Qualifying for CIT Incentives in Vietnam – A Guide for Foreign Companies

Vietnam implements several preferential corporate income tax (CIT) policies aimed at attracting investment in key strategic industries and spurring the development of deprived areas of the country.

Tax incentives in Vietnam are governed by a multi-layered regulatory framework that comprises laws, guiding decrees, and sector-specific policy decisions. As a result, determining which incentives are available for a company or investment project can be complex, as relevant provisions and eligibility requirements are spread across an array of documents. To complicate matters, several of the key pieces of legislation were amended in 2025 and have not yet come into force, meaning the available policies and eligibility criteria may change for a given project over the next few months.

Find Business Support

For support in structuring investments to qualify for CIT incentives in Vietnam, contact Dezan Shira & Associates

Investors must therefore carefully navigate this evolving framework to identify the incentives that apply to their specific circumstances when they begin generating income and are liable for CIT. The government provides different investment pathways through which incentives are granted, such as on an investment project basis or on a company basis, meaning companies must assess their specific conditions, including industry, location, and investment scope, to determine eligibility accurately.

Preferential CIT rates

Vietnam provides preferential CIT rates ranging from 10 percent to 17 percent for a broad range of industries, projects, and companies. Some of these policies are time-limited, while others are applicable for the duration of the investment projects. Vietnam’s standard CIT rate is 20 percent, although the country has introduced a tiered CIT regime with lower rates available for qualifying small and medium-sized firms.

CIT incentives are available to investments in Vietnam, and the eligibility criteria for these incentives are stipulated across a complex web of interweaving laws and government decrees. Several of the applicable laws and decrees have been updated and amended in recent months, of which some are yet to come into effect, meaning preferential CIT policies for certain sectors and projects have not yet come into force.

Currently, the CIT incentives available for companies are primarily governed by the following laws:

• The 2025 Investment Law, in effect March 1, 2026, along with its guiding decrees, the 2020 Investment Law will remain in force until then.
• The 2025 CIT Law, in effect October 1, 2025, along with its guiding decrees (Decree No. 320/2025/ND-CP); additional amendments to the 2025 CIT Law have been approved through the passing of the 2025 Law on High Technology (2025 High-Tech Law), which will come into effect on July 1, 2026.

Meanwhile, eligibility requirements for the incentives outlined in the above laws are governed in a range of additional laws, including the 2025 High-Tech Law, the Law on Science, Technology and Innovation, the Decree on Detailed Regulations and Guidelines For Implementing Certain Articles of The Investment Law (Decree No. 31/2021/ND-CP) the Decree Regarding The Development Of Supporting Industries (Decree No. 111/2015/ND-CP), and other guiding decrees.

Reduced the 10 percent CIT rate

The CIT law provides a reduced 10 percent CIT rate for certain eligible projects and companies.

Under the 2025 CIT Law, including amendments to the CIT Law stipulated in the 2025 High-Tech Law, the specific policies are:

• A 25-year 10 percent CIT rate for strategic technology research and development centers, strategic technology enterprises, high-tech research and development centers, and “Group 1” high-tech enterprises (in effect July 1, 2026).
• A 15-year 10 percent CIT rate for qualifying projects and companies in selective priority sectors (such as high-tech, renewable energy, and infrastructure), and certain large-scale or special projects in areas with low socio-economic development or special economic zones.
• A 10 percent CIT rate for the entire duration of the project for qualifying agricultural projects, agricultural projects in areas with low socio-economic conditions, qualifying income from press and publishing agencies, and cooperatives and cooperative unions operating in agriculture and salt production.

The CIT Law distinguishes between two different types of income for which the reduced CIT can be applied: income from eligible enterprises (enterprises operating in certain industries, carrying out certain activities, and/or operating within certain regions), and income derived from new investment projects in the eligible sectors or regions.

Certain projects and companies are also location-bound, meaning they must be located within certain incentivized regions to qualify for the reduced CIT rate. These regions fall into three categories:

1. Areas with particularly difficult socio-economic conditions;
2. Areas with difficult socio-economic conditions; and
3. Economic zones, high-tech zones, high-tech agricultural zones, and concentrated digital technology zones.

