CORPORATE INCOME TAX (“CIT”) LAW 2025

On 14 June 2025, the National Assembly passed the CIT Law 2025 (Law No. 67/2025/QH15), replacing the CIT Law 2008, effective from 01 October 2025. The CIT Law 2025 stipulates some notable new points as follows:

1.      Expansion of taxpayers and taxable income

 Point d, Clause 2, Article 2 and Clause 3, Article 3 stipulate that enterprises engaging in e-commerce and digital platform-based business activities are also subject to tax on income generated in Vietnam, regardless of the place of business operations. This ensures fairness and prevents revenue loss in the context of increasingly common cross-border transactions and digital commerce.

2.      Addition of tax-exempt income categories 

Article 4 of the CIT Law 2025 adds the following categories of tax-exempt income:

• Income from the production from crops, planted forests, livestock, aquaculture, and processing of agricultural and aquatic products (including purchasing for processing) in areas with extremely difficult conditions;

• Income from technology R&D, innovation, digital transformation contracts; products applying new technologies for the first time in Vietnam; and pilot production (including controlled trials) which is exempted from tax for up to 3 years;

• Income from the production and trading of goods and services of enterprises having at least 30% of average annual employees being persons with disabilities, drug rehabilitation participants, or HIV/AIDS-infected persons, and with an average annual workforce of at least 20 employees, except those operating in finance and real estate business;

• Direct support from the state budget and from Government-established investment support funds; the State’s compensation;

• Differences arising from asset revaluation as prescribed by law for equitization or restructuring of enterprises wholly owned by the State;

• Income from the initial transfer of carbon credits after issuance; income from interest and the initial transfer of green bonds after issuance.

3.      CIT rates

According to Article 10 of the CIT Law 2025, the standard CIT rate is 20%. In addition, small-scale enterprises are entitled to the following preferential rates:

• 15% for enterprises with total annual revenue not exceeding VND 3 billion;

• 17% for enterprises with total annual revenue from over VND 3 billion to VND 50 billion.

However, these preferential rates do not apply to enterprises that are subsidiaries or have related-party relationships with other enterprises whose related parties do not meet the eligibility conditions for the above preferential rates.

In addition, exploration and extraction activities in the oil and gas sector are subject to a CIT rate ranging from 25% to 50%, determined by the Prime Minister for each contract based on extraction conditions. Exploration and mining of rare resources are subject to a tax rate of 40%–50%, depending on socio-economic conditions.

4.      CIT incentives

 The CIT Law 2025 introduces significant adjustments to the tax incentive policy, including:

a.   Expansion of eligible sectors and location

 Article 12 of the CIT Law 2025 specifies principles for incentives by sector and location. Newly added sectors include:

• Application and incubation of high technology, venture capital investment for high-tech development in prioritized lists; application of strategic technologies; investment in the construction and operation of high-tech incubation facilities;

• Production of cybersecurity products/services, core digital technology products, semiconductor chips, AI data centers;

• Production of supporting industry products for high technology, and for textile, footwear, electronics – IT, automobile, and mechanical industries meeting technical standards;

• Production of clean energy; environmental protection; new, rare materials; defense, security; industrial mobilization products;

• Investment in critical infrastructure development;

• Manufacturing investment projects with at least VND 12,000 billion in capital, disbursed within 5 years, meeting technology requirements;

• Investment and business activities related to agriculture, forestry, aquaculture, processing; salt production, exploitation, refining;

• Production of high-grade steel, energy-saving products, machinery and equipment serving agriculture – forestry – fishery – salt industries, irrigation equipment, and animal and aquatic feed;

• Manufacturing and assembly of automobiles, digital technology products;

• Investment and operation of technical infrastructure or co-working facilities supporting innovative start-ups and SMEs;

• Publishing and journalism (including advertising in press).

b.   Preferential rates and duration

• A 10% tax rate for 15 years applies to new investment projects in high-tech zones, concentrated digital technology zones, high-tech agricultural zones, or economic zones located in difficult/extremely difficult areas;

