Vietnam's evolving tax landscape in 2025 presents both opportunities and challenges for foreign investors seeking to establish operations in this dynamic Southeast Asian market. With the country targeting ambitious 8% GDP growth in 2025 and attracting record foreign investment, including Samsung's $24-25 billion commitment by the end of 2025, understanding corporate tax compliance has become more critical than ever for international businesses.
The amended Law on Corporate Income Tax No. 67/2025/QH15, which took effect on October 1, 2025, represents the most significant overhaul of Vietnam's corporate tax regime in recent years. This comprehensive reform shifts from location-based incentives to sector-focused benefits while expanding the tax net to capture digital economy activities. For foreign businesses, these changes require immediate attention to ensure compliance and maximize 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 deemed permanent establishments and taxed on Vietnam-sourced income.
- Mandatory e-invoicing and electronic filing: All businesses, including foreign investors, must comply with Vietnam’s digital tax reporting systems, with strict non-compliance penalties.
- SME and conversion incentives: New businesses and those converting from household to enterprise status receive 2–3 years of full CIT exemption to encourage formalization and growth.
- Redesigned tax incentives: Priority is now sector-based (e.g., high-tech, renewables, R&D), not location-based; standard industrial parks no longer automatically qualify for tax breaks.
- Stricter VAT compliance: Electronic, non-cash payments are required for VAT deductions, and a lower transaction threshold applies.
- Severe penalties for late registration, tax filing, or e-invoice violations: Fines range from millions of VND up to 20% of tax due and other administrative sanctions on persistent non-compliance.
Understanding Vietnam's New Corporate Tax Structure
Vietnam’s new corporate tax structure, effective from October 2025, introduces a tiered approach to corporate income tax, marking a major shift from its previous one-size-fits-all model. While the standard CIT rate remains at 20% for most companies, lower preferential rates are now available for small and micro-enterprises, creating a more supportive environment for SME growth. Meanwhile, resource extraction industries such as oil, gas, and precious minerals face significantly higher tax rates, reflecting both their profitability and the government’s prioritization of sustainable resource management.
Standard Corporate Income Tax Rates
Vietnam maintains a standard CIT rate of 20% for both resident and non-resident businesses. However, the 2025 amendments introduce preferential rates designed to support small and medium enterprises:
- 15% CIT rate for businesses with annual revenue up to VND 3 billion (approximately $118,830)
- 17% CIT rate for businesses with annual revenue between VND 3 billion and VND 50 billion
These preferential rates apply based on the total revenue of the preceding corporate income tax period, with specific exclusions for enterprises with related-party affiliations to prevent artificial business fragmentation.
Specialized Industry Rates
Certain sectors face higher tax burdens, reflecting their resource extraction nature:
- Oil and gas exploration: CIT rates range from 25% to 50%, with the Prime Minister determining specific rates for each petroleum contract
- Rare resource extraction (platinum, gold, silver, tin, tungsten, gemstones, rare earths): 50% CIT rate, reduced to 40% for areas where 70% or more belongs to extremely disadvantaged regions
Expanded Tax Obligations for Foreign Digital Businesses
The 2025 CIT Law introduces groundbreaking changes for foreign enterprises operating in Vietnam's digital economy. Foreign companies engaged in e-commerce and digital platform-based businesses now fall under Vietnam's tax jurisdiction, even without a traditional permanent establishment in the country.
Key developments include:
- Digital platforms are formally recognized as permanent establishments
- Foreign enterprises must pay CIT on Vietnam-sourced income regardless of where business activities are conducted
- Capital gains tax now applies to indirect foreign transfers of shares in Vietnamese companies, addressing previous tax avoidance through offshore structures
- The VAT rate for foreign digital service providers increased from 5% to 10% effective July 1, 2025, with mandatory tax registration and e-invoicing requirements imposed to ensure compliance.