Note that in the 2025 Investment Law, industrial parks are no longer included in the regions eligible for preferential CIT treatment.

The areas with difficult or particularly difficult socio-economic conditions are listed in Appendix III (the List of Areas Eligible for Investment Incentives) of Decree 31/2021/ND-CP (amended by Decree 239/2025/ND-CP).

 Note: In 2025, Vietnam implemented a nationwide administrative reorganization, reducing the number of provincial-level units from 63 to 34. As a result, the List of Areas Eligible for Investment Incentives under Decree 31 is currently undergoing administrative updates to reflect the new provincial structure. This list will remain in force until an updated list is released. Companies that have established a company or project since the merger occurred can, in the interim, refer to the provincial merger list (in the second table in our article on the changes) to identify their pre-merger operating location and assess whether it falls within an incentive-eligible area.

Reduced 15 and 17 percent CIT rate

A reduced 15 percent CIT rate is applied to the income derived from companies involved in activities related to certain agricultural products, provided they are not located within an incentivized geographical area.

Meanwhile, a 10-year 17 percent CIT rate is available for new investment projects in certain key sectors, including production of high-grade steel, energy-saving products, and machinery and equipment for agriculture, as well as companies producing high-tech products (as defined in the High-Tech Law) and any new investments in areas with low socio-economic conditions.

An indefinite 17 percent CIT rate is granted to people’s credit funds, microfinance institutions, and cooperative banks; however, these sectors are subject to certain foreign ownership caps.

Extensions of preferential CIT treatment

The 2025 CIT Law stipulates that the preferential CIT treatment can be extended for a maximum of 15 years for certain large projects that have a significant socio-economic impact, are in the manufacturing industry, and meet certain conditions for revenue, production, or workforce, or are involved in the development of key infrastructure.

Projects that can receive an extension of preferential CIT treatment are:

1. New investment projects in eligible high-end technology, software, and digital industries, renewable energy and environmental protection sectors, and critical infrastructure that have a minimum investment capital of VND 6 trillion (US$231.3 million), which have a significant socio-economic impact;
2. Investment projects in the manufacturing sector that a) have a minimum investment capital of VND 12 trillion (US$462.6 million) and disburse the total registered investment capital within no more than five years from the date of investment approval, and b) utilize certain technology that meets requirements stipulated by the Minister of Science and Technology, that also meet one of the following criteria:

• Produce globally competitive goods, with annual revenue exceeding VND 20 trillion (US$771 million) per year, no later than five years after generating revenue from the investment project;
• Regularly employs over 6,000 workers; or
• Are for the development of key infrastructure, including water treatment plants, power plants, water supply and drainage systems, bridges, roads, railways, airports, seaports, river ports, airfields, train stations, new energy, clean energy, energy-saving industries, and petrochemical projects.

Tax holidays and reductions

Certain companies and investment projects can receive a tax holiday of up to four years, or a 50 percent tax reduction in tax payable for up to nine subsequent years. Others can receive a two-year tax holiday and a subsequent four-year 50 percent reduction.

The four-year tax holiday and nine-year 50 percent reduction policy apply to:

• The income of all companies and investment projects eligible for the 10-year 15 percent preferential CIT rate (see table above).
• The income of companies involved in socialization in the fields of education and training, vocational training, health, culture, sports, and environment in areas with difficult or particularly difficult socio-economic conditions. Where these activities don’t take place in the specified areas, the tax holiday is granted for a maximum of four years, and the 50 percent reduction is granted for a maximum of five subsequent years.

Meanwhile, companies eligible for the 10-year 17 percent CIT rate (see table above) can avail of a two-year tax holiday and a 50 percent reduction in tax payable for a maximum of four subsequent years.

Implementation period

Tax holidays and reductions are applicable from the first year in which an investment project generates taxable income. If there is no taxable income within the first three years following the first year that the project generates revenue, then the tax holiday or reduction period will begin from the fourth year.

