The amended CIT Law introduces new rules on capital transfers, revised SME rates, and targeted tax incentives.

Vietnam’s National Assembly passed Law No. 67/2025/QH15 on 14 June 2025 , a major amendment to the Corporate Income Tax (CIT) Law, introducing sweeping changes to taxpayer definitions, tax rates, deductible expenses, and incentive regimes.

The new law will come into force on 1 October 2025, applying to the 2025 financial year onwards.

Key changes and business implications include:

Broader taxpayer definition and PE expansion

Foreign enterprises conducting business in Vietnam via e-commerce or digital platforms are now classified as having a Permanent Establishment (PE). These entities must pay CIT on:

  • Income sourced in Vietnam, regardless of its connection to the PE’s operations.
  • Income earned outside Vietnam is linked to the PE’s activities.

Foreign enterprises without a PE are also taxable on income generated in Vietnam, particularly from digital or e-commerce activities.

Deductibility of expenses

The revised CIT Law keeps the main rules for deductible expenses: they must be incurred, related to business, and properly documented. It adds clearer provisions and new rules.
Non-refundable input VAT not yet fully credited may now be deductible, which was not previously specified.
Interest on loans from non-financial institutions is deductible only if the rate does not exceed 20% per year, replacing the earlier rule tied to the State Bank’s base rate.
Expenses violating laws—such as excessive overtime, construction without permits, or labour without valid work permits—are not deductible. Earlier rules did not specify this.

Revised taxation of capital transfers by foreign shareholders

Under the new rules, both direct and indirect capital transfers will be taxed at a deemed corporate income tax rate based on the total sale proceeds, not the actual gain. This means that tax will still apply even if the transfer results in a loss. The original purchase price or capital contribution will no longer be considered in calculating the tax.

Under the current system, foreign sellers are taxed at a rate of 20% on the gain from direct share transfers, with the gain calculated as the difference between the sale proceeds and the original acquisition cost; no tax is imposed if the transfer results in a loss.

Standard and preferential tax rates

The standard corporate income tax rate remains at 20%. Enterprises with annual revenue up to VND 3 billion qualify for a 15% CIT rate. In comparison, those with revenue up to VND 50 billion qualify for a 17% rate. Revenue thresholds are determined based on the fiscal year defined in the CIT Law.

However, subsidiaries or related parties linked to larger enterprises are excluded from these preferential rates to prevent business fragmentation intended to access SME tax benefits.

Sector-specific preferential rates

A 10% corporate income tax (CIT) rate for up to 15 years is available for income from new investments in strategic sectors like high-tech, renewable energy, supporting industries, software development, and venture capital.

Exemptions for science and technology contributions

Income derived from contributions to scientific research, technological development, innovation, and digital transformation is exempt from corporate income tax. However, this exemption excludes contributions made between related parties, as such transactions raise concerns about transfer pricing manipulation and the risk of base erosion.