3 billion up to VND 50 billion (≈ USD 2 million).
Thresholds are based on the previous fiscal year. These rates exclude subsidiaries or related-party companies if the parent entity is not an SME.
2. Continued Preferential Rates
10% (full duration): Forestation, agriculture, aquaculture, social housing, publishing.
10% (15 years): High-tech, software, supporting industries, renewable energy, projects in high-tech zones or disadvantaged areas.
15% (full duration): Agricultural production outside disadvantaged areas.
17% (full duration): People’s credit funds, microfinance institutions.
17% (10 years): Automobile assembly, SME-support infrastructure, advanced steel production.
3. Extended Incentives for Large/Strategic Projects
The Government may extend preferential tax periods up to 15 years for:
High-tech, software, supporting industries, renewable energy projects with capital ≥ VND 6,000 billion (≈ USD 240 million).
Projects with capital ≥ VND 12,000 billion (≈ USD 480 million) implemented within five years using advanced technology.
Projects with at least one of the following: annual revenue ≥ VND 20,000 billion within five years, more than 6,000 employees, or investment in key infrastructure (e.g., water plants, power stations, wastewater systems).
The Prime Minister may also extend tax exemption/reduction periods up to 1.5 times the standard duration for specially incentivized projects.
4. Tax Holidays and Reductions
4 years exemption + 50% reduction for 9 years: For projects enjoying 10% incentives for 15 years.
2 years exemption + 50% reduction for 4 years: For projects enjoying 17% incentives for 10 years.
5. Labor-Linked Incentives
Tax reduction equal to additional costs of employing/supporting many female workers.
Tax reduction for companies employing a high proportion of ethnic minority workers (further guidance pending).
The revised CIT Law creates a more transparent and predictable framework, opening real opportunities for SMEs and foreign investors to expand in Vietnam. Companies should carefully review eligibility and assess whether to continue under existing incentives or adopt the new regime. With broader benefits and extended timelines, effective tax planning will be key to maximizing efficiency under the 2025 rules.
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