What’s New in Vietnam’s CIT Law 2025? A Complete Guide

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What’s New in Vietnam’s CIT Law 2025? A Complete Guide

On June 14, 2025, Vietnam’s National Assembly passed the new Corporate Income Tax Law (Law No. 67/2025/QH15), which officially takes effect on October 1, 2025 and applies retroactively to the entire 2025 tax year.

This is the most significant overhaul of Vietnam’s corporate tax framework since 2008. The new law replaces the CIT Law No. 14/2008/QH12 (and all its amendments) entirely. For foreign investors, foreign direct investment (FDI) companies, and business managers operating in Vietnam, this is not a minor update — it introduces new tax rate tiers for small businesses, expands the scope of taxable income for foreign enterprises (including e-commerce and digital platforms), reshapes what qualifies as a deductible expense, and introduces a substantially broader framework of tax incentives.

The core question this guide answers is simple: How will the new CIT Law 2025 affect your business’s bottom line starting this year?

Key Takeaways

Before diving into the details, here are the most important things to keep in mind as you read through this guide:

New reduced tax rates are now available for small and medium-sized enterprises: 15% for businesses with annual revenue under VND 3 billion, and 17% for those between VND 3–50 billion — down from the flat 20% standard rate. However, these rates come with conditions and do not apply to subsidiaries or affiliated companies.
Foreign companies selling into Vietnam digitally are now explicitly covered. E-commerce operators and digital platform businesses without a permanent establishment in Vietnam are now clearly subject to CIT on Vietnam-sourced income.
More expenses are now deductible, including R&D costs at up to 200% of actual spending, certain pre-revenue costs, and green economy-related expenditures — potentially reducing your taxable income significantly.
Tax exemptions have been expanded to cover carbon credits, green bonds, tech innovation contracts, and businesses employing people with disabilities or recovering from addiction.
Tax incentive rules have been restructured and now align more closely with the Investment Law, with new criteria for expanded investment projects.
Transition provisions protect existing incentives — businesses with approved investment projects before the law takes effect can choose to keep their current incentives or switch to the new regime, whichever is more beneficial.

What Is Corporate Income Tax in Vietnam, and How Is It Calculated?

If you’re new to running a business in Vietnam or are still getting familiar with the local tax system, this section gives you the foundation you need before we get into what has changed.

Who Has to Pay CIT in Vietnam?

Corporate Income Tax (CIT) is a tax levied on the profits of businesses operating in Vietnam. Under the 2025 law, the following entities are required to pay CIT:

Companies incorporated under Vietnamese law (domestic enterprises)
Foreign companies with a permanent establishment (PE) in Vietnam — such as a branch, factory, or construction site
Foreign companies without a PE in Vietnam but that generate income from Vietnam — including businesses conducting e-commerce or operating digital platforms targeting Vietnamese customers
Cooperatives and cooperative unions
Public and non-public service units with taxable income
Other organizations engaged in production or business activities with taxable income

This is a key update from the 2008 law: digital businesses and e-commerce platforms are now explicitly named as tax subjects, removing previous ambiguity around their obligations.

How Is CIT Calculated?

The basic formula is:

Tax Payable = Taxable Income × Tax Rate

And taxable income is determined as follows:

Taxable Income = Assessable Income − Tax-Exempt Income − Carried-Forward Losses

Assessable Income = Revenue − Deductible Expenses + Other Income

In plain terms: you start with your total revenue, subtract your allowable business expenses, add any other income (such as interest, asset sales, or foreign earnings), subtract any income the law exempts from tax, subtract any losses carried over from previous years, and then apply the applicable tax rate.

When Do Businesses Pay CIT?

CIT in Vietnam follows an annual tax period, aligned with either the calendar year (January to December) or a fiscal year of the business’s choosing. FDI companies are typically required to make quarterly provisional tax payments throughout the year and then file a final annual tax finalization within 90 days after the end of the tax year. Foreign enterprises without a PE in Vietnam are generally taxed at the point of income receipt via withholding tax.

Why Was a New CIT Law Needed in 2025?

