LATEST UPDATES ON CORPORATE INCOME TAX (CIT) EFFECTIVE FROM 01/10/2025

From 01/10/2025, many new regulations on Corporate Income Tax (CIT) officially take effect and will apply to the CIT tax period for 2025.

• Law No. 67/2025/QH15 – Corporate Income Tax Law 2025
• Resolution No. 68-NQ/TW (2025) of the Politburo
• Decree No. 320/2025/ND-CP dated 15/12/2025 of the Government

1. Expansion of CIT taxpayers
   Enterprises owning e-commerce platforms or digital platforms of foreign organizations that generate revenue in Vietnam must pay CIT, even if they do not have a permanent establishment or permanent office in Vietnam.
2. CIT-exempt income

• Income from the first-time transfer of carbon credits
• First-time green bonds
• Interest income from green bonds

3. Real estate transfers
   Profits from the transfer of real estate projects or investment projects are allowed to:

• Offset losses from other business activities
• Not applicable to activities that are currently enjoying tax incentives.

4. Global minimum tax (IIR)
   Enterprises subject to the Global Minimum Tax (Income Inclusion Rule – IIR) may credit taxes already paid against their CIT liability in Vietnam.
5. Overseas investment income

• Declare and pay tax at the time the income arises, regardless of whether profits are remitted to Vietnam.
• Allowed to credit CIT already paid overseas.

6. Corporate income tax

• Standard tax rate: 20%
• Incentives for small and medium-sized enterprises (SMEs):
  • 15%: Annual revenue below VND 3 billion
  • 17%: Annual revenue from VND 3–50 billion

Note: SMEs that are subsidiaries or affiliates of large enterprises are not eligible for these preferential tax rates.

7. Tax exemption incentives for SMEs

• SMEs are exempt from CIT for 03 years from the date they are issued their first Business Registration Certificate.
• FDI enterprises need written confirmation from the tax authority before applying this incentive.

8. Key regulations requiring special attention

8.1. Interest expenses

• Loan interest exceeding 20%/year from parties other than credit institutions is not deductible when determining CIT.

8.2. Non-cash payments

• From 01/07/2025:
  • Invoices for goods/services of VND 5 million or more (VAT included) that are paid in cash will not be recognized as deductible expenses.
• Regarding the VND 5 million threshold requiring non-cash payment:
  • Effective from 15/12/2025
  • Not retroactive for the entire 2025 tax year
  • Applies to expenses without VAT invoices, such as: house rent, labor contract payments, outsourced service lump-sum payments, etc.