Corporate income tax in Vietnam from the 2025 tax year: what the new law changes for foreign-invested companies

Vietnam now taxes company profits under a new law: Law 67/2025/QH15 on Corporate Income Tax, in force from 1 October 2025 and applied from the 2025 tax year. For a foreign-invested enterprise (FIE) with a calendar year end, that means the finalisation you file in early 2026 is the first one prepared entirely under the new rules — even though most of the year's transactions happened before the law took effect.

The headline rate is unchanged at 20%. What changes is the set of rules around it: two reduced rates for smaller companies, a revised list of deductible and non-deductible items, and a reworked incentive regime. Most FIEs will not see a different rate. Almost all of them will need to re-check how they classify expenses and how they document incentives they already enjoy.

The legal framework in one paragraph

The law itself sets principles; the working detail sits in its implementing decree and in guidance from the Ministry of Finance. Filing, payment and deadlines are not governed by the CIT law at all but by the Law on Tax Administration (Law 38/2019/QH14), which also received new implementing documents in mid-2026: Decree 252/2026/ND-CP guiding the Law on Tax Administration and Circular 89/2026/TT-BTC guiding that law and its decree. We name these so you know where to look; we do not summarise their articles here, and you should read them, or have your adviser read them, before relying on any specific procedure.

A practical point for regional finance teams: Vietnamese tax documents are cited by number and year, with a suffix showing the issuing body — QH for the National Assembly, ND-CP for a government decree, TT-BTC for a Ministry of Finance circular. When your adviser quotes "Decree 123", ask for the full reference; several documents share short numbers across different years.

Three rates, and which one applies to you

The new law keeps the standard rate and adds two lower rates based on the company's total annual revenue:

For most FIEs — manufacturers, distributors, service hubs with a real payroll — revenue is well above VND 50 billion and the standard 20% applies. The reduced rates matter to smaller vehicles: a newly established trading company, a small service company set up to support a larger project, or a start-up still building revenue.

Three cautions before you book a lower rate. First, the test uses the revenue as defined in the implementing guidance, not a figure from your management accounts; read the definition, especially for a first year that is shorter than twelve months. Second, the reduced rates do not stack automatically with a project incentive; where both could apply, the guidance decides which one you use. Third, certain sectors have their own rates under the law, so a company in a specially regulated activity should not assume the table above is the end of the story.

Hypothetical example. Suppose a newly formed consulting company earns VND 2.4 billion of revenue in its first full year and VND 300 million of taxable income. If it meets the conditions for the 15% rate, its CIT would be VND 45 million, against VND 60 million at 20%. The saving is real, but it is small compared with the cost of getting the classification wrong and paying late-payment interest on the difference. If you want to test a few figures quickly, the CIT calculator on our sister site ThueSuat.com (Vietnamese) runs the same three rates.

Deductible expenses: the three conditions that decide your tax base

A different rate rarely changes an FIE's tax bill as much as the expense rules do. An expense is deductible when it meets three conditions:

1. It was actually incurred and relates to the business — not a shareholder cost, not a personal cost of an expatriate that the company happens to pay without a contractual basis.
2. It is supported by lawful invoices and documents. For domestic purchases that means a valid Vietnamese e-invoice; for overseas purchases, the contract, the foreign invoice and evidence of payment.
3. For purchases above the prescribed threshold, it is paid by non-cash means. (For VAT input credit, Law 48/2024/QH15 sets that line at VND 5 million per invoice; check the current CIT guidance for the deductibility rule rather than assuming the two are identical.)

Even when all three conditions are met, an expense can still be disallowed if it falls on the law's list of non-deductible items or exceeds a cap. The new law revised that list, so an expense that was fine in 2024 is not automatically fine in 2025. Items that FIEs should re-check first:

• Management fees, royalties and service charges from the parent or group companies — deductible only with evidence that the service was actually received and benefits the Vietnamese company, and priced on an arm's-length basis.
• Interest on shareholder or group loans — subject to the related-party interest cap in the transfer pricing rules.
• Expatriate costs — housing, school fees and home leave paid for foreign staff are generally deductible when they are written into the labour contract or internal policy and the related personal income tax has been handled.
• Provisions and write-offs — deductible only when made under the conditions set by the finance regulations, not on management judgement alone.

