Vietnam’s National Assembly passed a new corporate income tax law on 14 June 2025 (Law No. 67/2025/QH15) (CIT Law 2025)), which introduces significant reforms to the country’s tax framework and is a key component of the efforts to modernise the tax system. The changes will impact both resident and nonresident businesses, the latter, in particular, foreign suppliers engaging in e-commerce and digital business. The CIT Law 2025 will replace the corporate income tax laws dating from 2008 and 2013 on 1 October 2025 (and be applicable as from tax year 2025). A decree and circular on the implementation of CIT Law 2025 are under discussion and expected to be released soon.
This article looks at the main changes in policy as outlined in the CIT Law 2025.
The CIT Law 2025 broadens its reach to include foreign enterprises that supply goods or services in Vietnam, particularly through e-commerce platforms and digital technology platforms and that derive income from Vietnam, thus creating a deemed permanent establishment for domestic law purposes. Such entities will be required to declare and pay taxes on Vietnam-source income, regardless of their business location, aligning with global digital taxation trends (click here for a discussion of the new digital platform operator rules for VAT and personal income tax purposes).
To encourage innovation and sustainability, the law introduces several new exemptions from corporate income tax:
The CIT Law 2025 refines the expense deductibility rules with several notable changes. Deductible expenses are expanded to include:
The standard corporate income tax rate of 20% remains unchanged, but the CIT Law 2025 adds two tax rates for smaller enterprises:
The 15% and 17% tax rates will not apply to subsidiaries or affiliates if any related party’s revenue exceeds the specified threshold.
Several changes are made to the sectors and areas eligible for preferential tax rates:
Where additional tax is payable under the Pillar Two income inclusion rule, the taxpayer may credit that amount against the corporate income tax payable in Vietnam, aligning with global minimum tax standards.
Overall, Vietnam’s new CIT Law modernises the tax framework to better capture emerging business models, align with global tax standards and target incentives toward innovation and sustainable development. While the law broadens the tax base and tightens certain preferential treatments, it offers clearer rules, expanded deductibility for ESG and digital initiatives, and more flexible loss utilisation—ultimately encouraging compliance, competitiveness and long-term investment quality.
Hien Truong
BDO in Vietnam
This article looks at the main changes in policy as outlined in the CIT Law 2025.
Broadened Taxpayer Base
The CIT Law 2025 broadens its reach to include foreign enterprises that supply goods or services in Vietnam, particularly through e-commerce platforms and digital technology platforms and that derive income from Vietnam, thus creating a deemed permanent establishment for domestic law purposes. Such entities will be required to declare and pay taxes on Vietnam-source income, regardless of their business location, aligning with global digital taxation trends (click here for a discussion of the new digital platform operator rules for VAT and personal income tax purposes).
Exempt Income
To encourage innovation and sustainability, the law introduces several new exemptions from corporate income tax:
- Income from technology development, innovation and digital transformation, income from the sale of products made using newly applied technologies for the first time in Vietnam and income from the sale of trial production products during the testing period;
- Sponsorships from enterprises without related party relationships and from domestic or foreign organisations or individuals to be used for activities related to scientific research, technology development, innovation and digital transformation;
- Direct support from the state budget and from investment support funds established by the government;
- Compensation from the state in accordance with the law;
- Income from the initial transfer of emission reduction certificates and carbon credits; and
- Interest from green bonds and income from their initial transfer post-issuance.
Profit and Loss Offsetting Between Business Activities
Taxpayers will be permitted to offset losses from one production and business activity against taxable income from other activities of their choice. However, income from real estate transfers and investment project transfers will not be able to be offset against income from activities eligible for tax incentives. Taxable income from the transfer of mineral exploration, mining or processing investment projects, or related rights, will have to be reported separately for tax filing purposes and will not be available for offset against other business income or losses.
Deductible and Nondeductible Expenses
The CIT Law 2025 refines the expense deductibility rules with several notable changes. Deductible expenses are expanded to include:
- Expenses incurred for business purposes even if they are not matched with the revenue generated in the relevant period;
- Expenses incurred in support of the construction of public facilities that also serve the production and business activities of the enterprise;
- Expenses related to greenhouse gas emission reduction for the purpose of carbon neutrality and net-zero goals and environmental pollution reduction, which are also connected to the enterprise’s production and business activities;
- Elimination of the VND 20 million invoice threshold, with specific conditions to be stipulated by the government; and
- Input VAT directly related to business activities that is not yet credited against output VAT and not eligible for VAT refund.
Revenue-Based Preferential Tax Rates
The standard corporate income tax rate of 20% remains unchanged, but the CIT Law 2025 adds two tax rates for smaller enterprises:
- A 15% tax rate applicable to enterprises with total annual revenue not exceeding VND 3 billion; and
- A 17% tax rate applicable to enterprises with total annual revenue from VND 3 billion to VND 50 billion.
The 15% and 17% tax rates will not apply to subsidiaries or affiliates if any related party’s revenue exceeds the specified threshold.
Refined Tax Incentives and Eligible Industries
Several changes are made to the sectors and areas eligible for preferential tax rates:
- Investment projects with capital of VND 6 trillion or more, as well as those located in industrial zones, will no longer be eligible for preferential tax rates.
- New sectors, including projects under special investment incentives and small and medium-sized enterprises’ (SMEs) support operations (e.g., SME incubators and co-working spaces) will be eligible for corporate income tax incentives.
- High-tech agricultural zones are included in the list of areas eligible for incentives in addition to regions with difficult or particularly difficult socio-economic conditions, and high-tech zones, economic zones and concentrated digital technology zones.
Tax Policies Aligned with International Standards
The government may adopt favorable tax provisions prescribed by the OECD or the United Nations, enhancing Vietnam’s taxing rights as the income-sourced country.Where additional tax is payable under the Pillar Two income inclusion rule, the taxpayer may credit that amount against the corporate income tax payable in Vietnam, aligning with global minimum tax standards.
BDO Insights
Overall, Vietnam’s new CIT Law modernises the tax framework to better capture emerging business models, align with global tax standards and target incentives toward innovation and sustainable development. While the law broadens the tax base and tightens certain preferential treatments, it offers clearer rules, expanded deductibility for ESG and digital initiatives, and more flexible loss utilisation—ultimately encouraging compliance, competitiveness and long-term investment quality.Hien Truong
BDO in Vietnam