A Guide to Taxation in Vietnam – 2025 Update

Vietnam has made notable strides in tax administration reforms. All businesses are required to file tax returns and make payments through the national electronic tax portal. E-invoicing is now compulsory and comes with strict timelines for issuance and validation. Companies must also regularly reconcile tax declarations with their accounting records to avoid audits.

In parallel, the General Department of Taxation (GDT) is integrating AI tools to monitor suspicious transactions, paying particular attention to cross-border payments and VAT refund claims.

Corporate income tax remains stable, but changes are coming

The corporate income tax (CIT) rate remains at 20 percent for most enterprises, a level considered competitive in the region. However, higher rates between 32 percent and 50 percent continue to apply to petroleum operations and other natural resource extraction projects, subject to project-specific agreements.

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A proposed amendment to the Law on Corporate Income Tax is under review by Vietnam’s National Assembly as of May 2025. This draft law aims to:

• Adjust sector-specific tax incentives;
• Clarify tax exemption criteria for business expansion projects; and
• Streamline rules for investment in underdeveloped regions.

If passed, these changes could affect the way multinationals structure their investments in the coming years.

Business license tax still applies to all enterprises

Vietnam imposes a flat-rate business license tax (BLT) that ranges from VND 1 million to VND 3 million per year, depending on a company’s registered capital. This annual obligation applies to both domestic and foreign entities and must be paid in the first month of each calendar year.

VAT reforms focus on digital transactions and compliance

Vietnam’s value-added tax (VAT) regime continues to apply a standard rate of 10 percent. A preferential 0 percent rate remains available for qualifying exported goods and services, but recent changes introduced in mid-2025 have tightened the definition of “exports” to prevent abuse of this provision.

Key updates to VAT include:

• Foreign digital platforms providing services to Vietnam-based users are now required to register and pay VAT at 10 percent through the General Department of Taxation’s (GDT) dedicated e-portal.
• Electronic invoices and non-cash payment proof are mandatory for businesses seeking VAT refunds or input tax credits.
• Tax inspections are increasingly focusing on VAT reporting accuracy and transaction documentation.

Personal income tax rules remain unchanged for now

Personal income tax (PIT) in Vietnam is levied progressively from 5 percent to 35 percent for tax residents, while non-residents are subject to a flat rate of 20 percent on Vietnam-sourced income. Although the tax brackets remain unchanged in 2025, the Ministry of Finance is expected to issue new guidelines later this year on the tax treatment of remote workers and digital nomads who work for foreign employers but reside in Vietnam for extended periods.

The current PIT brackets are as follows:

Tax residents are defined as individuals residing in Vietnam for 183 days or more in a tax year or having a permanent residence in the country. Employers are required to withhold PIT at the source, and individuals with multiple income sources or high incomes are responsible for filing annual PIT returns.

Foreign contractor tax tightened for digital services

Vietnam’s Foreign Contractor Tax (FCT), a hybrid withholding mechanism for non-resident entities, remains in force and is becoming more strictly enforced.

Foreign companies that provide services in Vietnam—particularly software, SaaS, or cloud-based platforms—without a permanent establishment (PE) must fulfill FCT obligations, which include:

• A 5 percent VAT component,
• A CIT component is typically between 5–10 percent, depending on the contract type.

Regulatory updates in 2025 emphasize the registration and declaration of FCT through electronic systems, and the GDT is coordinating with banks and customs authorities to flag non-compliant foreign suppliers.

Transfer pricing compliance aligned with OECD BEPS

Vietnam fully implements the OECD’s Base Erosion and Profit Shifting (BEPS) Action Plan 13, requiring multinationals to submit:

• A Master File detailing the global business group,
• A Local File focused on Vietnam-based operations, and
• A Country-by-Country Report (CbCR) if group-wide revenue exceeds VND 18 trillion.

Transfer pricing scrutiny has increased significantly, and documentation thresholds are enforced rigidly. Companies must ensure comparability studies are current, especially when transactions involve related parties in low-tax jurisdictions.

Tax incentives still drive investment into priority sectors

Vietnam continues to offer generous tax incentives to attract investment in high-tech, education, healthcare, renewable energy, and R&D-intensive sectors. These include:

• A reduced CIT rate of 10 percent for 15 years,
• Four years of tax exemption,
• Nine subsequent years of 50 percent CIT reduction.

Incentives are also available in designated economic zones and underdeveloped areas, though access to these benefits is increasingly tied to specific project conditions and regional development goals.

Increasing tax digitalization and compliance obligations

Vietnam has made notable strides in tax administration reforms. All businesses are now required to file tax returns and make payments through the national electronic tax portal, streamlining compliance and improving oversight. E-invoicing has become compulsory, with strict timelines set for issuance and validation to ensure timely reporting. Additionally, companies must regularly reconcile their tax declarations with internal accounting records to avoid triggering audits. To strengthen enforcement, the General Department of Taxation (GDT) is integrating artificial intelligence tools to monitor suspicious transactions, with particular focus on cross-border payments and VAT refund claims.

Looking ahead: Global minimum tax and policy coordination

Vietnam has committed to implementing the OECD-led global minimum tax (GMT) regime by 2026. Foreign investors—particularly those with annual consolidated group revenues above EUR 750 million — should begin evaluating how top-up taxes may impact their Vietnam-based subsidiaries.

The country is also enhancing its bilateral tax agreements and participating in information-sharing initiatives under the Common Reporting Standard (CRS).

Conclusion: Navigating Vietnam’s tax system in 2025

Vietnam’s tax system remains investor-friendly but is becoming increasingly sophisticated. The focus is shifting toward digital enforcement, cross-border transparency, and base erosion prevention. Foreign investors should regularly review their tax structures, monitor regulatory updates, and ensure proper documentation to avoid penalties or missed incentives.

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