Overview of Vietnamese Corporate Tax and Key Points of Legal Amendments

2025/08/05

• I-GLOCAL CO., LTD. Ho Chi Minh Office
• Yuya Taniguchi

Introduction

　The standard corporate income tax (CIT) rate in Vietnam remains at 20%, placing it among the relatively lower levels in Asian countries. In this context, a significant revision of the Corporate Income Tax Law—the first major change in 12 years—was approved by the National Assembly on June 14, 2025 (Law 67/2025/QH15, hereinafter referred to as the ‘Amended Law’). In this revision, while the standard tax rate of 20% has been maintained, the range of taxpayers has been expanded. Furthermore, revisions to existing preferential schemes as well as new preferential measures for small and medium-sized enterprises have been included, demonstrating the government’s policy of supporting SMEs and startups. This article organizes an overview of the current corporate income tax system and explains the key points of the revisions in this law.

1. Overview of current corporate income tax(CIT)

　First, the main points of the current Vietnamese corporate income tax system are summarized in the table below

Tax rate	20%
Tax year	At the time of establishment, you can freely choose from March, June, September, or December.
Tax filing and payment period	Within 3 months after the end of the fiscal year (e.g., if the fiscal year ends in March, by the end of June)
Calculation method	20% * [Revenue + Other income – (Deductible expenses, Non-taxable income, Carried-forward losses)]
Estimated tax payment	・The company itself is required to make quarterly estimated tax payments based on the income for the period, and file a final tax return at the end of the taxable period. ・If the total amount of provisional tax payments for the fourth quarter is less than 80% of the amount due in the final tax return, delinquency tax must be paid on the difference.
Carryforward losses	Can be carried forward for 5 years
Preferential tax system	Manufacturing industry	2 years tax exemption + 50% tax reduction for the following 4 years
	Software development	Application of a 10% rate for 15 years and Tax exemption for the first 4 years + 50% tax reduction for the following 9 years.
	New investment projects in regions with difficult economic or social conditions, etc.	Application of a 17% rate for 10 years.
Reduction/exemption period	・Starts from the taxable period in which taxable income occurs within a single year. ・If deficits occur for three consecutive terms, the exemption/reduction period automatically begins from the fourth year.

2. Main points of the legal amendment

・Expansion of the range of taxpayers
　With this amendment, it has been clarified that non-resident businesses without a physical office in Vietnam are subject to tax obligations. Foreign corporations with subsidiaries in Vietnam are excluded from this requirement.

　In addition to the conventional Foreign Contractor Tax (FCT), under which Vietnamese companies must withhold tax on services provided by foreign businesses, foreign businesses now also have the option to file and pay taxes directly to the tax authorities themselves. Overseas businesses themselves are required to register and file tax returns through the tax portal, and in addition to VAT (Value Added Tax), corporate tax payment may also be required depending on the nature of the services provided. Whether or not a foreign business operator chooses to register is voluntary, but going forward it will be necessary to confirm each time whether a business partner is registered on the portal and which taxation method they use. Specific corporate tax rates for each service are expected to be clarified through future governmental orders and notices.

Table ①: Newly Added Taxpayers

Eligible Parties	Specific Details
Overseas Business Operators	Operators without a permanent establishment (PE) in Vietnam, conducting business through e-commerce or digital platforms.
Platform administrators and e-commerce managers.	Platform administrators and e-commerce managers who withhold and pay taxes on behalf of the above foreign operators or individuals operating on the platform.

