Corporate Income Tax (CIT) Vietnam: 2026 FDI Guide

For foreign-invested enterprises (FDI) operating in Vietnam, corporate income tax (CIT) is one of the most significant ongoing compliance obligations — and one of the biggest opportunities for strategic tax planning. Vietnam’s standard CIT rate of 20% is regionally competitive, and its network of tax incentives can reduce effective rates to as low as 10% for qualifying projects. However, the regulatory landscape has shifted significantly with the new Law on Corporate Income Tax 2025 (effective from 1 October 2025), which introduces revised incentive categories, new SME thresholds, and tighter compliance requirements. This guide provides a complete, up-to-date reference for FDI enterprises navigating Vietnam’s CIT system in 2026.

1. Who Is Subject to CIT in Vietnam?

Under Vietnam’s territorial-source tax system, all enterprises established under Vietnamese law — including wholly foreign-owned enterprises, joint ventures, and representative offices that generate income — are subject to CIT on their worldwide income. There is no separate concept of tax residency for CIT purposes; incorporation in Vietnam automatically triggers full CIT obligations.

Foreign organizations that carry out business in Vietnam without establishing a legal entity — such as contractors, service providers, or digital platform operators — are subject to Foreign Contractor Tax (FCT), which comprises both VAT and CIT elements withheld at source. The FCT rates vary by activity type, typically ranging from 1% to 10% of gross revenue. For a detailed treatment of FCT, refer to our Foreign Contractor Tax Guide.

2. CIT Rates: Standard, Sector-Specific, and Preferential

The standard CIT rate in Vietnam is 20%, applying uniformly across most industries and sectors. There are no local, state, or provincial income taxes — the 20% rate is the single national rate shared between central and provincial state budgets.

However, certain industries face higher rates:

• Oil and gas: 25% to 50%, depending on the specific production-sharing contract
• Mineral resources (prospecting, exploration, extraction): 40% to 50%, depending on the project location and mineral type

For small and medium enterprises (SMEs), the new CIT Law introduces tiered rates effective from the 2025 tax year:

Preferential CIT Rates for Investment Incentives

Qualifying investment projects can access significantly reduced CIT rates:

• 10% for 15 years: Large-scale manufacturing (≥ VND 6,000 billion investment or ≥ VND 10,000 billion revenue), high-tech enterprises, R&D centers, AI data centers, and projects in extremely disadvantaged socio-economic areas
• 15% for 10 years: Projects in disadvantaged areas, certain agricultural and manufacturing projects, and newly added incentive sectors under the 2025 CIT Law, including automobile manufacturing and assembly
• 17% for 10 years: Projects in areas with moderate socio-economic difficulty

The 2025 CIT Law significantly expanded the list of incentivized sectors. Notable additions include: certain digital technology products and services, AI infrastructure (data centers), semiconductor manufacturing, and SME-supporting technology platforms. FDI enterprises considering new investment in Vietnam should review whether their sector now qualifies under the expanded criteria.

3. How Taxable Income Is Calculated

The CIT calculation follows a straightforward formula:

Taxable Income = (Revenue – Deductible Expenses) + Other Assessable Income – Tax Loss Carry-Forward – Scientific Research Fund Allocation

Revenue includes all income from the sale of goods, provision of services, and other business activities, both domestic and foreign-sourced. Revenue is recognized on an accrual basis under Vietnamese Accounting Standards (VAS).

Other assessable income encompasses interest income, foreign exchange gains, income from asset liquidation, debt write-offs recovered, and other non-operating income items that are not classified as revenue.

4. Deductible vs. Non-Deductible Expenses

To qualify as deductible, expenses must meet four conditions under Article 6 of Circular 78/2014/TT-BTC (as amended):

1. Actual incurrence: The expense must be genuinely incurred and related to the enterprise’s business activities
2. Adequate documentation: Valid invoices, receipts, contracts, and payment documents as prescribed by law
3. Payment threshold: For expenses of VND 20 million or more (including VAT), payment must be made via bank transfer (non-cash) — cash payments above this threshold are not deductible
4. Not explicitly prohibited: The expense must not fall into any of the non-deductible categories specified by law

