On 14 June 2025, the Vietnamese National Assembly officially passed Law No. 67/2025/QH15 on Corporate Income Tax (CIT) Law, set to take effect from 1 October 2025, and applicable from the 2025 tax period. The new law marks a critical shift in Vietnam’s approach to corporate taxation, responding to changes in the global tax landscape, the digital economy, and national development priorities.
Table of contents
- Expanding corporate tax obligations to the digital economy
- Revised taxable and exempt income
- Offsetting profits and losses
- Changes in deductible expenses
- New tax rates and incentives
- Support for innovation
Expanding corporate tax obligations to the digital economy
One of the most notable reforms is the expansion of taxable entities to include foreign enterprises without a permanent establishment in Vietnam. Specifically, foreign companies engaged in e-commerce and digital platform-based business models must now declare and pay tax on income sourced from Vietnam. Digital platforms that enable these transactions are also formally recognized as constituting a permanent establishment, creating a clearer legal framework for taxing cross-border digital activity.
Revised taxable and exempt income
The revised law introduces the concept of a minimum taxable income rule (Income Inclusion Rule, IIR) in line with international Base Erosion and Profit Shifting (BEPS) initiatives. Simultaneously, it expands the scope of tax-exempt income.
New exemptions
- Financial support from unrelated domestic and foreign entities for R&D, innovation, and digital transformation
- Compensation paid by the State in accordance with the law.
- Transfers of carbon credits and green bonds
These exemptions reflect Vietnam’s commitment to fostering sustainability, innovation, and a cleaner economy. Tax exemption period reduced from 5 years to 3 years for income from the sale of products using new technology applied for the first time in Vietnam.
Tax exemptions for small and medium enterprises (SMEs) and household businesses
- SMEs: Eligible for 100% corporate income tax (CIT) exemption for three consecutive years from the date of issuance of the first business registration certificate. This policy has been in effect since 17 May 2025.
- Household Businesses: Enterprises newly established through conversion from household businesses are granted CIT exemption for two consecutive years, starting from the point at which taxable income is generated. This provision takes effect from 1 October 2025.
Offsetting profits and losses
Under the amended regulation, tax losses can now be offset against a broader range of taxable income, including:
- Income from real estate transfers
- Income from investment project transfers
- Income from business transfers
This marks a significant expansion from the previous rule, which only allowed offsets against ordinary business income. However, losses cannot be applied to income that is currently benefiting from CIT incentives. This offers businesses greater flexibility in managing financial performance and tax liabilities.
Changes in deductible expenses
As per Article 9, some new updates for deductible expenses are as follows :
Additional R&D Deductions: Research and development (R&D) expenses are now eligible for additional deductions beyond actual costs. As per current Resolution No. 198/2025/QH15 dated 17th May 2025, Enterprises are permitted to deduct R&D expenses at a rate of 200% of actual costs when calculating CIT. The specific rate may be adjusted by the Government through future guidance.
Non-Revenue-Corresponding Expenses: Certain expenses are deductible even if they don’t directly generate taxable income, including:
- Scientific research and technology development
- Innovation and digital transformation
- Contributions to public infrastructure
- Costs for reducing greenhouse gas emissions and environmental pollution
Non-compliance with specialized laws: Expenses that do not meet conditions under relevant specialized laws are not deductible.
Interest expense cap: Interest on loans from non-credit institutions exceeding the 20% cap set by the Civil Code is non-deductible. The previous reference to the State Bank’s base rate is no longer applicable. (Refer to Article 468 of Civil Law for capped interest rate)
Non-cash payment threshold: The rigid VND 20 million threshold for non-cash payments is removed from the law. The specific threshold will be defined in the implementing decree, aligning with VAT regulations. As per Decree 181/2025, the threshold is VND 5 million effective since 1st July.
New tax rates and incentives
Standard Corporate Income Tax rate remains 20%. The law introduces progressive tax rates based on annual revenue. A 15% CIT rate applies to enterprises with annual revenue not exceeding VND 3 billion, and a 17% rate to those earning between VND 3–50 billion. However, enterprises that are subsidiaries or related-party companies will not be eligible for the above preferential tax rates if any related party fails to meet the applicable revenue thresholds.
Preferential tax treatment is expanded for high-priority sectors, including information security, semiconductors, artificial intelligence, defense manufacturing, and digital technology production. Notably, investment projects are no longer granted incentives based solely on capital size or employment figures, shifting the focus from quantity to quality and strategic alignment. Industrial zones (IZs) are no longer automatically eligible for CIT incentives. Previously, new investments in IZs received a 2-year CIT exemption and 4a -year 50% reduction.
Expanded incentive sectors
New sectors eligible for CIT incentives include:
- Semiconductor R&D and manufacturing
- AI data centers
- Digital technology services
- Automobile manufacturing
- SME support services (e.g., incubation, co-working spaces)
Removed incentive sectors
- Biotechnology, refining of animal/aqua feed.
- Projects with capital ≥ 6,000 billion VND; projects in high-tech zones but not in the high-tech sector.
Support for innovation
To further encourage innovation, the maximum allocation to the Science and Technology Development Fund is raised from 10% to 20%. Additionally, the calculation of penalties for misusing this fund is revised.
The 2025 CIT amendments reflect Vietnam’s strategic alignment with global tax reforms, digital transformation, and climate commitments. Businesses, especially those operating in technology, green sectors, and cross-border e-commerce, should carefully review these changes to optimize compliance and take full advantage of new opportunities.
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