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Effective from 1 October 2025
The declaration of Corporate Income Tax (“CIT”) Law No. 67/2025/QH15, effective from 1 October 2025, marks an important step in Vietnam’s ongoing efforts to refine its corporate tax framework in line with evolving business practices and international standards. Rather than introducing a radical overhaul, the new Law focuses on recalibrating the tax base, improving clarity in the treatment of income and expenses, and introducing a more differentiated corporate tax rate structure that better reflects enterprise size and capacity.
These changes arrive at a time when Vietnamese enterprises, both domestic and foreign-invested, are increasingly engaged in corporate restructuring, cross-border transactions, and technology-driven business models. Against this backdrop, the Law seeks to close interpretative gaps, reduce disputes, and strengthen the neutrality and transparency of corporate income taxation.
Expansion and Clarification of Taxable Income
A central theme of Law 67 is the broader and more explicit definition of taxable income, particularly in areas where economic value is created without immediate cash inflows.
Asset Revaluation in Corporate Transactions
Under the new Law, differences arising from asset revaluation are expressly treated as taxable income in a wider range of corporate transactions. These include capital contributions using assets, asset transfers in mergers, consolidations or divisions, changes in ownership structure, and changes in business type.
In previous practice, asset revaluation gains arising from internal reorganisations were often subject to inconsistent tax treatment, particularly where transactions were driven by restructuring objectives rather than outright sales. Law 67 clarifies that where asset values are re-determined and ownership or economic control changes, any resulting increase in value constitutes taxable income for CIT purposes.
This change reflects a broader policy trend towards substance-over-form taxation, ensuring that economic gains are taxed regardless of whether they are realised through cash transactions. For enterprises planning mergers, internal restructurings, or business conversions, this amendment underscores the importance of conducting tax impact assessments early in the transaction planning process.
Contractual Grants, Bonuses, and Penalties
Law 67 also explicitly brings contractual grants, bonuses, and penalties within the scope of taxable income. Such items are commonly encountered in commercial contracts, particularly in construction, infrastructure development, energy projects, and long-term service arrangements.
By clarifying the tax treatment of these contractual amounts, the Law reduces uncertainty in determining whether such income should be classified as operating income or incidental gains. From a compliance perspective, enterprises should ensure that all contractual receipts, regardless of their accounting classification, are reviewed for CIT implications.
Deductible Expenses: Greater Alignment with Business Reality
While expanding taxable income, Law 67 simultaneously introduces more pragmatic rules on deductible expenses, acknowledging that commercial operations do not always conform neatly to annual accounting periods.
Expenses Not Directly Linked to Current Revenue
The Law allows the deduction of certain expenses incurred for business operations even where they do not directly correspond to revenue generated during the same tax period, provided such expenses comply with regulatory requirements.
This provision is particularly relevant for enterprises engaged in long-term projects, research and development, or capacity-building activities, where expenses are incurred well in advance of revenue generation. By recognising these realities, the Law reduces pressure on enterprises to artificially align expenses with revenue and helps prevent distortions in taxable income calculations.
Nevertheless, deductibility remains contingent on the expenses being genuine, properly documented, and incurred for business purposes. Tax authorities are likely to continue scrutinising such expenses closely, making documentation and internal controls critical.
Treatment of Non-Refundable Input VAT
Another notable clarification concerns input VAT that cannot be fully deducted and does not qualify for a VAT refund. Under Law 67, such VAT amounts may be treated as deductible expenses for CIT purposes.
This adjustment helps mitigate the cost impact of irrecoverable VAT, particularly for enterprises engaged in partially exempt activities or mixed VAT treatments. From a policy perspective, it promotes tax neutrality by ensuring that VAT which cannot be recovered does not inflate the effective corporate tax burden.
Introduction of a Tiered Corporate Income Tax Rate Structure
Perhaps the most visible change under Law 67 is the introduction of a more graduated CIT rate regime, reflecting enterprise size and revenue capacity.
Revised CIT Rates
| Category of Enterprise | Annual Revenue | CIT Rate |
| Micro enterprises | ≤ VND 3 billion | 15% |
| Small enterprises | > VND 3 billion – ≤ VND 50 billion | 17% |
| General enterprises | > VND 50 billion | 20% |
While the standard 20% rate remains unchanged for larger enterprises, the reduced rates for micro and small enterprises represent a meaningful policy shift. These rates are designed to support business sustainability, encourage formalisation, and improve cash flow for smaller operators.
From a compliance standpoint, revenue thresholds take on increased significance. Enterprises must ensure accurate revenue recognition and monitoring, as misclassification could lead to reassessments and penalties. For growing enterprises approaching threshold limits, forward-looking tax planning will be increasingly important.
Adjustment of Tax Incentives for New Technology Products
Law 67 also revises tax incentives applicable to income derived from the sale of new technology products. Specifically, the preferential CIT exemption period is reduced from five years to a maximum of three years.
This adjustment reflects a recalibration of incentive effectiveness, ensuring that tax benefits remain targeted and time-bound. While the shortened incentive period may affect long-term profitability projections for technology-focused enterprises, it also encourages businesses to prioritise efficiency and scalability rather than long-term reliance on tax exemptions.
Enterprises operating in innovation-driven sectors should reassess existing incentive assumptions and consider alternative support mechanisms available under other investment or innovation policies.
Implications for Corporate Restructuring and Investment Decisions
Taken together, the amendments under Law 67 have significant implications for corporate restructuring, investment planning, and financial modelling.
- Asset revaluation gains arising from restructuring are now more clearly taxable, increasing the importance of valuation methodologies.
- Contractual income streams must be reviewed comprehensively to ensure correct tax treatment.
- Reduced CIT rates offer tangible benefits to SMEs but require careful revenue management.
- Technology-related incentives remain available but on a more limited timeline.
These changes highlight the need for enterprises to integrate tax considerations into broader strategic decision-making rather than treating tax compliance as a purely administrative function.
Considerations for Foreign-Invested Enterprises
For foreign-invested enterprises (“FIEs”), Law 67 reinforces Vietnam’s commitment to aligning tax outcomes with economic substance. Internal restructurings, changes in ownership, or conversions of legal form may now give rise to taxable revaluation gains more clearly than before.
Foreign groups should also consider how Vietnam’s revised CIT rules interact with overseas tax regimes, particularly in relation to valuation, profit recognition, and potential double taxation. Advance planning and coordination across jurisdictions will be key to managing these risks.
Conclusion
Corporate Income Tax Law No. 67/2025/QH15 represents a measured but impactful evolution of Vietnam’s corporate tax regime. By expanding the taxable income base, refining deductible expense rules, introducing differentiated tax rates, and recalibrating incentives, the Law seeks to balance fiscal integrity with business support.
Enterprises operating in Vietnam should proactively review their tax positions ahead of the Law’s effective date to ensure compliance, manage risk, and identify opportunities arising from the new framework. Early preparation will be critical as tax authorities continue to enhance enforcement and analytical capabilities in the coming years.