Common Non-Deductible Expenses

FDI enterprises frequently encounter issues with the following non-deductible items:

• Employee remuneration not specified in labor contracts or company policy (e.g., bonuses, allowances without documented entitlement)
• Excess depreciation — depreciation charges exceeding the prescribed rates under Circular 45/2013/TT-BTC
• Provisions exceeding statutory limits: Bad debt provisions, warranty provisions, and inventory devaluation provisions are capped by specific formulas
• Interest on loans from non-credit institutions exceeding 150% of the State Bank of Vietnam’s base rate
• Marketing and advertising expenses exceeding 15% of total deductible expenses (for newly established enterprises for the first 3 years; this cap is waived for enterprises in certain incentivized sectors)
• Fines for administrative violations (tax penalties, traffic fines, environmental violation fines)
• Charitable contributions not made through prescribed organizations or not properly documented

A proactive review of expense documentation by your accounting team before the year-end closing can identify and remedy potential disallowances, saving significant tax costs. Our accounting review services routinely identify 5–12% of expenses at risk of disallowance during tax audits.

5. Tax Incentives: Eligibility, Duration, and Conditions

Important note for FDI planning: The Global Minimum Tax (GMT) rules under Vietnam’s Resolution 107/2023/QH15 took effect from 1 January 2024. Multinational enterprises with consolidated group revenue of €750 million or more are subject to a 15% effective minimum tax rate. Vietnam’s Qualified Domestic Minimum Top-Up Tax (QDMTT) means that if an FDI enterprise’s effective CIT rate falls below 15% due to incentives, Vietnam will collect the top-up tax, not the parent company’s jurisdiction. This fundamentally changes the economics of tax incentives for large MNEs — consult your financial advisors at Tài Chính Á Châu or corporate advisory team at BIZCA to model the post-GMT effective rate before committing to investment structures.

6. CIT Filing and Payment Deadlines

Vietnam operates a provisional quarterly payment + annual finalization system:

Critical change from July 2026: Under Decree 245/2026/NĐ-CP, certain enterprises affected by economic conditions may qualify for tax payment deferrals for VAT, CIT, PIT, and land rental. Check with your accountant whether your enterprise qualifies — the deferral is not automatic and requires specific application.

Provisional payment rule: The total of four quarterly provisional CIT payments must equal at least 80% of the final annual CIT liability. If provisional payments fall short of this threshold, the enterprise must pay late-payment interest (currently 0.03% per day, equivalent to ~10.95% per annum) on the shortfall from the Q4 payment deadline.

7. Tax Loss Carry-Forward

Tax losses — where deductible expenses plus tax loss carry-forward exceed revenue plus other income — can be carried forward for up to five consecutive years from the year following the loss year. Losses cannot be carried back, and there are no provisions for group loss relief or consolidated filing among related entities in Vietnam.

This makes accurate and timely loss tracking essential for FDI enterprises in their early years (when investment-phase losses are common). A comprehensive accounting operations function ensures losses are properly documented, carried forward, and applied within the five-year window — unutilized losses that expire represent a permanent tax cost.

8. Global Minimum Tax Impact: What FDI Enterprises Must Know

The introduction of the Global Minimum Tax (Pillar Two) is the single most significant change to Vietnam’s tax incentive landscape in decades. Key facts for FDI enterprises:

• QDMTT applies from FY 2024: Vietnam collects the top-up tax domestically, neutralizing the benefit of incentive rates below 15% for in-scope MNEs
• Income Inclusion Rule (IIR): For Vietnamese MNEs with outbound investments, the IIR applies from FY 2024, with the first filing due 18 months after fiscal year-end
• Filing deadline QDMTT: 12 months after fiscal year-end
• Transitional CbCR safe harbour: Available for the initial years, reducing compliance burden for groups that meet the simplified effective tax rate test

For FDI enterprises below the €750 million revenue threshold, existing CIT incentives continue to apply without GMT interference. However, enterprises approaching this threshold should begin planning for the transition well in advance — restructuring of legal entities, supply chains, and intercompany pricing may be required to optimize the post-GMT tax position.

