Corporate Income Tax (CIT) in Vietnam 2025: Key Updates on Tax Incentives Businesses Must Know
Corporate Income Tax Incentive Policies are a key instrument Vietnam uses to attract and retain foreign direct investment (FDI) projects. However, with the introduction of the Global Minimum Tax (GMT) from 2025, these incentive mechanisms are undergoing strategic changes.
This article provides a comprehensive overview of Vietnam’s current corporate tax incentives and analyzes the key updates businesses need to understand to stay compliant and strategically plan their investments.
Overview of Corporate Income Tax Incentives in Vietnam
Vietnam’s Corporate Income Tax (CIT) policy is designed not only to generate revenue for the state budget but also to act as an important tool to regulate and encourage investment. Understanding the CIT incentive regulations is crucial for businesses seeking to optimize their tax burden and operate efficiently.
Standard Corporate Income Tax Rate
The standard CIT rate currently applied in Vietnam is 20%. This rate applies to all enterprises that do not qualify for preferential treatment or special tax rates.
Key Update from October 1, 2025: New Tiered CIT Rates by Revenue
Under the Law on Corporate Income Tax No. 67/2025/QH15, effective from October 1, 2025, Vietnam will introduce a tiered tax rate system to support small and medium-sized enterprises (SMEs).
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15% tax rate: For enterprises with annual revenue not exceeding VND 3 billion.
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17% tax rate: For enterprises with annual revenue over VND 3 billion but not exceeding VND 50 billion.
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20% tax rate: For enterprises with revenue exceeding VND 50 billion or not eligible for lower rates.
Exceptions: Cases Not Eligible for Preferential Rates
Not all low-revenue enterprises are eligible for the 15% or 17% tax rates. Exceptions include:
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Enterprises in special industries: Exploration and extraction of oil, gas, and rare resources continue to apply higher rates from 32% to 50%.
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Enterprises already enjoying better incentives: If an enterprise qualifies for a lower investment tax rate (e.g., 10%), that rate continues to apply.
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Related-party enterprises: To prevent tax avoidance by large groups splitting into smaller entities, related companies are subject to consolidated review.
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Specific income categories: Income from capital transfer, real estate transfer, or project transfer remains taxed at 20%.
Main Forms of Corporate Income Tax Incentives
Vietnam applies two main types of CIT incentives, often combined for greater benefit:
Preferential tax rates: Applying lower CIT rates (e.g., 10%, 15%, 17%) for a specific duration.
Tax exemption and reduction: Full CIT exemption for the first few profit-making years, followed by a 50% reduction in subsequent years (commonly “4 years of exemption and 9 years of reduction”).
Additional Changes from October 1, 2025 – Reduced Tax Liabilities
The new law also introduces provisions to help businesses lower their taxable income:
Offsetting losses from real estate transfer: Losses from property transfer can be offset against profits from other business activities.
Deductible expenses: Input VAT that cannot be fully credited or refunded may now be deductible for CIT purposes.
Conditions for Enjoying CIT Incentives
CIT incentives in Vietnam are selectively applied to encourage investment in priority sectors and regions.
By Industry:
High-tech sectors: software production, IT, biotechnology.
Energy: renewable energy (wind, solar).
Agriculture: high-tech farming and agricultural processing.
Public services: scientific research, education, healthcare, sports, environment.
By Location:
Areas with difficult or extremely difficult socio-economic conditions.
Industrial zones, economic zones, and high-tech parks.
By Project Scale:
Large-scale projects vital to economic and social development (e.g., investments exceeding VND 6,000 billion meeting technology and environmental standards).
Major 2025 Update – Global Minimum Tax (GMT)
From 2025, Vietnam’s CIT incentive policy will be significantly influenced by the adoption of the Global Minimum Tax (GMT) under OECD’s Pillar Two framework.
What is GMT?
The Global Minimum Tax ensures that multinational enterprises (MNEs) with global revenue above EUR 750 million are subject to a minimum effective tax rate of 15%.
Impact on Vietnam’s Tax Incentives:
When Vietnam offers low preferential CIT rates (e.g., 10%), MNEs’ effective tax rate (ETR) falls below 15%. In that case:
The parent country can impose a Top-up Tax to bring the total rate up to 15%.
As a result, Vietnam’s low-rate incentives lose their effectiveness for attracting FDI, since the benefit is offset by the parent country’s additional tax.
Vietnam’s Strategic Response:
Applying QDMTT: Vietnam plans to introduce the Qualified Domestic Minimum Top-up Tax (QDMTT), allowing Vietnam to collect the top-up tax domestically rather than leaving it to the parent country.
Shifting to Non-Tax Support: Instead of tax rate reductions, Vietnam is exploring direct financial support that doesn’t affect the effective tax rate (ETR), such as:
Cash grants for R&D activities.
Support for infrastructure and high-tech investment.
Funding for workforce training and development.
These changes represent a strategic shift in Vietnam’s approach to investment incentives, especially for large multinational investors.
Procedure for Applying CIT Incentives
CIT incentives are not automatically applied. Enterprises must actively:
Determine eligibility: Self-assess whether they qualify based on industry, location, or project scale.
Declare incentives: Report their eligible CIT reductions or exemptions in tax filings. The tax authority will later verify and approve the incentives through audits or inspections.
Frequently Asked Questions
From October 1, 2025, Vietnam introduces tiered CIT rates based on annual revenue:
15% for businesses with revenue ≤ VND 3 billion.
17% for businesses with revenue > VND 3 billion up to VND 50 billion.
20% for businesses with revenue above VND 50 billion.
CIT incentives are not automatically granted. Enterprises must:
Assess their eligibility (by industry, location, or project scale).
Declare the incentive in their CIT filings.
The tax authority will review and confirm the incentive during inspection.
Priority sectors include:
High-tech industries (IT, software, biotechnology).
Renewable energy (solar, wind).
High-tech agriculture and agricultural processing.
Education, healthcare, science, and environmental services.
References
The information in this article is compiled and cross-checked from the following legal documents currently in effect in Vietnam:
Conclusion
As Vietnam moves toward aligning its tax system with the Global Minimum Tax (GMT) and new international standards, a clear understanding of Corporate Income Tax (CIT) incentives is more crucial than ever.
Foreign-invested enterprises (FDIs) should take a proactive approach to review their investment strategies, tax structures, and compliance records to ensure both regulatory compliance and tax efficiency.
With the Government shifting from tax rate incentives to more substantial, performance-based support mechanisms, Vietnam is opening a new chapter for sustainable and strategic investors. Now is the right time for businesses to reassess, adapt, and seize the emerging opportunities under Vietnam’s new CIT incentive framework from 2025 onward.
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