The CIT Law of 2008 served Vietnam for nearly two decades and was amended multiple times — in 2013, 2014, 2020, 2022, and 2023 — to keep pace with economic changes. However, those amendments created a patchwork of regulations that were increasingly difficult to navigate, particularly for foreign investors unfamiliar with Vietnamese tax law.

Several developments made a comprehensive overhaul necessary:

The rise of the digital economy. The 2008 law predates the scale of today’s cross-border e-commerce and digital platform businesses. Vietnam needed clear rules about how foreign tech companies, app platforms, and online retailers are taxed on income derived from Vietnamese consumers — regardless of whether they have a physical presence in the country.

Global tax reform alignment. Vietnam has been adapting its tax framework to align with international standards, including the OECD’s Global Minimum Tax (Pillar Two / IIR) rules, which require multinational enterprises to pay a minimum effective tax rate. The new law includes specific provisions on supplemental CIT for businesses subject to these global minimum tax rules.

Support for the green economy and innovation. As Vietnam pursues sustainability goals and positions itself as a tech-forward investment destination, the government wants to introduce specific incentives for carbon credits, green bonds, R&D investment, digital transformation, and innovation-driven businesses.

Simplification and codification. Rather than continuing to amend a 17-year-old law, the government chose to consolidate everything into a new, cleaner legal framework.

The 7 Most Important Changes in Vietnam CIT Law 2025

1. What Counts as Taxable Income? Key Clarifications for FDI Businesses

The new law significantly expands the details around what constitutes taxable income — particularly for foreign enterprises earning money in Vietnam.

For all businesses, the law now explicitly lists the following as “other taxable income” (in addition to core business income):

Capital transfers (including securities transfers)
Real estate transfers
Investment project transfers and mineral exploration/extraction rights transfers
Asset transfers, leases, and disposals (including financial instruments, excluding real estate)
Intellectual property rights and technology transfers
Interest income, foreign exchange gains, bad debts recovered, unclaimed liabilities
Gifts and donations received
Asset revaluation gains (upon capital contribution, restructuring, mergers, or conversions)
Income from Business Cooperation Contracts (BCCs), including where profits are shared in the form of revenue, products, or pre/post-tax profit
Income from admitting new capital contributors
Scrap and by-product sales
Import/export tax refunds
Income from domestic equity participation (after CIT has been paid at the source)
Income from overseas operations

For foreign enterprises without a permanent establishment in Vietnam, the 2025 law is particularly significant. It now covers taxable income arising from:

Services rendered with Vietnamese-sourced income (regardless of where the service is performed)
Supply and distribution of goods in Vietnam, including via e-commerce platforms and digital platforms
Loans extended to Vietnamese parties
Royalties and technology transfers
Capital and investment project transfers
Mineral exploration, extraction, and processing rights

This change has direct implications for foreign companies selling software, digital services, or goods to Vietnamese customers online without maintaining a local office.

Practical note: If your overseas business generates any of the above types of income with a Vietnamese source, you may now have a clearer CIT obligation in Vietnam — even without a registered entity here. This is an area worth reviewing with a tax advisor, as the withholding tax mechanism and applicable rates will depend on the nature of the income.

2. Which Types of Income Are Now Exempt from CIT?

The 2025 law expands the list of CIT-exempt income in several meaningful ways. The following categories are exempt from tax:

Agricultural and aquaculture activities (in areas designated as especially economically difficult): This includes fishing, cultivation of crops, forests, and aquaculture, as well as agro-processing in qualifying locations — provided that agricultural raw material or seafood input accounts for at least 30% of production costs.

R&D, technology development, innovation, and digital transformation contracts: Income from these contracts is exempt for up to 3 years from the date the contract generates income. Income from selling products made using newly applied technologies in Vietnam for the first time is also exempt for 3 years, subject to confirmation from a competent authority.

Businesses employing people with disabilities, recovering addicts, or HIV-positive individuals: Companies where at least 30% of average annual workers fall into these categories — and total average workforce is 20 or more — are fully exempt from CIT on their business income (excluding financial services and real estate businesses).

Social welfare organizations (healthcare, education): The undistributed income of institutions in the social welfare sector — education, healthcare, and other approved categories — that is reinvested back into facility development is exempt, provided it meets the minimum reinvestment ratio (at least 25% of income) set by the Government.

