Vietnam’s Corporate Income Tax (CIT) is a central component of the country’s tax regime and is crucial for any foreign investor looking to operate a business here.
Whether entering through manufacturing, services, or trade, understanding how profits are taxed can help reduce compliance risk and improve after-tax returns.
This guide outlines the essentials of CIT in Vietnam as of 2025, including applicable rates, incentive structures, and how recent global reforms have changed the landscape for multinational firms.
Who Must Pay Corporate Income Tax in Vietnam?
CIT applies to:
- All enterprises incorporated in Vietnam
- Foreign companies with a permanent establishment (PE) in Vietnam
- Foreign companies generating income in Vietnam without a PE under Foreign Contractor Tax rules
These taxes are managed by the General Department of Taxation (GDT) under the Ministry of Finance.
What Is the Standard CIT Rate in Vietnam?
The standard corporate income tax rate in Vietnam is 20 percent, as per Article 10 of the Law on Corporate Income Tax approved in January 2023.
Exceptions:
- Petroleum operations: CIT ranges from 25 to 50 percent depending on the terms of the investment agreement.
- Natural resource exploration (excluding petroleum): 32 to 50 percent depending on project scope.
How Is Corporate Income Tax Calculated?
CIT is applied to taxable income, calculated as:
Revenue – deductible expenses – losses carried forward – incentives = taxable income.
For example, a foreign firm earning VND 5 billion in annual profit would owe:
- 20 percent x VND 5 billion = VND 1 billion in CIT
Tax-deductible expenses include:
- Wages and salaries
- Office and operating expenses
- Depreciation
- Loan interest (within limits)
Non-deductible expenses include:
- Personal expenses
- Fines or penalties
- Certain forms of donations or sponsorships
CIT Incentives for Foreign Firms
Vietnam offers several incentives to attract foreign investment:
Common incentives for manufacturers include:
- 10 percent CIT rate for 15 years
- 4 years CIT exemption + 9 years of 50 percent CIT reduction
High-priority sectors (hi-tech, education, healthcare) and economic zones or disadvantaged areas may be eligible for additional tax holidays or reductions.
Provincial incentives: Provinces may offer their own incentives, particularly in newly developed industrial zones.
Vietnam’s CIT & the Global Minimum Tax
In response to the OECD’s Global Minimum Tax reforms (Pillar Two), Vietnam enacted Resolution 107 in 2023, introducing a Top-up Tax.
Who is affected? Multinational corporations with consolidated global revenues of ≥ €750 million that enjoy an effective tax rate in Vietnam below 15 percent.
Key implication: Even if firms receive preferential CIT rates (e.g., 10 percent), they must still pay the difference to meet the 15 percent global minimum.
To counter this, the Vietnamese government established the Investment Support Fund in late 2024. This fund provides non-tax incentives like cash rebates for eligible training and R&D expenditures.
See also: Vietnam’s Investment Support Fund: Key Details
When Is CIT Paid?
- Calendar year basis: CIT returns must be filed within 90 days of year-end (i.e., by March 31 each year).
- Quarterly prepayments: Most companies are required to make estimated quarterly CIT payments.
Late filing or underpayment can result in penalties and interest charges.
Common CIT Compliance Mistakes
- Misclassification of revenue or deductible costs: Errors in classifying operating versus non-operating income or incorrectly deducting non-eligible expenses can result in tax penalties.
- Missing quarterly provisional payments: Failing to submit estimated CIT payments each quarter can attract interest charges and administrative fines.
- Applying incentives without formal registration: Some firms assume eligibility for tax incentives without properly registering with the tax authority, leading to back taxes and fines.
- Ignoring new Top-up Tax requirements: Multinationals may overlook their obligation to meet the 15 percent effective rate under global tax reforms.
- Underestimating complexity in local compliance: Differences between Vietnam Accounting Standards (VAS) and IFRS can lead to reporting errors. VAS requires specific templates and documentation that many international firms are unaccustomed to.
FAQ
What is Corporate Income Tax in Vietnam?
Vietnam’s CIT is a tax on profits earned by companies operating in the country, set at a standard rate of 20 percent.
What incentives are available for foreign businesses?
Foreign-invested enterprises may qualify for reduced rates (10 percent), CIT holidays, or partial exemptions depending on sector, size, and location.
How has the Global Minimum Tax affected Vietnam?
Firms with effective tax rates below 15 percent must pay the Top-up Tax. The new Investment Support Fund offers non-tax incentives as compensation.
How do I file and pay CIT in Vietnam?
Returns are filed annually, with quarterly estimated payments. Filing is electronic through the GDT’s tax portal.
Can I use international accounting standards?
Vietnam uses the Vietnam Accounting System (VAS), which differs from IFRS. Some foreign firms will be required to transition to IFRS after 2025.
What’s next?
Vietnam’s Corporate Income Tax is just one of several taxes in Vietnam foreign firms should be aware of. Other important taxes in Vietnam include Vietnam’s Value-added Tax, Capital Gains Tax, Special Consumption Tax, Foreign Contractor Tax in Vietnam, and Personal Income Tax. By familiarising themselves with these taxes it may help foreign firms to avoid running afoul of Vietnam’s tax department.
With this in mind, firms considering starting a company in Vietnam can best keep abreast of the latest CIT developments by subscribing to the-shiv.
First published May 25, 2024. Last updated May 19, 2025.