From October 1, 2025, several new regulations on corporate income tax officially take effect

The 2025 Corporate Income Tax Law (“CIT Law 2025”), passed by the National Assembly on 14 June 2025 and effective from October 1, 2025, introduces significant changes to Vietnam’s corporate tax policy. These reforms are expected to directly affect the tax obligations of both domestic and foreign enterprises operating in Vietnam. This article provides TNTP’s analysis of several notable new provisions under the CIT Law 2025.

1.Foreign enterprises are subject to corporate income tax on business activities conducted through digital platforms and e-commerce

Previously, taxing foreign enterprises engaged in e-commerce or digital platform businesses was challenging due to the absence of a clear legal framework. Many foreign enterprises, despite having no permanent establishment in Vietnam, still generated substantial profits from Vietnamese users through online platforms.

Under point d, clause 2, Article 2 of the CIT Law 2025, foreign enterprises without a permanent establishment in Vietnam, including those operating e-commerce or digital platform businesses, must pay tax on taxable income arising in Vietnam.

Regarding the principle for determining taxable income, clause 3, Article 3 states that the taxable income of foreign enterprises is income originating from Vietnam, regardless of where the business activities are conducted.

This is a significant development that demonstrates the tax authorities’ determination to regulate cross-border transactions. The regulation promotes fairness between domestic and foreign enterprises while securing tax revenue from rapidly expanding digital-economy activities in Vietnam.

2.Revised corporate income tax rates

Article 10 of the CIT Law 2025 introduces substantial adjustments to tax rates based on annual revenue levels. The applicable rates are as follows:

• Enterprises with annual revenue below VND 3 billion are subject to a 15% tax rate, while those with annual revenue from VND 3 billion to VND 50 billion are subject to a 17% rate.
• For oil and gas exploration and extraction activities, the tax rate ranges from 25% to 50%, depending on the field’s location, extraction conditions, and reserves, with the specific rate for each petroleum contract determined by the Prime Minister.
• Exploration and extraction activities relating to rare and precious natural resources (including platinum, gold, silver, tin, tungsten, antimony, gemstones, rare earths, and other rare resources as prescribed by law) shall be subject to a corporate income tax rate of 50%. In cases where at least 70% of a mine’s total area is located in regions classified as having exceptionally difficult socio-economic conditions, a preferential tax rate of 40% shall apply.
• Enterprises not falling within the categories above are subject to the general 20% tax rate.

These revisions are expected to enhance competitiveness for small and medium-sized enterprises (SMEs) in Vietnam. By differentiating tax rates based on revenue size, the CIT Law 2025 reduces the tax burden on lower-revenue enterprises, encouraging investment and business expansion.

3.Expansion of industries eligible for CIT incentives

The CIT Law 2025 expands the list of incentive-eligible industries, marking a strategic shift toward prioritizing high technology, digital transformation, and green industries:

• The law extends incentives to high-tech product and service manufacturing. Activities ranging from semiconductor chip design, fabrication, and packaging; AI data center development; cybersecurity solutions; electronic device manufacturing; to digital technology services are eligible for a 10% tax rate for 15 years;
• Manufacturing activities involving components and parts of supporting industries for key sectors such as electronics, automobiles, and textiles, particularly products for which Vietnam has not yet mastered the underlying technology or which are required to meet international standards, as well as renewable energy projects, green solutions, and environmental technology initiatives, shall be entitled to a preferential corporate income tax rate of 10% for a period of 15 years.
• The automotive assembly sector will apply a 17% tax rate for 10 years (increased from the previous 10%).
• The startup-support ecosystem, including co-working spaces, incubators, and technical facilities for SMEs, is encouraged with a 17% rate for 10 years.

Notably, large-scale investment projects with capital exceeding VND 12 trillion, implemented within five years and applying advanced technology, will be eligible for a 10% tax rate for 15 years to attract major global technology investors to Vietnam.

4.New rules on offsetting losses from real estate transfers when determining taxable income

Article 7 of the CIT Law 2025 introduces a major change in the mechanism for offsetting losses from real estate transfer activities.

• Previously, losses from real estate transfers could be offset against profits from production and business activities, as provided in clause 2, Article 4 of Circular 78/2014/TT-BTC (as amended by Article 2 of Circular 96/2015/TT-BTC).
• From 01 October 2025, the CIT Law 2025 reverses this mechanism by allowing enterprises with losses from production and business activities to offset such losses against taxable income from other income-generating business activities of their choice (excluding activities enjoying tax incentives). This replaces the previous requirement to offset against profits from production and business activities.
• However, certain taxable income categories cannot be offset against losses, including income from transferring mineral exploration, mining, and processing projects; transferring rights to participate in such projects; and transferring exploration, mining, and processing rights. These must be separately determined for corporate income tax declaration purposes.

This new regulation is expected to help real estate enterprises, particularly those operating in multiple sectors, manage and offset losses more flexibly, thereby reducing tax pressure and promoting economic development.

5.Changes to deductible expenses for tax purposes

Article 9 of the CIT Law 2025 adds several deductible expenses when determining taxable income, reflecting the realities of current business operations. Key additions include:

• Actual expenses for secondees participating in the governance, management, and supervision of credit institutions under special control, or commercial banks subject to compulsory transfer under the 2024 Law on Credit Institutions, are deductible for CIT purposes.
• Certain expenses serving business operations but not corresponding to revenue in the period, as prescribed by the Government, and certain expenses supporting the construction of public-use facilities that also serve enterprise operations, are now deductible.
• Expenses related to greenhouse-gas reduction, carbon neutrality, pollution reduction, and activities associated with production and business operations are deductible.
• Another important change concerns input value-added tax (“VAT”) that relates directly to an enterprise’s business activities but cannot be fully credited and is not eligible for VAT refund. Such input VAT may now be included as a deductible expense when determining taxable income. However, once recorded as a deductible expense, the input VAT may no longer be credited against output VAT.

This provision helps reduce the CIT burden in cases where enterprises incur substantial input costs that are not eligible for VAT refunds.

6.New rules on the revenue-based CIT calculation method

A noteworthy addition in the CIT Law 2025 is the revenue-percentage method for tax calculation. Under Article 11, this method applies to:

• Foreign enterprises without a permanent establishment in Vietnam generating income from business activities in Vietnam, including e-commerce and digital platform businesses.
• Enterprises with annual revenue not exceeding VND 3 billion, where revenue can be determined but expenses and income cannot.

The applicable percentage of revenue for calculating CIT will be specified by the Government for each industry and business type.

This method is suitable for micro-enterprises or household businesses transitioning into enterprises without a fully developed accounting system, helping them comply with tax obligations without difficulty in determining deductible expenses.

The above is TNTP’s overview of the key new provisions of the CIT Law 2025. We hope this information is helpful. Should you require assistance, please feel free to contact TNTP.

Sincerely,