Applicable from the 2025 tax year onwards, the circular clarifies documentation requirements for deductible expenses and tax incentives, revenue recognition rules across specific business activities, and the CIT obligations of both domestic and foreign enterprises, including foreign contractors and digital platform operators.

RF Report

Vietnam’s Ministry of Finance (MOF) issued Circular 20/2026/TT-BTC on 12 March 2026 , which provides detailed guidance on several articles of the Law on Corporate Income Tax (CIT) and Decree No. 320/2025/ND-CP.

Applicable from the 2025 tax year onwards, the circular clarifies documentation requirements for deductible expenses and tax incentives, revenue recognition rules across specific business activities, and the CIT obligations of both domestic and foreign enterprises, including foreign contractors and digital platform operators. It also introduces important rules on expansion investments and assets financed through the Science and Technology Development Fund, while replacing several longstanding CIT guidance circulars.

  1. Scope and subjects of application

The Circular provides detailed regulations on:

  • Dossiers for deductible expenses when calculating taxable income.
  • Dossiers for tax incentives.
  • Timing for determining revenue for CIT calculation in specific cases.
  • Tax filing and payment for overseas investments by Vietnamese enterprises.
  • CIT for foreign enterprises (Foreign Contractor Tax) doing business in Vietnam.
  • Registration of investment capital for expansion and tax obligations for assets formed from the Science and Technology Development Fund.
  1. Dossiers for deductible expenses (Article 3)

To be deductible, expenses must generally have sufficient invoices and vouchers. Specific dossier requirements include:

  • National defense & security: Decisions from authorised persons and confirmation from relevant government agencies.
  • Education and vocational training: Labor contracts, training regulations, approval decisions, and graduation certificates or diplomas for employees.
  • HIV/AIDS prevention: Relevant vouchers for actual expenditures at the workplace.
  • Sponsorships: For education, health, culture, disaster relief, and charitable houses, the dossier must include a Sponsorship Confirmation Minute (Form 01/TNDN) signed by both the donor and the recipient.
  • Scientific research: Dossiers must follow specific laws on science and technology.
  • Asset losses: For losses due to natural disasters or diseases, enterprises need inventory records, value determination documents, and insurance compensation documents (if any).
  • Goods/Services without invoices: For purchases of agricultural, forestry, or fishery products directly from producers, or small-scale business individuals (with revenue below the VAT threshold), a List of Purchased Goods/Services (Form 02/TNDN) is required.
  • Non-cash payments: For transactions valued at VND 5 million or more, proof of non-cash payment is mandatory for the expense to be deductible.
  1. Timing of revenue determination (Article 5)

The point at which revenue is recognised for tax purposes varies by activity:

  • Export of goods: The date ownership is transferred to the buyer.
  • Aviation services: The date the service provision is completed.
  • Construction and installation: The date the completed work or volume of work is accepted and handed over, regardless of whether payment has been received.
  • Electricity and water supply: The date the consumption is recorded on the invoice.
  • Foreign enterprises: Depends on the specific activity, such as the date a capital transfer agreement becomes effective or the date of securities transfer.
  1. CIT for foreign enterprises (Articles 7)

This section covers foreign entities (Foreign Contractors) doing business or earning income in Vietnam:

  • Applicability: Includes e-commerce, digital platform businesses, and goods supplied under Incoterms where the seller bears risks within Vietnam.
  • Exemptions: Direct delivery at border gates without inland services, or services performed entirely outside Vietnam (e.g., overseas repairs, advertising/marketing outside Vietnam, and certain training/telecom services).
  • Internal restructuring: Transfers of capital within a corporate group that do not change the ultimate parent company and do not generate taxable income may be exempt from CIT under specific conditions.
  • Calculation: CIT Payable = Taxable Revenue x CIT Rate (%).
  • Rates: For construction, the rate is 2%. For mixed contracts involving machinery and services where the values are not separated, the rate is 2%.
  1. Other key provisions
  • Expansion investment: Enterprises must notify tax authorities of their registered investment capital for expansion at the time of filing the CIT finalisation return.
  • Science & technology fund: If assets formed from this fund are transferred to production or business before they are fully depreciated, the remaining value is added to taxable income.
  • Effectiveness: The Circular is effective from 12 March 2026, and applies to the 2025 tax year onwards. It replaces several older regulations, including Circular 78/2014/TT-BTC and Circular 96/2015/TT-BTC.