Critical Compliance Deadlines and Requirements
Foreign businesses must adhere to strict reporting schedules to avoid penalties:
Value Added Tax (VAT) Compliance
- Monthly VAT declarations are due by the 20th of the following month
- Non-cash payment documentation required for transactions exceeding VND 5 million (reduced from VND 20 million)
- Standard VAT rate of 10%, with a temporary reduction to 8% continuing until December 31, 2025
Corporate Income Tax Reporting
- Quarterly provisional CIT declarations within 30 days after quarter-end
- Annual CIT finalization within 90 days after the fiscal year-end
- Tax registration must be completed within 10 working days of establishment or commencement of taxable activities
Electronic Filing Requirements
Vietnam has mandated electronic tax filing through the eTax portal, with heavy penalties for non-compliance starting June 1, 2025. Business households and individual enterprises must implement e-invoicing systems or face significant fines.
Strategic Tax Incentives for Foreign Investors
Despite tightening compliance requirements, Vietnam offers substantial incentives for investments in priority sectors:
High-Technology and Innovation Incentives
- 10% preferential CIT rate for 15 years for qualified high-tech projects
- 4 years full tax exemption followed by 9 years at 50% CIT reduction for high-tech enterprises
- Additional customs duty exemptions for imported raw materials and equipment not available domestically
Priority Sector Benefits
The 2025 law focuses incentives on:
- Artificial Intelligence and semiconductor manufacturing
- Renewable energy and environmental protection projects
- Research and Development centers
- Digital technology products and cybersecurity
- SME incubators and startup support services
Geographic Incentives
Unlike previous blanket industrial park benefits, the 2025 law restricts location-based incentives to:
- Areas with especially difficult socio-economic conditions
- Special economic zones and high-tech parks designated by the Prime Minister
- Large-scale manufacturing projects exceeding VND 12,000 billion (~$475 million)
Small and Medium Enterprise Support
Recognizing the importance of SMEs in economic development, Vietnam provides generous support:
- SMEs established after May 17, 2025: 100% CIT exemption for three consecutive years
- Household businesses converting to enterprises: CIT exemption for two consecutive years
- 15% and 17% preferential rates based on revenue thresholds for eligible SMEs
Compliance Risks and Penalty Structure
Non-compliance with Vietnam's tax requirements carries escalating penalties that can significantly impact 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 up to 20% of the tax due
- E-invoicing non-compliance: Heavy penalties effective from June 1, 2025
Audit and Enforcement Measures
Vietnam's tax authorities conduct both scheduled and surprise audits, particularly focusing on high-risk sectors and foreign-invested enterprises. The implementation of electronic systems and cross-border information-sharing agreements enhances the government's ability to detect non-compliance.
Practical Compliance Strategies
Effective corporate tax compliance in Vietnam requires a proactive approach from the very first steps of business establishment through ongoing operations. Foreign investors must adhere to strict procedural requirements—starting with timely licensing and tax registration—to ensure a compliant foundation for their business. Maintaining compliance demands well-structured accounting systems, consistent documentation, regular review of regulatory changes, and leveraging expert tax services to manage risk and optimize tax advantages in an ever-changing legal landscape.
Establishment Phase
Foreign businesses should prioritize proper establishment procedures:
- Obtain Investment Registration Certificate (IRC) within 15-30 working days
- Register for Enterprise Registration Certificate (ERC) following IRC approval
- Complete tax registration within 10 working days of obtaining business licenses
Ongoing Compliance Management
Successful tax compliance requires systematic approaches:
- Implement robust accounting systems aligned with Vietnamese Accounting Standards (VAS)
- Maintain comprehensive documentation for all transactions and tax positions
- Establish internal controls for monthly VAT and quarterly CIT reporting
- Monitor regulatory updates through official channels and professional advisors
Future Outlook and Strategic Considerations
Vietnam’s 2025 tax reforms underscore the government’s emphasis on digital transformation, sustainable development, and industrial modernisation. The removal of blanket industrial park incentives shifts the focus toward merit-based benefits, rewarding genuine investment in technology and innovation. Expanded digital taxation aligns Vietnam with global standards, ensuring fair competition between 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 deep local knowledge and professional expertise, InCorp helps investors maximize available incentives while ensuring full compliance with the latest laws—empowering businesses to grow 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%, with preferential rates of 15% and 17% for small and micro enterprises based on annual revenue thresholds.
Q: Who must comply with Vietnam’s corporate tax obligations?
A: All resident and non-resident businesses earning income in Vietnam, including foreign digital companies without a physical establishment, 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 filing (up to 20% of tax due), and heavy fines for non-compliance with mandatory e-invoicing.
