The National Assembly has passed the Law on Enterprise Income Tax, taking effect on October 1, 2025, and applying from the 2025 enterprise income tax period onward. Below are the new points of the Law on Enterprise Income Tax 2025.
1. Tax on all Vietnam-sourced income of foreign enterprises
The Law expands its scope to foreign enterprises supplying goods and services in Vietnam via e-commerce platforms and digital platforms.
“Foreign enterprises without Vietnam-based permanent establishments, including enterprises conducting e-commerce and digital platform-based business, shall pay tax on taxable incomes generated in Vietnam.” (Point d, Clause 2, Article 2)
“Taxable incomes arising in Vietnam of foreign enterprises specified at Points c and d, Clause 2, Article 2 of this Law are incomes derived from Vietnamese sources, regardless of the place where business is conducted.” (Clause 3, Article 3)
2. Shorter tax-exemption period for income from sales of products made with new technology
Under Clause 4, Article 4:
“Incomes from the performance of contracts on scientific research, technological development, and innovation, digital transformation; incomes from the sale of products created from newly introduced technologies applied for the first time in Vietnam; incomes derived from the sale of trial production products during the trial production period, including controlled trial production in accordance with law. Incomes under this Clause shall be exempted from tax for a maximum period of 03 years.”
(Previously, such income was exempt for up to 5 years.)
3. Expanded tax-exempt incomes
A number of new incomes have been supplemented into the tax-exempt incomes as specified in Clause 10, Article 4 supplements new tax-exempt items, including:
- Incomes from the transfer of emission reduction certificates, the first-time transfer of carbon credits after issuance by enterprises that have been granted emission reduction certificates or carbon credits; - Incomes from interest on green bonds; incomes from the first-time transfer of green bonds after issuance.
4. Losses from real estate transfer may be offset against taxable income
In accordance with Article 7, Law on Enterprise Income Tax, in case any production and business activity incurs a loss, the enterprise may offset such loss against taxable income from income-generating production and business activities at its own discretion (excluding income from real estate transfer, transfer of investment projects, and transfer of rights to participate in investment projects, which shall not be offset against incomes from production and business activities currently enjoying tax incentives).
The remaining income after offsetting shall be subject to the enterprise income tax rate applicable to income-generating production and business activities.
Note: Taxable income from the transfer of investment projects for exploration, mining, and processing of minerals; transfer of rights to participate in investment projects for exploration, mining, and processing of minerals; and transfer of rights to exploration, mining, and processing of minerals must be separately determined for tax declaration and payment, and shall not be offset against profits or losses from other production and business activities during the tax period.”
5. Revisions to deductible expenses
Compared to previous regulations, Article 9 of the Law on Enterprise Income Tax 2025 revises a number of provisions on deductible expenses for determining taxable income as follows:
5.1. Additional deductible items
- Actual expenses for seconded individuals participating in the management, administration, and supervision of credit institutions under special control and commercial banks subject to compulsory transfer in accordance with the Law on Credit Institutions;
- Certain expenses serving the enterprise’s production and business activities that do not correspond to revenues arising in the same period, as prescribed by the Government;
- Certain expenses for supporting the construction of public infrastructure works that also serve the enterprise’s production and business activities;
- Expenses related to greenhouse gas emission reduction for the purpose of carbon neutrality and net-zero targets, and environmental pollution reduction, provided such expenses relate to the enterprise’s production and business activities;
- Certain contributions to funds established under the decisions of the Prime Minister and the provisions of the Government;”
5.2. Input VAT not fully credited but not refundable may be treated as deductible:
The input value-added tax paid under the credit method mentioned in this Point does not include input value-added tax related directly to production and business activities that has not yet been fully credited but does not fall under refundable cases.
Where input value-added tax has been included in deductible expenses, it shall not be credited against output value-added tax;”
6. Cases eligible for the 15% or 17% tax rates
Article 10 of the Law on Enterprise Income Tax 2025 prescribes the tax rates as follow:
A tax rate of 15% shall apply to enterprises with total annual turnover not exceeding VND 3 billion.
A tax rate of 17% shall apply to enterprises with total annual turnover of more than VND 3 billion but not exceeding VND 50 billion.”
The enterprise income tax rate applicable to activities of prospecting, exploring and exploiting oil and gas is between 25% and 50%. Based on the location, extraction conditions, and reserve volume of the oil field, the Prime Minister shall determine the specific applicable tax rate in conformity with each oil and gas contract;
The enterprise income tax rate applicable to activities of exploring and exploiting precious and rare natural resources (including platinum, gold, silver, tin, tungsten, antimony, gemstones, rare earths, and other precious and rare resources as prescribed by law) is 50%. In case 70% or more of the licensed mining area is located in areas with extremely difficult socio-economic conditions, the applicable tax rate shall be 40%.
The tax rate of 20% shall be applicable to other cases
Previously, enterprises were mainly subject to the 20% tax rate (except oil and gas, rare resources activities, and cases eligible for preferential tax rates). Under the new regulations, many enterprises with annual income not exceeding VND 50 billion will be subject to the 15% or 17% tax rates.
7. Changes to incentivized sectors and trades
Pursuant to Article 13 of the Law on Enterprise Income Tax, the business sectors eligible for preferential tax rates are revised as follows:
Removal of certain sectors and trades previously eligible for incentives:
• Production projects with a minimum investment capital of VND 6,000 billion;
• Investment projects in industrial parks.
Addition of sectors and trades already specifically provided with enterprise income tax incentives under current regulations:
• Projects eligible for special investment incentives and supports as prescribed in Clause 2, Article 20 of the Law on Investment 2020;
• Investment and business in technical facilities supporting small- and medium-sized enterprises (SMEs), SME incubators; investment and business in co-working areas supporting innovative start-up SMEs as prescribed in the Law on Support for Small- and Medium-Sized Enterprises.
8. High-tech agriculture zones added to preferential localities
Under Article 13 of the Law on Enterprise Income Tax, localities eligible for enterprise income tax preferences include:
Localities with especially difficult socio-economic conditions;
Localities with difficult socio-economic conditions;
High-tech zones, economic zones, high-tech agriculture zones, and concentrated digital technology zones.
Previously, high-tech agriculture zones were not listed among preferential localities.
9. Adjusted preferential tax rate for new automobile manufacturing and assembly projects
In accordance with Clause 4, Article 13, the tax rate of 17% for a period of 10 years shall be applied to a new investment projects in the preferential sectors and trades (in previous regulations, the preferential tax rate of 10% is applicable for 15 years)
10. SME-support projects are entitled to the 17% rate for 10 years
Clause 4, Article 13 prescribes that, the tax rate of 17% for a period of 10 years shall be applied to:
New investment projects in the preferential sectors and trades for business investment in technical establishments in support of small- and medium-sized enterprises, and small- and medium-sized enterprise incubators;
New investment projects in the preferential sectors and trades for business investment in co-working space in support of small- and medium-sized innovative startup enterprises in accordance with the law on support for small- and medium-sized enterprises;
The above are the new points of the Law on Enterprise Income Tax 2025.
Vietnamese
