New Corporate Income Tax Policy: Draft Amendment Adds Breakthrough Incentives From October 1, 2025.

The Draft Amended Law, which will shape new corporate income tax, is currently undergoing review. Its key aims are not only to rationally restructure the system of tax incentives but also to incorporate many new, outstanding tax incentive policies. According to the Minister of Finance, these adjustments are designed to support businesses in expanding investment into prioritized sectors and areas, while ensuring the Law takes effect early from October 1, 2025.

Overview Of The Draft And Finalization Process

The Draft amended corporate income tax has been highly appreciated for the serious process of incorporating feedback from National Assembly Deputies, experts, and the business community. Options regarding the standard tax rate, incentives for small and medium-sized enterprises, innovative enterprises, and investment in particularly incentivized sectors have been thoroughly reviewed. This review ensures a balance among international practices, regional competitiveness, and the Vietnamese economy’s capacity.

Additionally, many other important provisions have received comments for finalization, including:

• Scope of taxpayers.
• Determination of taxable income and tax-exempt income.
• Deductible and non-deductible expenses when determining tax.
• Tax calculation method.
• Detailed regulations on tax incentives.

Deputies also paid special attention to contents such as tax exemption for sponsorships serving the development of Science, Technology, Innovation, and Digital Transformation (STIDT); or the offsetting of profits and losses between real estate business activities and other activities, as well as policies for public service units and small and medium-sized enterprises. The proposal for early effectiveness from October 1, 2025, was raised to create more momentum and resources for business development.

Reorganizing The CIT Tax Incentive System: Focusing, Avoiding Widespread Incentives

On behalf of the drafting agency, Minister of Finance Nguyen Van Thang acknowledged and thanked the dedicated comments. The Minister affirmed that maximum feedback would be incorporated to finalize the draft, ensuring the best quality upon promulgation.

Regarding the review and restructuring of tax incentives according to the policy of the Party and the State, the Minister stated that the draft has proposed many solutions to improve the CIT tax incentive policy, avoiding widespread incentives and preventing tax base erosion.

The CIT tax incentive policies in the draft are oriented towards focusing on:

• High value-added industries, Science and Technology, Innovation, Digital Transformation (DT).
• Promoting green economy, environmental protection.
• Developing agriculture, farmers, rural areas.
• Promoting the development of public service activities.
• Promoting investment in areas with difficult, especially difficult socio-economic conditions.

At the same time, the drafting agency has also proactively reviewed international experience, especially in the context where we must implement Pillar Two of the global minimum tax, to develop appropriate incentive policies aimed at continuing to effectively attract foreign investment capital. In addition, the policies ensure encouragement of participation from other economic sectors, including the private economy. Accordingly, the Government is studying methods for indirect support, ensuring compliance with international commitments and agreements that Vietnam is a party to.

Furthermore, to ensure the uniformity and consistency of tax incentive policies, ensuring that tax policies are only stipulated in tax legal documents and avoiding scattered tax incentive policies in other specialized laws, the Draft Law has added a provision stating that if other laws have provisions on CIT incentives different from those in this law, the provisions of this law shall prevail.

The Minister emphasized, “In principle, tax incentives should only be stipulated in tax laws. At the same time, we need to cease integrating tax incentive policies into specialized laws to ensure comprehensiveness, consistency, and ease of implementation.”

Many Breakthrough Incentives For Science, Technology, And Innovation

Another important content of the draft is contributing to the institutionalization of Resolution No. 57-NQ/TW of the Politburo. In this draft, the drafting agency has proposed adding more breakthrough incentives compared to current regulations related to STIDT.

Specifically, adding sponsorships for scientific research, technology development, and STIDT, and expenses for scientific research, technology development, and STIDT within businesses are deductible expenses when calculating tax. At the same time, the Government is assigned the task of stipulating additional expense levels, conditions, and scope of application for businesses’ research and development expenses, to suit the actual situation in each period.

“Based on the experience of some countries, they do not have rigid regulations but assign this to the Government. To ensure flexibility and practicality, we also propose continuing to assign this task to the Government,” the Minister suggested.

The draft also adds provisions that sponsorships for scientific research, technology development, and STIDT; and income from performing contracts for scientific research, technology development, and STIDT are tax-exempt income. Public science and technology organizations and public higher education institutions operating on a non-profit basis are subject to CIT exemption.

Besides the addition of the outstanding incentive policies mentioned above in this draft, the Minister stated that many incentive policies are also added to other Tax Laws such as the Law on Export Tax, Import Tax and the Draft Replacement Law on Personal Income Tax to be submitted to the National Assembly in the near future. Even the draft law amending 7 laws submitted to the National Assembly in this session also focuses on adding provisions to implement Resolution 57-NQ/TW of the Politburo.

More Appropriate Tax Policy for Public Service Units

Tax incentives for the public service sector are also an issue commented on by many deputies. According to the current Law, if public service units can determine revenue and income expenses, they must pay CIT like regular businesses. If they can determine revenue but not expenses or income, they declare and pay tax based on a percentage of revenue.

According to the Minister, currently many public service units both provide public services using state budget funds and provide public services without using state funds or using them partially. In cases where public service units independently determine prices according to market principles or form joint ventures or associations for profit-making business, paying CIT like normal business activities is appropriate.

However, for units using state funds where service prices do not fully cover costs and the state budget still supports costs, this is not a profit-generating business activity, the Minister clarified.

Representatives of the drafting agency affirmed that requiring public service units providing basic, essential services that affect social welfare and impact all citizens to pay CIT as currently regulated is not appropriate. Therefore, in the draft law, the drafting agency has made calculations and included many contents, including two important ones.

Firstly, tax exemption for the income of public service units providing public services, including basic essential public services on the list of public services using state budget funds, issued by competent authorities; public services for which the State must support operating funds because service prices do not fully include service provision costs; public services in areas with particularly difficult socio-economic conditions.

Secondly, public service units providing public services in areas with difficult socio-economic conditions are entitled to a 50% reduction in the CIT amount on income derived from providing such services in those areas.

However, the Minister also stated that the draft would continue to be researched and adjusted to ensure suitability with reality, protect the legitimate rights and interests of public service units, while simultaneously preventing tax loss and state budget loss.

Bringing The Law Into Effect Early: Expected From October 1, 2025

Regarding the effective date of the law, based on the deputies’ opinions, representatives of the drafting agency stated that efforts would be made to finalize the guiding documents, ensuring the Law can be implemented from October 1, 2025.