9. Comparison: Vietnam CIT vs. Regional Competitors

Vietnam’s 20% standard rate is competitive, and its 10% incentive rate for qualifying FDI is attractive even after GMT top-up considerations. Combined with Vietnam’s growing manufacturing ecosystem, FTAs, and young workforce, the CIT regime supports Vietnam’s position as a premier FDI destination in Southeast Asia.

10. Practical Action Steps for FDI Enterprises

1. Review your incentive eligibility: The 2025 CIT Law expanded incentivized sectors. If your project was established before these changes, you may now qualify for additional incentives — conduct a formal eligibility review
2. Audit expense documentation: Before year-end, ensure all expenses ≥ VND 20 million have bank transfer records, all labor costs are backed by contracts/policies, and depreciation schedules comply with statutory rates
3. Model your GMT exposure: If your global group revenue exceeds €750 million, work with a financial advisory team and business restructuring advisors to quantify the QDMTT impact and explore restructuring options
4. Track loss carry-forwards: Maintain a five-year loss schedule and monitor expiration dates — an expired loss is a permanent tax cost
5. Ensure quarterly provisional payments reach 80%: The 0.03% daily late-payment interest on shortfalls is punitive — plan quarterly payments conservatively
6. Stay current with Decree 132 compliance: If your enterprise has related-party transactions, ensure transfer pricing documentation is prepared contemporaneously, not reactively during an audit

Explore the Á Châu Ecosystem:

• Dịch Vụ Kế Toán Á Châu — Accounting & Tax Services
• Tài Chính Á Châu — Financial Advisory, Business Loans & Restructuring
• BIZCA — Business Networking, M&A Advisory & Capital Matching

Official sources: Vietnam Laws (VBPL) · Thu Vien Phap Luat · Ministry of Finance Portal

Frequently Asked Questions

What is the standard CIT rate in Vietnam for FDI enterprises?

The standard corporate income tax rate in Vietnam is 20% for most enterprises, including wholly foreign-owned entities. There are no local or provincial income taxes — the 20% rate applies nationally. Certain extractive industries face higher rates (25–50%), while qualifying SMEs benefit from reduced rates of 15–17% under the new CIT Law effective from the 2025 tax year.

What expenses are NOT deductible for CIT purposes in Vietnam?

Common non-deductible expenses include: employee compensation not specified in labor contracts or company policy; expenses of VND 20 million+ without bank transfer proof; depreciation exceeding statutory rates; interest on non-bank loans exceeding 150% of the SBV base rate; fines for administrative violations; and charitable donations not meeting documentation requirements. A professional accounting review can identify potential disallowances before the tax audit.

How does the Global Minimum Tax affect FDI enterprises in Vietnam?

Since 1 January 2024, multinational groups with global revenue of €750 million+ are subject to a 15% effective minimum tax rate under Vietnam’s QDMTT rules. If your effective CIT rate falls below 15% due to incentives, Vietnam collects the top-up tax. Groups below the €750 million threshold continue to benefit from incentives without GMT impact. Enterprises approaching the threshold should begin restructuring planning with financial advisors well in advance.

How long can tax losses be carried forward in Vietnam?

Tax losses can be carried forward for up to five consecutive years from the year following the loss year. There is no loss carry-back mechanism, and no group loss relief or consolidated filing is available. Losses that expire after five years become a permanent tax cost — proper tracking of loss schedules is essential, especially for FDI enterprises in the investment phase.

When are CIT returns and payments due in Vietnam?

Quarterly provisional CIT payments are due by the 30th day of the first month following each quarter. The annual CIT finalization return and any remaining tax balance are due by the last day of the third month after the fiscal year-end (31 March for calendar-year taxpayers). Total quarterly provisional payments must reach at least 80% of the final annual CIT liability to avoid late-payment interest of 0.03% per day.

What tax incentives are available for FDI in high-tech sectors?

High-tech enterprises, R&D centers, AI data centers, and large manufacturing projects (≥ VND 6,000 billion investment) qualify for a 10% CIT rate for 15 years, plus a tax holiday of up to 4 years from the first profitable year, followed by a 50% reduction for up to 9 subsequent years. The 2025 CIT Law expanded incentivized sectors to include semiconductor manufacturing, certain digital technology products, and automobile manufacturing and assembly.