Corporate Income Tax in Vietnam: Rates, Regulations, and Impact

Expanding or establishing a company in Vietnam can open doors to one of Southeast Asia’s most dynamic markets. However, before setting up shop, understanding the landscape of corporate income tax in Vietnam is critical. From corporate income tax obligations to the business license tax, Vietnam’s tax structure impacts all types of businesses local or foreign.

In this article, we’ll explore the corporate tax rate in Vietnam, explain how the CIT tax in Vietnam is calculated, and highlight how professional service providers like Offshore Company Corp can simplify the entire process for foreign investors.

Understanding Corporate Income Tax in Vietnam

The corporate income tax (CIT) is the primary tax imposed on profits earned by companies operating in Vietnam. All entities engaged in production, trading, or service provision are subject to this tax, including both domestic and foreign-invested enterprises.

Corporate income tax in Vietnam is calculated based on a company’s taxable income, which is determined by deducting allowable expenses from total revenues. These expenses must be supported by proper documentation and must directly relate to business operations.

Meaning of corporate income tax in Vietnam

Corporate Tax Rate in Vietnam (Latest update)

The corporate tax rate in Vietnam is generally straightforward and competitive within the region, making it attractive for both local and foreign investors.

• Standard CIT Rate: The standard corporate income tax in Vietnam is 20%, applied to most types of business activities.

However, the Vietnamese government offers preferential corporate tax rates to encourage investment in prioritized sectors and regions. These include:

• 10% CIT for enterprises involved in:
• High-tech industries
• Education and training
• Healthcare services
• Scientific research and technology development
• Environmental protection and renewable energy

(Applicable for a specific incentive period, typically 15 years or the entire project lifecycle for some sectors)

• 15% or 17% CIT for companies operating in:
• Designated economic zones
• Difficult socio-economic areas
• Projects aligned with national development objectives

These CIT tax incentives in Vietnam are usually granted to businesses that:

• Invest in underdeveloped or remote areas
• Create jobs and stimulate local economic growth
• Promote sustainable practices and environmental responsibility

These preferential tax rates may apply for a specific period, typically between 10 to 15 years, and businesses must meet specific criteria to qualify for these incentives. It’s important to stay updated on government policies, as these incentives can change.

Schedule of Corporate Tax Rates in Vietnam

Who Is Subject to Corporate Income Tax in Vietnam?

Entities subject to corporate income tax in Vietnam include:

• Resident enterprises: Taxed on worldwide income.
• Non-resident enterprises: Taxed only on Vietnam-sourced income.

A resident enterprise is defined as any organization incorporated under Vietnamese law or having a permanent establishment and generating income within the country.

Non-resident foreign companies, such as those providing digital services without a legal presence, may be taxed under Vietnam’s Foreign Contractor Tax (FCT) regime.

Details of CIT Tax in Vietnam: Taxable Income and Deductions

Understanding how the CIT tax in Vietnam is calculated is key to accurate compliance. Here's a simplified breakdown:

Taxable Income = Total Revenue – Deductible Expenses – Losses Carried Forward

Deductible expenses must meet the following conditions:

• Directly related to the generation of taxable income.
• Supported by proper invoices and accounting records.
• Not listed as non-deductible under Vietnamese tax law.

Examples of deductible expenses include:

• Salaries and wages.
• Rent and utilities.
• Raw material costs.
• Business travel expenses.

Certain costs, such as fines, donations (unless allowed by law), and excessive interest payments, are non-deductible.

Standards for calculating corporate income tax in Vietnam

Loss Carryforward and Tax Filing

Companies in Vietnam are allowed to carry forward losses for up to 5 consecutive years to offset future taxable income. However, loss carryback is not permitted. In doing so, companies must follow strict rules when carrying forward losses. They must maintain accurate financial records and provide evidence that losses are incurred within the allowed timeframe.

CIT returns must be submitted annually, with quarterly provisional payments made throughout the year. The deadline for the final CIT return is 90 days after the end of the fiscal year.

Business License Tax in Vietnam in 2025

Aside from CIT, companies also need to pay the business license tax in Vietnam, which is a fixed annual fee. This is separate from income tax and is based on the company’s registered capital:

Registered Capital (VND)	Annual Business License Tax
Over VND 10 billion	VND 3,000,000
VND 10 billion or less	VND 2,000,000
Branches/Representatives	VND 1,000,000

This tax must be paid within 30 days of business registration and then annually by January 30th each year. Failure to pay on time may lead to penalties and restrictions on business activities.

Table of business license tax fees in Vietnam

Vietnam’s Tax Treaties: No Double Taxation

Vietnam has signed over 80 Double Taxation Avoidance Agreements (DTAs) with countries around the world. These treaties are a big win for international investors.

Why do they matter?

They help you avoid paying tax twice — once in Vietnam and again in your home country. Under a DTA, you might be eligible for:

• Lower or zero withholding tax on dividends, interest, and royalties
• Clearer rules on which country gets to tax your income
• More favorable tax treatment if your business spans across borders

Just make sure to keep the necessary documents (like tax residency certificates) handy if you want to take advantage of these agreements.

Smart Tax Practices in Vietnam: What Every Business Should Know

By adopting sound tax practices early on, businesses can avoid costly errors and ensure smooth operations. Here are essential recommendations for maintaining full tax compliance in Vietnam:

• Keep solid records: All business income and expenditures must be supported by valid VAT invoices and recorded in line with Vietnamese accounting standards. Consistent and accurate record-keeping is the foundation of effective tax compliance.
• Work with a local expert: Vietnam’s tax regulations can be intricate — particularly when dealing with investment incentives, international transactions, or repatriated income. A trusted advisor like Offshore Company Corp offers localized expertise to help you interpret and comply with current laws.
• Fulfill Quarterly CIT Obligations: Corporate Income Tax (CIT) in Vietnam involves quarterly provisional payments, not just an annual return. Businesses must settle their final tax obligations within 90 days of the fiscal year-end. Staying on schedule helps you avoid penalties and interest charges.

Conclusion

Corporate tax in Vietnam is a pivotal consideration for enterprises to choose the right path for sustainable development in the host country. Discharge of commitments such as the risk management of business tax in Vietnam, compliance with corporate income tax, and managing all tax obligations from the company are equally important in addition to strategic tax planning.

Whether you’re a start-up entering Vietnam or an international business expanding in the region, Offshore Company Corp stands ready to assist you at every stage. We simplify the process so you can focus on what matters most—growing your business.

Looking to incorporate in Vietnam and stay tax-compliant from day one? Contact us today for a consultation and expert support.