Carbon credits and green bonds: This is new. Income from the first transfer of carbon reduction certificates and carbon credits is exempt from CIT. Similarly, interest income and gains from the first transfer of green bonds after issuance are exempt. This creates a meaningful incentive for businesses operating in or financing green economy activities.

State-mandated missions: Income (including bank deposit interest, government bond interest, and treasury bill interest) earned by the Vietnam Development Bank, Vietnam Bank for Social Policies, VAMC (Vietnam Asset Management Company), and other state funds while performing assigned government mandates is exempt.

Asset revaluation differences: The law now clarifies how gains from asset revaluations (when assets are contributed as capital, transferred during mergers, split-offs, consolidations, or enterprise type conversions) are treated — providing clearer guidance on when these gains are taxable versus exempt.

3. What Can and Can’t You Deduct? Updated Rules on Business Expenses

This section has practical implications for your accounting and tax planning. The 2025 law introduces new deductible items while also tightening restrictions on certain expense categories.

Newly Deductible (or Enhanced Deductions)

Expense Category	New Rule Under CIT 2025
R&D spending	Deductible at up to 200% of actual cost (i.e., a “super-deduction”)
National defense education costs	Fully deductible
Party organization support within the enterprise	Deductible
Vocational training for employees	Deductible
HIV/AIDS prevention at the workplace	Deductible
Sponsorships for education, healthcare, culture, charity, and scientific research	Deductible (with documentation)
Greenhouse gas reduction costs	Deductible, if related to business operations
Contributions to Government-approved funds	Deductible
Pre-revenue costs (unsuccessful bids, market research that didn’t lead to a deal, land rental before operations begin, depreciation on leased assets before tenants are found)	Now specifically included as deductible in the period they’re incurred

The 200% R&D super-deduction is particularly notable. If your business spends VND 1 billion on qualifying research and development, you may be able to deduct VND 2 billion from your taxable income — effectively halving the net cost of that investment. The conditions, time limits, and scope of what qualifies are to be further detailed by the Government.

What this means for you: Review your current accounting setup. If your lease arrangements, car fleet, or employee benefit structure doesn’t align with these rules, you may be inadvertently overclaiming deductions — which creates audit exposure. Conversely, if you’re investing in R&D or green initiatives, you may be able to claim significantly more than before.

4. How Do the New Tax Rates Work?

This is one of the most talked-about changes in the new law. Here’s a clear breakdown:

Standard Tax Rate

The standard CIT rate remains 20% for most enterprises.

New Reduced Rates for Small Businesses

Annual Revenue	CIT Rate
Up to VND 3 billion (~USD 120,000)	15%
VND 3 billion to VND 50 billion (~USD 2 million)	17%
Above VND 50 billion	20% (standard)

The revenue threshold used to determine eligibility is based on the previous tax year’s total revenue, not the current year.

These reduced rates of 15% and 17% do not apply to companies that are subsidiaries of, or have an affiliated relationship with, a company that does not itself qualify for these reduced rates. In other words, if your Vietnamese entity is a subsidiary of a larger foreign group, it will likely not qualify for the 15% or 17% rates — even if its own revenue is below the thresholds.

Special Rates for Specific Activities

Activity	CIT Rate
Oil and gas exploration and extraction	25% – 50% (set per contract by the Prime Minister)
Exploration/extraction of rare resources (platinum, gold, silver, tin, tungsten, antimony, gemstones, rare earths, etc.)	50%
Exploration/extraction of rare resources (platinum, gold, silver, tin, tungsten, antimony, gemstones, rare earths, etc.), but where 70%+ of the area is in “especially difficult” zones	40%

Preferential Rates Under the Incentive Framework

Separate from the above, the law also provides for preferential rates of 10% and 17% for businesses operating in qualifying sectors or locations — we will discuss in detail in Section 6.

5. How Is Tax Calculated in Special Situations?

Vietnamese Enterprises with Overseas Operations

If your Vietnamese company earns income from operations abroad, you must declare and pay CIT in Vietnam on that overseas income. The good news is that tax paid overseas can be credited against your Vietnamese CIT liability — but only up to the amount of Vietnamese CIT that would otherwise be due on that income. You cannot use foreign tax credits to reduce Vietnamese tax below zero.

