Vietnam's Amended CIT Law 2025: A Restructuring of the Tax System

Amended Corporate Income Tax Law 2025: Major Changes

On June 14, 2025, the National Assembly passed Law No. 67/2025/QH15 amending the Corporate Income Tax (CIT) Law. This marks a crucial step toward modernizing Vietnam’s tax system. The new law, effective from October 1, 2025, and applicable to the 2025 fiscal year, introduces structural changes that directly impact both domestic and foreign-invested enterprises (FDI).

Here are the most notable changes in the CIT Law 2025:

1. Expanded Tax Base for the Digital Economy

The amended CIT Law now officially includes foreign companies operating in Vietnam through digital platforms and e-commerce as taxable entities. These cross-border platforms are recognized as Permanent Establishments (PEs) in Vietnam.

• Impact: This regulation expands the tax scope, aligns with international trends, and ensures fair competition between domestic and international businesses in the rapidly growing digital economy.

2. Attractive Tax Incentives for Small and Medium Enterprises

The new law introduces conditional tax incentives to support small and micro-enterprises:

• Companies with annual revenue under 3 billion VND: 15% tax rate.

• Companies with annual revenue from 3 to under 50 billion VND: 17% tax rate.

Note: These incentives do not apply to related-party companies that do not meet the conditions or to businesses that intentionally under-declare revenue.

• Impact: This policy encourages financial transparency and facilitates the transition of individual business households into formal enterprises, thereby broadening the tax base.

3. New Deductible Expenses

The CIT Law 2025 adds several new deductible expenses when calculating taxable income, reflecting business realities and encouraging sustainable development. Notable additions include:

• Costs for greenhouse gas emission reduction and environmental pollution treatment.

• Expenses for public works projects connected to business operations.

• Non-refundable input VAT can now be deducted as an expense.

4. New Tax Rule for Foreign Investment Income

Instead of taxing income when it is repatriated to Vietnam, the new law specifies that the tax is due at the time the income is generated abroad.

• Impact: This regulation enhances financial oversight. However, companies can still deduct the CIT paid in the foreign country from their tax obligation in Vietnam, avoiding double taxation.

5. Tax Incentives for the Green and Innovation Economies

The new law exempts certain types of income and expands tax incentives for strategic projects:

• Tax Exemption: Income from the initial transfer of carbon credits and interest from green bonds.

• Special Incentives: Projects in high-tech fields (AI, IoT, renewable energy), innovative startups, and technical support facilities for small businesses may receive a preferential 10% tax rate for 15 years or 17% for 10 years.

• Impact: This is a key step to attract high-quality FDI, promote technology, and guide sustainable long-term development.

6. Real Estate Transfer Losses Can Be Offset

A significant new provision in the CIT Law 2025 allows businesses to offset losses from real estate transfers against income from other business activities (excluding tax-incentivized income), at the company’s discretion.

• Impact: This provides flexibility and helps businesses optimize their tax liabilities, especially in a volatile real estate market.

Conclusion: Opportunities and Challenges

The amended CIT Law 2025 is a comprehensive, systemic reform that tightens tax management on the digital economy while offering substantial tax incentives to key business groups. While it presents many opportunities for tax optimization, the new law also requires businesses to be more proactive in financial management, tax planning, and legal compliance to effectively capitalize on the new policies.