4 Key Changes in Vietnam's 2025 CIT Law

Key takeaways

• Breakthrough tax incentives for high-tech and the green economy, featuring a 10% tax rate for 15 years and a 4-year tax exemption, present a strategic investment opportunity that cannot be missed.
• Stricter tax management for digital platforms requires businesses to review all contracts with foreign partners to mitigate compliance risks.
• The Global Minimum Tax will directly impact the financial structure of corporate groups with overseas investment activities.
• New tax policies on expanded investment incentives must be carefully calculated before making capital allocation decisions.

The 2025 CIT Law (Law No. 67/2025/QH15) was enacted to align tax policy more closely with the context of the digital economy and the nation’s new development goals. This amendment to the corporate income tax law profoundly impacts technology companies and businesses operating on digital platforms, while opening up special incentive opportunities for small and medium-sized domestic enterprises and innovative organizations.

1. Tax incentives for high-tech and the green economy

The latest tax policy is geared towards sustainable development, the green economy, and high technology, with a priority on startups and innovative enterprises.

1. A preferential tax rate of 10% for 15 years will be applied to projects including:

• Construction of Artificial Intelligence (AI) data centers.
• Production of semiconductor chips, software, high-tech products, high-tech agricultural zones, and more. These are currently among the top investment prospect sectors in Vietnam.

2. A 100% CIT exemption for the first 4 years, followed by a 50% tax reduction for the subsequent 9 years, for new investments in high-tech, innovation, software production, AI data centers, and semiconductor chip manufacturing.

3. Press agencies, including their advertising activities, will be eligible for a preferential tax rate of 10% on this income for an unlimited number of years, instead of the standard 20% rate.

4. Complete tax exemption for several new income categories:

• Income from the first-time sale and transfer of carbon credits after issuance.
• Income from interest and the first-time sale of green bonds after issuance.
• Income from scientific research, technology transfer, innovation, and the first-time sale of new technology products in Vietnam may be exempt for a maximum of 3 years, after which the preferential tax rates mentioned above will apply.

2. Stricter tax management for digital platforms

The 2025 Law establishes a clear legal framework to control the tax obligations of digital platforms and cross-border businesses, expanding the scope of taxable activities and increasing transparency.

2.1 Expanded taxpayer base and the definition of “permanent establishment”

Foreign enterprises without a permanent establishment in Vietnam but generating income from providing goods or services through digital platforms, applications, or e-commerce to Vietnamese organizations/individuals are now required to declare and pay CIT in Vietnam.

The scope of taxable entities is significantly broadened to include digital platforms, e-commerce marketplaces, online applications, and cross-border service platforms. This means major technology corporations like Google, Meta, and Amazon Web Services will be directly affected.

2.2 Income sourced from Vietnam

The new law clearly defines taxable income as “income sourced from Vietnam, regardless of where the business is conducted.” This means that revenue generated from distributing or supplying digital services to the Vietnamese market must be declared for taxation, even if the company has no physical office or personnel in Vietnam.

2.3 Tax payment method and withholding responsibility

Foreign businesses operating on digital and e-commerce platforms are permitted to apply a tax rate based on a direct percentage of the revenue generated in Vietnam (typically 2% or higher, with details pending further decrees).

Organizations that manage e-commerce marketplaces and digital platforms are responsible for assisting with withholding tax at the source, transferring information and data, and fulfilling transparent reporting obligations in close coordination with Vietnamese tax authorities.

System investment requirements:

• Develop mechanisms to collect and process transaction data.
• Establish an automated tax withholding process.
• Conduct periodic reporting to tax authorities.
• Invest in the necessary technology systems and professional teams.
• Ensure compliance with new administrative procedures.

3. Redefining taxable income

The method for determining the tax base has been fundamentally adjusted with new regulations on exempt income, the addition of flexible calculation methods for specific entities, and the integration of advanced international standards. Businesses must master these amended administrative procedures to ensure compliance.

3.1 Additional income included in the tax scope:

• Gains from asset revaluation (for capital contribution, mergers, or corporate restructuring).
• Proceeds from grants, bonuses, contract penalties, and compensation.
• Interest and income from the issuance of special shares (debt shares, treasury stock transactions) are now clearly excluded or adjusted.
• Real estate transfers for real estate businesses are now clearly classified as income from production and business activities (not as “other income” as before).

3.2 Application of the Global Minimum Tax (Income Inclusion Rule – IIR)

The new law has integrated the Pillar 2 rules from the global Base Erosion and Profit Shifting (BEPS) program, demonstrating alignment with international tax reform trends.

The Income Inclusion Rule (IIR): Vietnam-based multinational corporations will be required to pay a top-up tax if their foreign subsidiaries are paying taxes below the 15% minimum rate.

Impact on corporations: The application of the IIR forces businesses to re-evaluate their entire international investment structure, considering the potential restructuring of subsidiaries to ensure compliance while optimizing the overall tax burden. Businesses must establish an effective tax risk management system to avoid compliance issues.

4. Clarifying incentive regulations for expanded investments

If an ongoing investment project undertakes an expansion—increasing scale, capacity, innovating technology, or reducing pollution—in an incentivized sector or location, then:

• The additional income generated from the expansion will enjoy the tax incentive for the remaining period of the original project (and does not need to be accounted for separately if it’s the same type of project).
• If the original project’s incentive period has expired, the additional income from the expansion will be eligible for a new tax exemption and reduction period as if it were a new project in the same sector/location. This period begins in the year the expansion capital is fully invested.

The project is eligible for incentives if it meets one of the following conditions:

• The added value of fixed assets reaches a minimum threshold set by the Government (typically at least a 20% increase or an absolute value of 20–40 billion VND (800,000 – 1,600,000 USD), depending on the location).
• The designed production capacity increases by at least 20% compared to before the expansion.
• The expansion is carried out in a location or sector that is encouraged for investment according to regulations.

The 2025 CIT Law is not just a routine legal update; it is a factor that will completely reshape business strategy. These new CIT provisions bring both immense opportunities and significant challenges, demanding proactive adaptation from business leaders.The first step is to direct your finance team to model the impacts of the new tax schedules and re-evaluate the investment project portfolio to optimize new incentive opportunities. Simultaneously, a full review of all contracts and partnerships is necessary to ensure compliance with the new rules on digital platforms and the Global Minimum Tax. Businesses should also prepare for potential tax inspections and explore professional compliance advisory services to ensure a smooth transition under the new regulations.