Overseas income should be declared in the CIT finalization, with the standard tax rate is 20% of the tax year in which the overseas tax obligation arises.

Foreign Companies Without a Permanent Establishment in Vietnam

These entities are taxed on a percentage of gross Vietnam-sourced revenue rather than on net profit (since they don’t maintain books in Vietnam). The specific rates by income type are set by the Government (rates from the previous regime, such as 5% for services, 10% for royalties, 10% for interest, 2% for construction and transport, 0.1% for securities transfers, etc.).

Businesses with Annual Revenue Under VND 3 Billion

If a small business qualifies for the 15% rate but cannot determine its costs and therefore cannot calculate taxable income, it may pay CIT based on a percentage of revenue rather than the standard profit-based calculation. The Government will set the applicable revenue percentages.

6. What Tax Incentives Are Available Under the New Law?

The 2025 CIT Law significantly restructures the incentive framework. Incentives are granted based on two main criteria: qualifying industries/sectors and qualifying geographic locations.

Qualifying Sectors for Tax Incentives

The law lists a broad range of qualifying sectors, including:

High-tech application and development; strategic technology; high-tech business incubation
Software production; cybersecurity products and services; key digital technology products and services; electronic component manufacturing; AI data centers
Supporting industries for textiles, footwear, electronics, auto manufacturing (meeting EU or equivalent standards)
Renewable energy, clean energy, energy from waste; environmental protection; production of composite and lightweight building materials
Investment in water plants, power plants, infrastructure (roads, railways, airports, ports, bridges)
High-tech enterprises; science and technology enterprises
Large-scale manufacturing projects (minimum VND 12,000 billion investment, disbursed within 5 years)
Investment in social housing construction for eligible buyers and renters
Agriculture: forestry, seed breeding, post-harvest storage, fisheries, organic farming, feed production
Healthcare and education: hospitals, schools, vocational training; forensic assessment
SME support infrastructure; co-working spaces; startup incubators
Publishing; journalism

Qualifying Geographic Locations

Areas with especially difficult socioeconomic conditions
Areas with difficult socioeconomic conditions
Special economic zones; high-tech parks; hi-tech agriculture zones; digital technology concentration zones

Preferential Tax Rate Structure

Rate	Duration	Qualifying Situation
10%	15 years	New investment projects in qualifying high-tech sectors or in especially difficult areas, etc.
10%	Ongoing	Agricultural cooperatives; social housing construction; publishing; journalism; credit unions, etc.
15%	Ongoing	Agriculture and aquaculture operations in difficult areas, etc.
17%	10 years	New projects in manufacturing sectors (m, n, o under Article 12); new projects in difficult areas; new projects in economic zones not in priority areas, etc.
17%	Ongoing	People’s credit funds and microfinance institutions, etc.

The 10% rate over 15 years can potentially be extended by the Prime Minister for up to an additional 15 years for projects with minimum VND 6,000 billion investment that have significant socioeconomic impact.

What the Incentives Do NOT Apply To

The preferential rates of 15% and 17% (for small/medium revenue businesses) and the incentive framework do not apply to:

Income from capital transfers and equity transfers
Income from real estate transfers (except social housing development)
Income from investment project transfers (except mineral processing project transfers)
Income from oil and gas and rare resource exploration/extraction
Income from online gaming; goods and services subject to special consumption tax (with exceptions for autos, aircraft, yachts, oil refining)

7. Transitional Provisions: What Happens to Existing Investment Incentives?

If your business holds an approved investment project that was granted incentives under the previous CIT regime, you are protected by the transition provisions in Article 20 of the new law.

Option to choose the more favorable regime: Businesses with investment projects that were licensed or certified before the new law takes effect, and that qualify for incentives under the new law’s expanded criteria, may choose between:

Continuing with the incentives they were originally granted, for the remaining duration, OR
Switching to the new law’s incentive framework for the remaining period

Businesses newly qualifying under the 2025 law: If your project did not qualify for incentives under the old law but does qualify under the new law, you can apply the new incentives starting from the 2025 tax year onward.