Find Business Support

To assess whether your project can access Vietnam’s CIT incentives, speak with Dezan Shira & Associates

If a company is granted a certificate or confirmation of preferential treatment after the point that income is generated, then the tax holiday or reduction will start from the year that the certificate is granted. However, if no income is generated in the year in which the certificate is granted, then the tax holiday or reduction period will start from the first year that income is generated. If no income is generated in the first three years after the certificate is granted, then the period of tax holiday or reduction will begin from the fourth year.

Tax incentives for project expansion

Companies that have ongoing investment projects and choose to expand the project’s scale, increase capacity, upgrade technology, reduce pollution, or improve the environment within the industries, professions, and geographical areas that are eligible for CIT incentives described above can enjoy the CIT incentives for the additional income derived from the expansion for the remainder of the project. The additional income does not need to be separately accounted for from the income of the operating project.

If the period during which the company or project is entitled to the CIT incentives has expired, the additional income arising from an expansion that satisfies certain criteria can still enjoy the tax holiday and reduction policy, but is not entitled to the preferential CIT rates. In this instance, projects must meet one of the following criteria to be eligible for the tax holiday and reduction for expansions (per the CIT Law’s guiding Decree No. 320/2025/ND-CP):

1. The increase in the original cost of fixed assets, upon the project completing the disbursement of the registered expanded capital, is at least VND 40 billion (US$1.5 million) for expanded projects in sectors or trades eligible for CIT incentives, or at least VND 20 billion (US$771,014) for expanded projects implemented in areas with difficult or particularly difficult socio-economic conditions;
2. The proportionate increase in the original cost of fixed assets, upon the project completing the disbursement of the registered expanded capital, is at least 20 percent compared with the total original cost of fixed assets before the commencement of the expansion;
3. The increase in design capacity, upon the project completing the disbursement of the registered expanded capital, is at least 20 percent compared with the design capacity before the commencement of the expansion.

The amount of registered investment capital that has been disbursed is determined by the difference between the original cost of total fixed assets on the company’s Balance Sheet (Statement of Financial Position) at the time that the company completed the expanded investment project and the time before the expanded investment is implemented. During the period when the company has not yet completed the disbursement of the registered investment capital, it is not entitled to tax incentives for expansions.

Implementation period

For companies whose initial CIT incentive period has expired but are eligible for the tax holiday and reduction policy for expansions, the tax holiday and reduction period applicable to the additional income generated from the expanded investment will be the same as that of a new investment project in the same sector, profession, and CIT-incentivized location, and will be applied from the year in which the expansion completes the registered investment capital.

If no taxable income is generated in the first three years starting from the first year of registering the expanded capital, the tax holiday and reduction period begins from the fourth year of the registration of the expanded capital.

Businesses must separately account for the additional income from expansion investments to apply for incentives. If separate accounting is not possible, the income from expanded investment activities is determined based on the ratio between the original cost of newly invested fixed assets put into use for production and business, and the total original cost of fixed assets of the business.

Tax holidays and reductions for project expansions do not apply to expansions resulting from mergers and acquisitions or existing investment projects.

Assessing eligibility for CIT incentives

Foreign companies need to consider an extensive array of factors and conditions when assessing whether they are eligible for the preferential tax policies, as well as which areas of the business and income can actually avail of the reduced tax rates.

The first step will be to assess the applicable pathway for the incentive – that is, whether the applicable incentive will be project-based (preferential CIT rates extended to income derived from new investments) or enterprise-based (preferential rates granted to the income of the company based on its location or industry focus).

The company should then ascertain whether its business or investment project falls within the scope of industries or activities stipulated in the relevant laws and decrees. This will require cross-referencing relevant guiding decrees and Prime Minister decisions to check whether the project is located within an incentivized zone, mentioned in the applicable laws, or included in the lists of incentivized industries and products where applicable. Companies should also assess the extent to which the project is actually implemented within those areas, as partial implementation, mixed-use activities, or incomplete alignment with the approved project scope may render the project wholly or partly ineligible for preferential treatment.

For location-based requirements, companies should check whether the location in which they are basing the company or investment is included in the List of Areas Eligible for Investment Incentives.

Case study

A foreign infrastructure company has entered into a joint venture with a Vietnamese company to build an offshore wind farm off the coast of the Thai Binh economic zone.