・Various revisions to preferential tax systems
○Abolition of the 2 exemptions 4 reductions policy.
　Until now, new entries and expansion investments in industrial parks have been uniformly subject to a tax incentive of “2 years of tax exemption plus 4 years of 50% tax reduction (commonly known as 2 years exemption and 4 years reduction),” but this incentive will be completely abolished under the revised law.
Other preferential measures based on location conditions (for example, regions with difficult economic or social circumstances) will be maintained, and this amendment only abolishes preferential measures for being located within industrial parks.
　It should be noted that, under the amended law, it remains unclear whether companies located in existing industrial parks can continue to apply the “two years exemption and four years reduction” for the remaining period after the enforcement of the revised law, and further announcements are awaited. In the future, the criteria for applying preferential treatment to newly established corporations in the manufacturing industry will also become a point of discussion. However, it is currently unclear whether eligibility for preferential measures will be based on having already obtained an Investment Registration Certificate (IRC) or Enterprise Registration Certificate (ERC) by September 30, 2025, or determined based on the start date of operations or the beginning of the corporate income tax year. It is expected that clarification will be provided in detailed government decrees and other regulations in the future.

○New preferential system for small and medium-sized enterprises
　A progressive preferential tax rate according to sales scale is applied to small and medium-sized enterprises that meet specific conditions, and newly established corporations enjoy a three-year tax exemption. The sales amount used as a basis for applying these preferential measures is, in principle, determined based on the sales of the corporate income tax period of the previous fiscal year.
　On the other hand, the amended law also sets out cases where these preferential tax rates are excluded, for example, capital gains arising from share transfers or income earned outside of Vietnam are not eligible. In particular, in case (2) of Table ① below, if there is even one company within the corporate group that does not meet the requirements (in other words, with net sales exceeding 50 billion VND), it is expected that the preferential tax rates will not be applicable to the entire group.
　The text of the revised law lacks clarity in defining this group, and it does not specify whether foreign parent companies or branches are included, or whether it is limited to companies that have corporate status within Vietnam. However, according to our company’s view, as with many Japanese companies operating overseas, if the parent company is a large-scale enterprise that does not meet the sales requirements listed below, there is a high possibility that, under the revised law, schemes such as separating a small Vietnamese subsidiary to apply preferential tax rates will not be permitted.

Table ②: List of Preferential Systems for Small and Medium-Sized Enterprises

	Eligible companies and application requirements		Tax rate
Preferential tax rate	Previous year’s sales criteria
		3 billion VND (approximately 180 million yen) or less	15%
		3 billion VND to over 50 billion VND (approximately 300 million yen)	17%
		Cases not eligible for preferential treatment (1) Income from capital transfers or stock transfers (2) Corporate groups with related parties for application requirements (3) Income generated from overseas business (4) Income from real estate transfers (5) Income earned from the extraction of oil, gas, and rare minerals (6) Income from manufacturing and selling special consumption tax対象products (such as alcoholic beverages and tobacco)
Tax exemption for newly established corporations	For enterprises in commerce and service industries that meet the classification criteria for small and medium-sized enterprises (SMEs)(*) ・Average annual number of employees enrolled in social insurance: 100 or fewer ・Annual sales: 1,000 billion VND (approximately 18 billion yen) or less ・Total capital: 3,000 billion VND (approximately 6 billion yen) or less *Details specified in Decree 80/2021/ND-CP		Tax exemption for three years after establishment

・New Capital Gains Taxation
　Previously, there were no explicit legal provisions regarding the transfer of unlisted shares by foreign corporations; in practice, there were cases where the treatment was applied as for a limited liability company (subject to a 20% tax on capital gains), or a professional judgment was made that no taxation applied at all. In contrast, the recent amendment explicitly designates transfers of unlisted shares, including those of joint-stock companies, as subject to taxation, thereby clarifying the handling of such cases.

　It is also important to note that the tax treatment will differ depending on whether the foreign corporation has “direct control” over the company being transferred. Specifically, if the foreign parent company is deemed to be directly involved in the management and business operations of the Vietnamese subsidiary, the conventional 20% tax on capital gains will continue to apply. However, if there is no direct involvement in management or operations, a flat tax rate on the total transfer price (set at 2% in the current draft) is expected to be applied.

　It should be noted that the specific definition and criteria for determining ‘direct management’ as used here are not yet explicitly stated under the amended law, so it will be necessary to closely monitor guidance such as government ordinances or notifications to be issued in the future.

Table ③: CIT Rates Arising from Capital Transfer Transactions

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