Government introduces a new framework for corporate income tax in Vietnam, including revised rules for capital transfers by foreign enterprises, effective 15 December 2025.
The Vietnamese Government issued Decree No. 320/2025/ND-CP on 15 December 2025, setting out detailed rules for the implementation of the Law on Corporate Income Tax (CIT). The decree provides a comprehensive framework for determining taxpayers, taxable income, allowable expenses and tax incentives, with the aim of standardising CIT application across sectors.
The decree applies to a wide range of taxpayers, including Vietnamese enterprises established under the Law on Enterprises and the Law on Investment, foreign enterprises operating in Vietnam with or without a permanent establishment, and other entities such as cooperatives, credit institutions and public service units.
Under the decree, taxable income consists of income from production and business activities as well as other income. This includes income from capital and securities transfers, real estate transfers, royalties from intellectual property and technology transfers, asset leasing, and financial income such as interest, foreign exchange differences and dividends.
A major update concerns capital transfers. Before 15 December 2025, foreign enterprises paid 20% tax on gains from transfers sourced in Vietnam, calculated as the transfer price minus the purchase price and related costs. The new decree lowers this to a 2% tax on taxable revenue from such transfers.
It also identifies categories of exempt income, including income from agriculture, forestry and fisheries in difficult socio-economic areas, direct technical services for agriculture, scientific research and technology development contracts (for a limited period), and enterprises employing a workforce with at least 30% disabled, rehabilitated or HIV-positive employees.
The decree clarifies the treatment of expenses when calculating taxable income. Deductible expenses must be directly related to production or business activities and supported by valid invoices and non-cash payment records for transactions exceeding VND 5 million. Non-deductible expenses include costs lacking proper documentation, administrative fines, certain welfare expenses exceeding one month’s average salary, and interest expenses that exceed statutory limits or relate to unpaid charter capital.
The standard CIT rate remains 20%, with reduced rates introduced for smaller enterprises. A 15% rate applies to enterprises with annual revenue not exceeding VND 3 billion, while a 17% rate applies to enterprises with revenue between VND 3 billion and VND 50 billion. Higher rates continue to apply to specific sectors, including oil and gas activities and the exploitation of precious natural resources.
In addition, the decree details tax incentives linked to priority industries and disadvantaged locations.
Preferential CIT rates of 10% may apply for up to 15 years, or for the entire duration of a project in certain cases, while qualifying new investment projects may benefit from tax holidays of up to four years followed by a 50% tax reduction for up to nine years. The decree also allows enterprises to allocate up to 10% of annual taxable income to a Science and Technology Development Fund.
Overall, Decree No. 320/2025/ND-CP serves as a key regulatory instrument for guiding CIT compliance and ensuring consistent tax administration in Vietnam.
