Vietnam’s tax landscape is on the brink of a significant transformation in 2025, poised to present both fresh opportunities and formidable challenges for foreign investors who are eager to make inroads into this rapidly evolving Southeast Asian market. With Vietnam targeting an ambitious GDP growth rate of 8% and breaking records in foreign investment — including major commitments from companies like Samsung, with a whopping $24-25 billion investment expected by the end of 2025 — a keen understanding of corporate tax compliance has never been more crucial for international businesses.
The recently amended Law on Corporate Income Tax No. 67/2025/QH15, implemented on October 1, 2025, marks the most significant reconfiguration of Vietnam’s corporate tax framework in years. This comprehensive reform transitions from a location-based incentive model to a more nuanced, sector-focused advantage system, while also widening the tax net to encompass activities related to the burgeoning digital economy. For foreign enterprises, these shifts necessitate immediate attention to ensure compliance and to take full advantage of available incentives.
Key Takeaways
- New tiered CIT rates from October 1, 2025: 15% for micro-enterprises (≤ 3 billion VND/year), 17% for small enterprises (> 3–50 billion VND), and 20% for larger or standard businesses.
- Expanded tax obligations for foreign digital businesses: E-commerce and digital platform providers are now considered permanent establishments and taxed on Vietnam-sourced income.
- Mandatory e-invoicing and electronic filing: Diverse businesses, including foreign investors, must comply with Vietnam’s digital tax reporting systems, facing strict penalties for non-compliance.
- SME and conversion incentives: Newly established businesses and those transitioning from household to enterprise status enjoy 2-3 years of full CIT exemptions to spur growth and formalization.
- Redesigned tax incentives: Incentives will now prioritize specific sectors (e.g., high-tech, renewables, R&D), deviating from previous location-based criteria, and standard industrial parks will no longer automatically qualify for exemptions.
- Stricter VAT compliance: Electronic, non-cash payments are mandated for valid VAT deductions, with a lower transaction threshold enforced.
- Severe penalties for late registration, tax filing, or e-invoice violations: Penalties can range from millions of VND up to 20% of tax owed and additional administrative sanctions for persistent infractions.
Understanding Vietnam’s New Corporate Tax Structure
Vietnam’s new corporate tax framework, set to take effect starting October 2025, introduces a tiered system for corporate income tax, a groundbreaking change from its previous uniform model. The standard CIT rate remains at 20% for most businesses, but lowered rates are now provided for small and micro-enterprises, fostering a more conducive environment for SME expansion. Furthermore, resource-oriented sectors like oil, gas, and precious minerals will encounter significantly elevated tax rates, reflecting both their profitability and the government’s push for sustainable resource management.
Standard Corporate Income Tax Rates
Currently, Vietnam upholds a standard CIT rate of 20% applicable to both resident and non-resident companies. The amendments set to be implemented in 2025 introduce preferential rates aimed at bolstering small and medium enterprises:
- 15% CIT rate for businesses generating annual revenue up to VND 3 billion (approximately $118,830)
- 17% CIT rate for businesses with annual revenue between VND 3 billion to VND 50 billion
These preferential rates apply based on the total revenue realized during the preceding corporate income tax period while taking into account relevant exclusions pertaining to enterprises linked to affiliated parties to avoid the fragmentation of business operations.
Specialized Industry Rates
Certain sectors will bear higher tax responsibilities, commensurate with their nature of resource extraction:
- Oil and gas exploration: CIT rates will vary between 25% to 50%, with specific rates determined by the Prime Minister for individual petroleum contracts
- Extraction of rare resources (platinum, gold, silver, tin, tungsten, gemstones, rare earths): 50% CIT rate applicable, with a reduction to 40% in areas predominantly considered to be extremely disadvantaged
Expanded Tax Obligations for Foreign Digital Businesses
The 2025 CIT Law introduces pioneering changes for foreign entities engaged within Vietnam’s digital economy. By classifying foreign companies involved in e-commerce and digital platforms as part of Vietnam’s tax jurisdiction, firms no longer need a traditional permanent establishment within the country to fulfill tax obligations.
Key developments include:
- Digital platforms are now formally recognized as permanent establishments
- Foreign enterprises must pay CIT on income sourced from Vietnam, regardless of their operational activities’ location
- Capital gains tax will now apply to indirect foreign share transfers in Vietnamese companies, effectively addressing previous tax avoidance mechanisms established through offshore frameworks
- The VAT rate for foreign digital service providers will see an increment from 5% to 10% starting July 1, 2025, with compulsory tax registration and e-invoicing to ensure compliance.
Critical Compliance Deadlines and Requirements
For foreign businesses, adhering to stringent reporting schedules is imperative to circumvent penalties:
Value Added Tax (VAT) Compliance
- Monthly VAT declarations must be submitted by the 20th of the subsequent month
- Documentation for non-cash payments is required for transactions over VND 5 million (reduced from VND 20 million)
- Standard VAT is set at 10%, with a temporary reduction to 8% applicable until December 31, 2025
Corporate Income Tax Reporting
- Quarterly provisional CIT declarations are required within 30 days after the end of each quarter
- Annual CIT finalization must be completed within 90 days post fiscal year-end
- Tax registration is mandatory within 10 working days after establishment or the onset of taxable activity
Electronic Filing Requirements
Vietnam has instituted electronic tax filing via the eTax portal, with strict penalties for any non-compliance commencing June 1, 2025. Business households and individual ventures must implement e-invoicing systems to avert substantial fines.
