Major Amendments to the Corporate Tax Law Effective October 1, 2025
2026/02/17
Introduction
The new Corporate Income Tax Law under Law No. 67/2025/QH15 (hereinafter referred to as the “CIT Law 2025”) will officially take effect on October 1, 2025, and will apply from the 2025 corporate income tax period. This amendment introduces numerous changes that directly impact corporate taxation, including revisions to the tax rate structure, a reorganization of preferential tax incentives, an expansion of deductible expenses, and greater flexibility in loss offsetting. Notably, the revised law reflects recent economic developments such as the growth of the digital economy, support for small and medium-sized enterprises (SMEs), and the promotion of research and development. This report provides a clear overview of the key amendments as outlined below.
1. Clarification of Taxable Scope for Foreign Enterprises
| CIT Law 2025 | Foreign enterprises are subject to taxation if they generate Vietnam-sourced income, regardless of whether they have a permanent establishment (PE) in Vietnam. For e-commerce and similar activities, a method is introduced to calculate tax based on a fixed percentage of revenue. |
| Previous Regulation |
No explicit provisions defining this taxable scope. |
| Remarks / Impact |
The taxation of cross-border e-commerce and platform-based businesses is clarified, reflecting a policy intention to secure tax revenue and ensure fairness with domestic enterprises. |
2. Changes to Tax Rates
| CIT Law 2025 |
Tax rates are determined based on the previous fiscal year’s revenue: |
| Previous Regulation |
A standard tax rate of 20% applied, with no differentiation based on company size (except for specific incentive schemes). |
| Remarks / Impact |
The primary objective is to reduce the tax burden on SMEs. |
3. Revision of Scope of Tax Incentives
|
CIT Law 2025 |
〇 Removal of certain incentives: ・Production projects with investment capital of VND 6 trillion or more ・Investment projects located in industrial zones 〇 Addition of new incentives: |
| Previous Regulation |
Included incentives for: |
| Remarks / Impact |
The traditional approach of broadly granting incentives based on investment size or location (e.g., industrial zones) has been revised. The focus has shifted toward innovation and SME support. |
4. Expansion of Deductible Expenses
|
CIT Law 2025 |
〇 Newly deductible expenses include: ・Expenditures related to scientific research, technological development, innovation, and digital transformation (DX) ・Expenses that do not generate revenue in the current period but support production and business activities (subject to government conditions) ・Costs of developing shared infrastructure related to business activities (e.g., roads, electricity, water supply and drainage systems) ・Expenditures for emissions reduction, environmental protection, and carbon neutrality ・Contributions to funds established under decisions of the Prime Minister (subject to compliance) ・Non-creditable input VAT, provided that: ＋It is not eligible for a VAT refund; and ＋It is directly related to business activities ※Note: Once treated as deductible expense, such VAT cannot be claimed again as input VAT credit) 〇 Revision of non-deductible expenses: |
|
Previous Regulation |
For loans from non-credit institutions (e.g., individuals), interest exceeding 150% of the base rate announced by the State Bank of Vietnam at the time of borrowing was non-deductible. |
|
Remarks / Impact |
・Allowing non-refundable input VAT to be deductible may reduce financial burdens for certain business models ・As expenses must comply with all relevant laws, compliance requirements now extend beyond tax law to include labor law and administrative regulations |
5. Loss Offset
|
CIT Law 2025 |
Companies are allowed to flexibly offset losses between different business activities. Losses from one activity may be offset against taxable income from another activity at the company’s discretion. This includes income from: However, losses cannot be offset against income from activities that are enjoying tax incentives. |
| Previous Regulation |
Losses from the transfer of real estate or investment projects could be offset against business income, but there was no clear provision allowing the reverse (i.e., offsetting business losses against income from such transfers). |
| Remarks / Impact |
Companies with multiple business lines can optimize their financial structure more effectively. This may reduce overall tax burdens, particularly when gains arise from real estate or project transfers. |
6. Deduction for Contributions to Science and Technology Development Funds
| CIT Law 2025 |
Companies may allocate up to 20% of taxable income to a science and technology development fund as a deductible expense. |
| Previous Regulation |
The maximum allowable allocation was 10% of taxable income. |
| Remarks / Impact |
The increased cap encourages greater investment in research and development (R&D), particularly in high-tech sectors. This facilitates long-term technological advancement and innovation, enhancing corporate competitiveness in an increasingly technology-driven global environment. |
References
Corporate Income Tax Law No. 67/2025/QH15 (dated June 14, 2025)
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