The 2025 Corporate Income Tax Law: Key Changes Businesses Should Be Aware Of

Expansion of Taxable Scope for Foreign Enterprises without Commercial Presence in Vietnam

The 2025 Corporate Income Tax Law expands the scope of taxation applicable to foreign enterprises, aligning Vietnam’s tax framework with cross-border business practices and the growth of e-commerce.

Specifically, foreign enterprises without a commercial presence in Vietnam—meaning they do not have a subsidiary, branch, representative office, business location, or employees in Vietnam—but derive income from Vietnam, are still subject to Corporate Income Tax in Vietnam.

Taxable income notably includes:

• Income generated from e-commerce platforms; and

• Income from electronic transactions and digital platforms, including cross-border services provided to organizations and individuals in Vietnam.

This provision reflects Vietnam’s policy to prevent tax base erosion and ensure fair taxation between domestic enterprises and foreign enterprises participating in the Vietnamese market through digital channels.

Introduction of Two Additional Preferential CIT Rates Based on Revenue Scale

One of the most significant changes under the 2025 Corporate Income Tax Law is the restructuring of CIT rates, replacing the previous single standard rate of 20%.

Under the new regulations, Corporate Income Tax is applied at three different rates, depending on annual revenue, as follows:

• 15%: Applicable to enterprises with annual revenue below VND 3 billion;

• 17%: Applicable to enterprises with annual revenue from VND 3 billion to below VND 50 billion;

• 20%: Applicable to enterprises with annual revenue of VND 50 billion or more.

This policy aims to support small and medium-sized enterprises, reduce tax burdens, and encourage entrepreneurship as well as business expansion.

Important note: Under the new law, subsidiaries of the same parent company are not eligible for preferential tax rates, even if a subsidiary independently meets the revenue thresholds. This rule is intended to prevent artificial business fragmentation for tax incentive purposes.

3. Expansion of Sectors Eligible for CIT Incentives

In addition to revising tax rates, the 2025 Corporate Income Tax Law also expands the list of industries eligible for tax incentives, in line with Vietnam’s strategy for digital transformation and innovation-driven growth.

Accordingly, enterprises operating in high-technology and innovation-focused sectors, such as:

• Digital technology;

• Artificial intelligence (AI);

• Digital platforms and big data;

• Other innovation-driven industries,

may be considered for Corporate Income Tax incentives, including preferential tax rates and tax exemption or reduction periods, subject to specific legal conditions.

This policy is designed to attract investment, promote research and development, and enhance Vietnam’s long-term economic competitiveness.

Conclusion

The updates introduced by the 2025 Corporate Income Tax Law demonstrate a clear trend toward enhanced tax management of cross-border and digital business activities, while simultaneously strengthening support for small enterprises, technology companies, and innovative businesses.

Both domestic and foreign enterprises are encouraged to review their business models, revenue structures, and operating sectors to assess the potential impact of these new regulations and to develop appropriate tax strategies in compliance with Vietnamese law.