Strategic Tax Incentives for Foreign Investors
In spite of the tightening compliance measures, Vietnam continues to offer lucrative incentives aimed at investments in priority sectors:
High-Technology and Innovation Incentives
- 10% preferential CIT for a duration of 15 years allotted to eligible high-tech projects
- Four-year full tax exemption followed by a nine-year 50% CIT reduction for qualifying high-tech enterprises
- Additional customs duties exemption for raw materials and equipment unavailable locally
Priority Sector Benefits
The 2025 law focuses incentives on sectors including:
- Artificial Intelligence and semiconductor manufacturing
- Renewable energy and environmental protection initiatives
- Research and Development centers
- Digital technology products and cybersecurity
- SME incubators and support services for startups
Geographic Incentives
In contrast to previous blanket incentives for industrial parks, the 2025 law sharply focuses geographic inducements on:
- Regions marked by notably challenging socio-economic conditions
- Special economic zones and high-tech parks as designated by the Prime Minister
- Large-scale manufacturing initiatives exceeding VND 12,000 billion (~$475 million)
Small and Medium Enterprise Support
Recognizing the vital role of SMEs in economic growth, Vietnam provides extensive support:
- SMEs established after May 17, 2025, will enjoy full CIT exemptions for three years
- Household businesses transitioning to enterprises will have a two-year CIT exemption
- Special CIT rates of 15% and 17% remain applicable based on revenue thresholds for qualifying SMEs
Compliance Risks and Penalty Structure
A failure to comply with Vietnam’s tax obligations can lead to escalating penalties that significantly affect business operations:
Registration and Filing Penalties
- Late tax registration (1-30 days): Fines of VND 1-2 million
- Late tax registration (31-90 days): Fines of VND 3-6 million
- Late tax filing: Penalties can reach up to 20% of the tax due
- E-invoicing non-compliance: Severe penalties set to take effect from June 1, 2025
Audit and Enforcement Measures
Vietnam’s tax authorities are ramping up both scheduled and unplanned audits, particularly concentrating on sectors deemed high-risk and foreign-invested enterprises. The application of electronic systems and cross-border data sharing will enhance the government’s capabilities to spot non-compliance.
Practical Compliance Strategies
Achieving effective corporate tax compliance in Vietnam necessitates a proactive approach right from the inception of business establishment to ongoing operations. Foreign investors should prioritize strict adherence to procedural requirements—starting with timely licensing and tax registration—to lay a solid foundational compliance framework. Sustaining compliance requires well-organized accounting systems, meticulous documentation practices, and regular reviews of any regulatory alterations, in addition to leveraging expert tax services that help mitigate risks while optimizing tax advantages in this continually evolving legal landscape.
Establishment Phase
Foreign businesses should prioritize adherence to proper establishment protocols:
- Obtain the Investment Registration Certificate (IRC) within 15-30 working days
- Register for the Enterprise Registration Certificate (ERC) post IRC approval
- Complete tax registration within 10 working days after acquiring business licenses
Ongoing Compliance Management
Successful tax compliance necessitates systematic approaches:
- Implement robust accounting systems consistent with Vietnamese Accounting Standards (VAS)
- Maintain thorough documentation for all transactions and tax positions
- Establish internal controls for monthly VAT and quarterly CIT reporting
- Monitor regulatory changes through official communication channels and trusted advisors
Future Outlook and Strategic Considerations
Vietnam’s tax reforms for 2025 underscore the government’s commitment to digital advancement, sustainable development, and the modernization of its industrial sector. The removal of blanket tax incentives tied to industrial parks shifts the focus toward merit-based benefits, incentivizing genuine investments in technology and innovation. Enhanced digital taxation is aligning Vietnam with international standards, promoting fair competition between domestic and foreign enterprises.
How InCorp Can Help
InCorp Vietnam specializes in supporting foreign businesses in tax compliance, registration, and strategic planning within Vietnam’s evolving fiscal environment. By utilizing extensive local knowledge and professional expertise, InCorp assists investors in leveraging available incentives while ensuring complete compliance with the latest laws—enabling businesses to thrive confidently in this dynamic market.
FAQs
Q: What is the standard corporate income tax (CIT) rate in Vietnam for 2025?
A: The standard CIT rate is 20%, alongside preferential rates of 15% and 17% for small and micro enterprises based on their annual revenue thresholds.
Q: Who must comply with Vietnam’s corporate tax obligations?
A: All resident and non-resident companies earning income in Vietnam, including foreign digital businesses without a physical presence, are subject to corporate income tax.
Q: What penalties apply for non-compliance with Vietnam’s tax laws?
A: Penalties include fines for late registration (up to VND 6 million), late tax filings (up to 20% of tax owed), and significant penalties for failure to comply with mandatory e-invoicing.