• A 17% tax rate for 10 years applies to investment projects in technical infrastructure, incubation facilities, co-working spaces supporting SMEs, and new investment projects in economic zones not located in difficult areas;

• Enterprises investing and operating facilities supporting SMEs are entitled to CIT incentives, specifically full tax exemption for up to 2 years and a 50% reduction of payable tax for the following 4 years.

c.   Amendments to tax exemption and reduction

 According to Article 14 of the CIT Law 2025, the CIT exemption and reduction policy is applied as follows:

• Tax exemption for up to 4 years and a 50% tax reduction for up to the following 9 years applies to: 

  • Income within the scope prescribed in Clause 1, Article 13 of the Law;

  • Income under Point r, Clause 2, Article 12, if the enterprise operates in the areas specified in Points a and b, Clause 3, Article 12.

If operating outside the preferential areas mentioned above, the tax exemption remains for up to 4 years, but the 50% reduction period is limited to a maximum of 5 years.

• Tax exemption for up to 2 years and a 50% reduction for up to the following 4 years applies to income specified in Clause 4, Article 13.

• For new investment projects specified in Point h, Clause 2, Article 12, the Prime Minister has the authority to extend the incentive duration, but not exceeding 1.5 times the exemption and reduction periods stipulated in Clause 1, Article 14.

• The commencement time for tax incentives is calculated from the first year the project generates taxable income.

In case, there is no taxable income arised within the first 3 years from the date of revenue generation, the exemption and reduction period will start from the 4th year.

5.      Losses from real estate transfers allowed to offset taxable income

According to Article 7, when an enterprise incurs losses from production and business activities, the losses can be offset against taxable income from other profit-making activities at the enterprise’s discretion, except for those currently enjoying tax incentives.

For income from the transfer of investment projects involving exploration, mining, and processing of minerals, or the transfer of rights to participate in such projects, profits and losses must be separately determined for tax declaration and payment, and cannot be offset against results from other business activities in the same tax period.

6.      Additional deductible expenses for CIT purposes

 According to Article 9 of the CIT Law 2025, newly added deductible expenses include:

• Expenses supporting the operations of Party organizations, socio-political organizations, vocational education and training for employees, and actual expenses for HIV/AIDS prevention activities at the workplace;

• Expenses for scientific research, technology development, innovation, and digital transformation;

• Actual expenses for seconded personnel involved in management, administration, and control of credit institutions under special control, or commercial banks compulsorily transferred under the Law on Credit Institutions 2024;

• Certain business expenses not directly corresponding to revenue generated in the period;

• Expenses for the construction of public works that concurrently serve the enterprise’s business operations;

• Expenses related to greenhouse gas emission reduction to achieve carbon neutrality and net-zero targets, pollution reduction, and associated production and business activities;

• Contributions to funds established under the Prime Minister’s decisions and Government regulations;

• Expenses with sufficient invoices and non-cash payment evidence, except in specific exceptional cases.

7.      Addition of non-deductible expenses for CIT purposes

 In addition to those mentioned in the 2008 CIT Law, the 2025 CIT Law stipulates that enterprises may not deduct the following expenses:

• Expenses exceeding the prescribed limits for: management fees for casino and prize-winning electronic game operations; interest expenses from related-party transactions; employee welfare expenses; contributions to supplementary pension insurance, social welfare funds, and voluntary pension or life insurance for employees;

• Provisions and depreciation of fixed assets that are incorrect or exceed prescribed limits;

• Input value-added tax (“VAT”) on passenger cars with 9 seats or fewer exceeding the limit; other taxes, fees, charges, and late payment interest not deductible under the Law on Tax Administration.

However, input VAT directly related to production and business activities that has not been fully credited and is not eligible for refund may still be included as a deductible expense. Note that once input VAT has been treated as a deductible expense, it may not be credited against output VAT to avoid duplication.

• Construction investment costs during the investment stage for forming fixed assets; expenses directly related to changes in the enterprise’s charter capital;

Expenses from business activities in the banking, insurance, lottery, securities, BT, BOT, and BTO sectors that are incorrect or exceed the prescribed limits.

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RSM Hanoi_Tax Alert _October 2025.pdf

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