As the company is an infrastructure construction company, it does not qualify as a “high-tech or science and technology company as defined in relevant laws, and therefore is not eligible for the enterprise-based preferential CIT treatment.

However, as the project is a new investment project in the renewable and clean energy sector, a reduced 10 percent CIT rate can be applied to the income generated from the project for a period of 15 years.

The project is also a new investment located in an area with difficult socio-economic conditions – the Thai Binh economic zone, being located in the Thai Thuy and Tien Hai districts of Thai Binh, which are included in the List of Areas Eligible For Investment Incentives. This means income from the project is eligible for the lowered 17 percent CIT rate for a period of 10 years.

Additionally, projects that are eligible for the 10-year 17 percent CIT rate are also granted a two-year tax holiday, plus a 50 percent CIT reduction for the subsequent four years.

The CIT Law does not allow multiple stacking of preferential tax incentives, meaning the company must choose to apply the regime that is most favorable to its conditions.

Note that in this particular case, the company would likely also be eligible for additional tax incentives under the Investment Law and CIT Law, in particular the exemptions from import duties on machinery, equipment, specialized vessels, components and materials imported to form fixed assets for the offshore wind project, as well as exemptions from or reductions of land use fees, land rent, and land use tax.

Maintaining eligibility

It is important to ensure that projects or business activities that have made a company eligible for preferential CIT policies remain operational for the entire duration of the investment or incentive period. A common pitfall that causes the loss of these benefits is when a company strays from the original scope of the investment or business activity, such as when it expands into non-eligible activities or industries without properly separating business entities, changing location, or restructuring through M&As or divestiture.

It is important to ensure that projects or business activities that have made a company eligible for preferential CIT policies remain operational for the entire duration of the investment or incentive period. A common pitfall that causes the loss of these benefits is when a company strays from the original scope of the investment or business activity, such as when it expands into non-eligible activities or industries without properly separating business entities, changing location, or restructuring through M&As or divestiture.

Other issues that may lead to a loss of benefits include failing to meet the requisite compliance procedures, such as missing documentation or improper accounting that prevents the clear identification and segregation of income eligible for incentives.

Moreover, project expansions must be assessed for eligibility separately, as they do not automatically inherit the incentives granted for the original investment project.

Project expansions can provide further tax incentives if they independently satisfy the statutory criteria for incentivized expansion investments, but such incentives apply only to the additional qualifying income and are subject to separate registration and compliance requirements.

Annual compliance checks and audits of the project or business scope can help investors assess ongoing eligibility for the incentives and ensure the long-term sustainability of tax planning by helping to identify changes in operations, location, or income composition that could affect entitlement to incentives.

Pillar Two Global Minimum Tax considerations for large groups

For large multinationals with operations in Vietnam – specifically, those with a combined group-level revenue of €750 million (US$889 million) or more in at least two of the four consecutive years, CIT benefits must also be assessed with consideration of the OECD’s Global Minimum Tax (GMT) rules.

Under the Pillar Two Model GloBE (Global Anti-Base Erosion) Rules, which Vietnam officially adopted through the passing of Resolution No. 107/2023/QH15 at the end of 2023, Vietnam implements both the Qualified Domestic Minimum Top-Up Tax (QDMTT) and the Income Inclusion Rule (IIR), meaning that these large entities or their parent groups must calculate and pay additional tax to bring their overall effective rate to at least 15 percent if their preferential rates or exemptions result in lower effective taxation. This change, which took effect for the 2024 fiscal year, means that for MNEs, the benefits of the preferential CIT regimes that Vietnam offers are essentially nullified.

Find Business Support

For guidance on tax incentives and investment structuring in Vietnam, contact Dezan Shira & Associates

As a result, Pillar Two considerations should form an integral part of tax planning for MNEs whose revenue exceeds the threshold, with preferential CIT regimes assessed not only based on eligibility, but also on their potential impact on the group’s effective tax rate and this potential exposure to potential top-up taxes, as well as overall after-tax cash flows.

• Previous Article How the Iran Conflict Should Change Energy, Supply Chain, and Market Entry Planning in ASEAN
• Next Article