Vietnam’s Evolving Tax Landscape in 2025: A Guide for Foreign Investors

Vietnam’s tax environment is set to undergo significant changes in 2025, offering a mixed bag of opportunities and challenges for foreign investors. The ambitious target of achieving an 8% GDP growth and the influx of substantial foreign investment—most notably Samsung’s $24-25 billion commitment—underscores the importance of understanding the evolving corporate tax compliance requirements.

Key Legislative Updates

Corporate Income Tax (CIT) Reforms

The amended Law on Corporate Income Tax No. 67/2025/QH15, effective October 1, 2025, marks a comprehensive overhaul of Vietnam’s corporate tax system. This reform shifts the focus from location-based incentives to sector-focused benefits, expanding the tax net to include activities in the digital economy. For foreign businesses, this means immediate attention to compliance is critical to maximizing available incentives.

Tiered CIT Rates

Vietnam introduces tiered CIT rates to foster growth among small and micro enterprises. The key changes are as follows:

• 15% for Micro Enterprises: Entities with annual revenue up to VND 3 billion (approximately $118,830)
• 17% for Small Enterprises: Entities with annual revenue between VND 3 billion and VND 50 billion
• 20% for Larger Businesses: Remaining businesses will continue at the standard rate of 20%

The revised rates are designed to be more supportive of small-to-medium enterprise (SME) growth while imposing higher rates on resource extraction industries.

Expanded Tax Obligations for Digital Businesses

One of the most groundbreaking changes in the 2025 CIT Law is the expanded tax obligations for foreign digital businesses. Now classified as permanent establishments, companies engaged in e-commerce and digital platforms must adhere to Vietnam’s tax jurisdiction, thereby broadening the scope for compliance.

Key Developments Include:

• Digital platforms now recognized as permanent establishments liable for CIT on Vietnam-sourced income.
• Capital gains tax will apply to indirect foreign transfers of shares in Vietnamese companies.
• The VAT rate for foreign digital service providers is set to increase from 5% to 10%, effective July 1, 2025, accompanied by mandatory tax registration and e-invoicing.

Compliance Deadlines and Requirements

Adhering to strict compliance deadlines will be vital for foreign businesses operating in Vietnam.

Value Added Tax (VAT) Compliance:

• Monthly VAT Declarations: Due by the 20th of the following month.
• Documentation for Non-Cash Transactions: Required for transactions exceeding VND 5 million (down from VND 20 million).
• Standard VAT Rate: 10%, with a temporary reduction to 8% continuing until December 31, 2025.

Corporate Income Tax Reporting:

• Quarterly Provisional CIT Declarations: To be filed within 30 days after the quarter ends.
• Annual CIT Finalization: Must be completed within 90 days post fiscal year-end.
• Tax Registration: Required within 10 working days of beginning taxable activities.

Electronic Filing Requirements:

Vietnam mandates the electronic filing of taxes through the eTax portal, setting heavy penalties for non-compliance starting June 1, 2025.

Strategic Tax Incentives for Foreign Investors

Despite the tightening compliance requirements, Vietnam offers substantial incentives, particularly in priority sectors.

High-Technology and Innovation:

• 10% preferential CIT rate for high-tech projects, extending for 15 years.
• Tax exemptions for the initial years, offering full CIT exemption for four years followed by a 50% reduction for subsequent years.
• Additional customs duty exemptions for pertinent imports.

Focus on Priority Sectors:

The 2025 reforms refocus incentives on specific high-growth areas, including:

• Artificial Intelligence and semiconductor manufacturing
• Renewable energy and environmental protection projects
• Research and development centers
• Digital technology and cybersecurity

Geographic Incentives:

This shift means that industry-wide benefits will no longer apply broadly; only specific regions or projects qualifying as high-tech or in socio-economically disadvantaged areas will receive targeted incentives.

Support for Small and Medium Enterprises (SMEs)

Recognizing the importance of SMEs for economic growth, Vietnam introduces considerable support for these entities.

• CIT Exemption for New SMEs: 100% exemption for the first three years for businesses established after May 17, 2025.
• CIT Exemption for Conversions: Household businesses transitioning to formal enterprises can receive a two-year CIT exemption.
• Continued preferential rates based on revenue thresholds for qualifying SMEs.

Compliance Risks and Penalties

Foreign businesses must be keenly aware of the compliance risks associated with varying tax obligations.

Registration and Filing Penalties:

• Late Tax Registration: Ranges from VND 1-6 million depending on days overdue.
• Late Tax Filing: Penalties can reach up to 20% of the tax due.
• E-invoicing Non-Compliance: Significant fines will be imposed starting June 1, 2025.

Audit and Enforcement Measures:

Vietnam’s tax authorities are increasingly vigilant, employing both scheduled and surprise audits, particularly focusing on foreign-invested enterprises due to their perceived risk.

Practical Compliance Strategies

Successfully navigating Vietnam’s tax landscape requires a proactive management approach from the establishment phase through continuous operations.

Establishment Phase:

• Secure Investment Registration Certificate (IRC): Within 15–30 working days.
• Obtain Enterprise Registration Certificate (ERC): Following IRC approval.
• Complete Tax Registration: Within 10 working days of receiving business licenses.

Ongoing Compliance Management:

• Implement Robust Accounting Systems: Aligned with Vietnamese Accounting Standards (VAS).
• Maintain Comprehensive Documentation: Essential for all financial transactions.
• Establish Internal Controls: Specifically for VAT and CIT reporting.
• Monitor Regulatory Updates: Regularly engage with professional advisors to keep up with changes.

Future Outlook and Strategic Considerations

Vietnam’s tax reforms point toward an era of digital transformation and sustainable development. The emphasis on merit-based incentives rewards genuine investment in technology, while global standards in digital taxation level the playing field for both domestic and foreign businesses.

How InCorp Can Help

InCorp Vietnam specializes in assisting foreign businesses with tax compliance, registration, and strategic planning under Vietnam’s evolving tax regime. By leveraging local expertise, InCorp aids investors in maximizing available incentives while ensuring full compliance with the latest laws, enabling businesses to navigate confidently in this dynamic market.

FAQs

What is the standard corporate income tax (CIT) rate in Vietnam for 2025?

The standard CIT rate is set at 20%, with preferential rates of 15% and 17% for SMEs based on annual revenue.

Who must comply with Vietnam’s corporate tax obligations?

All resident and non-resident entities earning income in Vietnam, including foreign digital firms without a physical presence, are subject to corporate income tax.

What penalties apply for non-compliance with Vietnam’s tax laws?

Penalties can range from fines for late registration (up to VND 6 million) to late tax filing penalties (up to 20% of tax due) and heavy fines for e-invoicing non-compliance.