Tax incentives: what to review if you already have one

Vietnam grants CIT incentives by project, sector and location: preferential rates for a period, tax holidays and reductions, or both. They attach to the specific investment project that qualified, not to the company as a whole, and they are not automatic — the company must meet the conditions and account for the incentivised income separately.

The new law reworks the list of encouraged sectors and locations and contains transitional provisions for projects that already enjoy incentives. We deliberately do not state durations or rates here: they depend on when the project was licensed, which condition it qualified under and how the transitional rules read against your investment registration. What we recommend instead is a short review:

1. List every project the company operates and which incentive, if any, each one claims.
2. For each incentive, identify the legal basis originally relied on and the date the project qualified.
3. Check whether the income is still separated correctly — a common problem is an expansion or a new product line booked inside an incentivised project without checking whether it qualifies.
4. Ask your adviser to confirm, in writing, how the transitional provisions apply to each project.

A separate, simpler rule applies to new small businesses: Resolution 198/2025/QH15 of the National Assembly provides a three-year CIT exemption for newly established small and medium-sized enterprises. A new FIE may qualify if it meets the SME criteria and the other conditions in the guidance; it is not available to a company simply because it is new.

Related-party transactions and the group recharge problem

Most FIEs sit inside a group, so a large part of their cost base is set by intercompany agreements. The tax authority looks at these first. Decree 255/2026/ND-CP now governs tax administration for enterprises with related-party transactions; it took effect on 1 July 2026, together with the other decrees issued at the same time. If your group's transfer pricing documentation was drafted under the previous framework, have it reviewed against the new decree before the next filing season.

The recurring weak points are practical rather than technical:

• A management fee invoiced once a year with no description of the services, no time records and no allocation key.
• A cost-sharing agreement signed after the costs were charged.
• Royalties paid for a trademark the Vietnamese company does not actually use in its sales.
• Foreign contractor tax not withheld on payments to group companies overseas, which then makes the underlying expense harder to defend.

None of these are fixed at finalisation. They are fixed when the agreement is drafted and the first invoice is booked.

Payments, finalisation and deadlines

CIT is paid provisionally during the year, quarter by quarter, and settled in the annual finalisation. Under the Law on Tax Administration, the annual finalisation return is due by the last day of the third month after the end of the financial year — 31 March for a calendar-year company — and the tax is payable by the same date. If provisional payments fall short of the final liability by more than the permitted margin, late-payment interest runs on the shortfall; check the current tolerance and rate in the regulations in force rather than relying on figures from earlier years. Late-payment interest has long been calculated at 0.03% per day on the amount paid late.

What changes in practice for the 2025 year is the preparation, not the calendar:

• Re-run the add-back schedule against the new list of non-deductible items.
• Confirm which rate applies before the first provisional payment of the following year, not at finalisation.
• Reconcile revenue across the general ledger, the e-invoices issued and bank receipts; a mismatch here is the first thing an audit query asks about.
• Keep the working papers. Accounting documents used directly for bookkeeping and preparing financial statements must be kept for at least 10 years under the Law on Accounting.

One cost disappears: the annual business licence fee was abolished from 1 January 2026 under Resolution 198/2025/QH15, so there is no longer a separate licence fee declaration to track.

Where to check your own position

You do not need an adviser to see the basic facts the tax authority holds about your company. Three places cover most of it:

• The tax authority's taxpayer information lookup shows your company's registration status and managing tax office. Search by tax code (known locally as MST, mã số thuế).
• Your company's e-tax account on the tax authority's online portal shows returns filed, payments recorded and any amounts the system treats as outstanding. The mobile tax app gives a read-only view of much of the same.
• Your managing tax office. Since 1 July 2025 Vietnam has 34 provinces and centrally run cities and no district level; the tax administration now works in three tiers — the Tax Department at central level, provincial and city tax offices, and grassroots tax offices (Thuế cơ sở). The taxpayer lookup shows which office manages your company; confirm it before writing to anyone.

If what you see does not match your records — a payment not credited, a return missing — resolve it before finalisation. It is far easier to explain in March than during an audit two years later.