Loss carryforward: The ability to carry forward losses remains (up to 5 consecutive years from the year following the loss year), and the new law confirms this framework continues.

What Does This Mean for Your Business?

Understanding the law is one thing — understanding how it affects your operations, costs, and compliance calendar is another. Here’s what foreign investors and FDI companies should be thinking about:

For Small and Medium FDI Companies

If your Vietnamese entity has annual revenue below VND 50 billion and is not a subsidiary or affiliated entity of a larger group, the reduced tax rates of 15% or 17% could meaningfully reduce your annual tax bill.

However, the affiliated company restriction is critical. Many FDI structures involve a parent company abroad and a Vietnamese subsidiary. If the parent does not independently qualify for the reduced rates (which it likely doesn’t), the subsidiary cannot use them either. This is worth verifying carefully with a professional.

For Technology and Digital Businesses

The explicit inclusion of e-commerce platforms and digital platform businesses in the scope of Vietnam-sourced taxable income means overseas tech companies serving Vietnamese customers without a local entity may now face clearer — and potentially enforced — CIT obligations. If your company falls into this category, this is the right time to assess your exposure and whether establishing a compliant local presence makes more business sense than managing withholding tax obligations from abroad.

On the upside, if you’re building tech products in Vietnam — software, AI systems, cybersecurity solutions, key digital technology products — you likely qualify for the 10% rate over 15 years with a 4-year tax exemption followed by a 9-year 50% reduction. The economics of the IT tax incentive package are substantial.

For Manufacturing and Infrastructure Investors

Large-scale manufacturing projects meeting the VND 12,000 billion investment threshold with technology that meets Government standards now qualify for the 10% rate over 15 years. For infrastructure investments (power plants, water systems, roads, airports, ports), the same rate applies. These categories also benefit from potential Prime Minister extensions of up to 30 years total if the investment meets specific scale and socioeconomic impact criteria.

For All Businesses: R&D and Green Economy Opportunities

The 200% R&D deduction is one of the most underutilized incentives in many tax systems, and Vietnam is now introducing it explicitly. If your business has qualifying research and development activities — product development, process innovation, technology adaptation — ensuring those costs are properly classified and documented could significantly reduce your taxable income.

Similarly, if your business is engaged in or financing activities related to carbon reduction, the exemption on carbon credits and green bond income is worth structuring around carefully.

Compliance Risk Areas to Watch

Several changes in the 2025 law create new audit exposure if businesses don’t update their internal processes:

Car depreciation limits: The VND 1.6 billion cap per vehicle for passenger cars under 9 seats is not new, but the law now explicitly reinforces it. If your fleet policy doesn’t reflect this, review your depreciation calculations.
Employee insurance obligations: If you’re claiming deductions for supplemental pension or life insurance premiums for employees but haven’t fully paid all mandatory social insurance contributions, those deductions will be disallowed.
Utility cost documentation: If your landlord holds the utility contracts directly, costs passed through to you may not qualify as deductible. Review your lease structure and consider whether utility contracts should be renegotiated into your company’s name.
Pre-revenue costs: While the law now explicitly allows deductions for certain pre-revenue expenses (bid costs, market research, land rental before operations), these still require proper documentation and must genuinely relate to the business.

How VNBG Can Help You Navigate Vietnam’s New CIT Framework

Vietnam’s new Corporate Income Tax Law is comprehensive, and its interaction with your specific business structure, investment category, and operational footprint creates a compliance landscape that is genuinely complex — even for experienced finance teams. The difference between getting this right and getting it wrong is not just a matter of paperwork: it’s the difference between claiming the incentives your business is genuinely entitled to, and either overpaying tax unnecessarily or facing unexpected audit exposure.

At VNBG, we specialize in helping foreign investors, FDI company owners, and business managers understand and navigate Vietnam’s legal and tax environment. Our team combines local regulatory knowledge with practical business advisory experience — so when we explain what the new CIT rules mean, we’re translating them into decisions you can actually make.

Whether you need a review of your current tax structure in light of the new law, guidance on whether your business qualifies for preferential rates or exemptions, support with your 2025 annual tax finalization, or assistance establishing the right legal and tax framework for a new investment in Vietnam — we’re here to help.

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