The Law on Corporate Income Tax 2025 is expected to create a fair and transparent investment environment, encouraging domestic and foreign enterprises to invest in innovation, green development and digital economic integration.

At the Dialogue Conference with the Korean business community on tax and customs policies and administrative procedures in 2024-2025, the Ministry of Finance introduced many notable new contents of the 2025 Corporate Income Tax Law.

Foreign enterprises doing business through digital platforms must pay taxes in Vietnam

One of the major changes in the Law is the addition of regulations requiring foreign enterprises providing goods and services in the form of e-commerce and digital platform-based business to pay taxes on taxable income arising in Vietnam; the permanent establishment of a foreign enterprise includes the e-commerce platform and digital platform through which the foreign enterprise provides goods and services in Vietnam.

The Law also clarifies how to determine taxable income at home and abroad: other income (other than income from main production and business activities) of enterprises in general, taxable income arising in Vietnam of foreign enterprises (with or without a permanent establishment in Vietnam) and income abroad of Vietnamese enterprises; which specifically stipulates the obligation to pay additional corporate income tax on foreign income of Vietnamese enterprises under the global minimum tax mechanism (IIR).

Expanding the list of tax-exempt incomes, encouraging green development and innovation

Regarding tax-exempt incomes (Article 4), the Law supplements a number of tax-exempt incomes to contribute to the implementation of the Party and State's policies on developing priority industries and occupations, including:

Income from the first transfer of carbon credits, the first transfer of green bonds after issuance; income from green bond interest.

Direct support from the state budget and from the Investment Support Fund established by the Government; State compensation according to the provisions of law.

The difference from the revaluation of assets for equitization and restructuring of enterprises in which the State holds 100% of charter capital.

Income of public service units from providing public service services.

Income from the implementation of scientific research contracts, technology development and innovation, digital transformation.

Funding received from enterprises without any affiliation, domestic and foreign organizations and individuals to be used for scientific research, technology development, innovation and digital transformation.

More flexible regulations on tax calculation period and tax calculation method

Regarding the tax calculation period, determining taxable income and tax calculation method (Article 5, Article 7, Article 11), amending and supplementing regulations on choosing the tax calculation period according to the calendar year or the fiscal year; for foreign enterprises generating income in Vietnam from e-commerce business activities, digital platform-based business activities, the tax calculation period shall be implemented according to the law on tax administration.

Amending and supplementing regulations allowing enterprises to offset profits from real estate transfer, investment project transfer, transfer of investment project participation rights with losses from production and business activities, excluding profits from production and business activities that are enjoying tax incentives.

Specific regulations on tax calculation method based on the percentage of revenue for the following subjects: foreign enterprises without permanent establishments generating income in Vietnam; cooperatives, cooperative unions, public service units and other organizations; Enterprises with total annual revenue of no more than 3 billion VND can account for revenue but cannot determine expenses and income.

In addition, the Law on Corporate Income Tax 2025 removes the regulation on where to pay corporate income tax to synchronize with the Law on Tax Administration.

Add more deductible expenses to encourage investment in research and emission reduction

Regarding deductible and non-deductible expenses when determining taxable income for corporate income tax (Article 9), the amended and supplemented Law details a number of expenses that are included in deductible expenses, such as:

Adding additional deductible expenses based on the percentage of actual expenses incurred during the tax period related to the research and development activities of enterprises and assigning the Government to prescribe the additional expense level, conditions, time and scope of application for this expense.

Adding funding for scientific research, technological development and innovation, digital transformation; expenses for scientific research, technological development and innovation, digital transformation in enterprises are deductible expenses when calculating corporate income tax.

Add some other actual expenses that are included in deductible expenses such as: expenses serving the production and business of the enterprise but not corresponding to the revenue generated in the period; expenses supporting the construction of public works, at the same time serving the production and business activities of the enterprise; expenses related to reducing greenhouse gas emissions to neutralize carbon and net zero, reduce environmental pollution, at the same time related to the production and business activities of the enterprise; contributions to funds established under the Prime Minister's decision and regulations of the Government;...

Details of some expenses that are not deductible such as excess expenses or expenses for activities that are not in accordance with the provisions of specialized laws.

Add new tax rates to support small and medium enterprises

Regarding corporate income tax rates (Article 10), the Law adds two new tax rates: 15% and 17% applicable to enterprises with total annual revenue of no more than VND 3 billion and from over VND 3 billion to VND 50 billion. These rates aim to reduce the burden on small and micro enterprises, helping them have more resources to expand production and business.

Amend and supplement regulations on tax rate frameworks for oil and gas exploration and exploitation activities, and tax rates for exploration and exploitation of rare resources.

Large tax incentives for high technology, innovation and green production

Regarding corporate income tax incentives (from Article 12 to Article 18), supplementing provisions on principles for applying corporate income tax incentives to:

(i) In cases where other laws have provisions on corporate income tax incentives different from those of the Law on Corporate Income Tax, the provisions of the Law on Corporate Income Tax shall apply, except for the Law on Capital City and resolutions stipulating special and specific mechanisms and policies of the National Assembly;

(ii) In cases where, at the same time, an enterprise meets many different levels of tax incentives as prescribed by this Law for the same income, it shall be allowed to choose to apply the most favorable tax incentive level.

Detailed regulations on subjects of corporate income tax incentives (industries, occupations, localities and activities eligible for incentives):

Supplementing corporate income tax incentives for: Projects eligible for incentives and special investment support; application of strategic technology; production of network information security products and provision of network information security services; production of key digital technology products and services, production of electronic equipment; research and development, design, production, packaging, testing of semiconductor chip products; construction of artificial intelligence data centers; production of key chemical industrial products and key mechanical products; production of national defense and security and production of industrial mobilization products; investment in technical facilities supporting small and medium-sized enterprises, incubators for small and medium-sized enterprises; investment in co-working spaces supporting small and medium-sized enterprises to start up creatively; production and assembly of automobiles; production of other digital technology products.

In addition, income from other press activities (other than print newspapers), including newspaper advertising, is also subject to a preferential tax rate of 10%.

Eliminate incentives for industries and occupations that are overlapping, spread out, do not have clearly defined criteria, and are not in accordance with specialized laws such as: refining animal feed, poultry, and aquatic products.

Do not apply specific incentives to investment projects in industrial parks (investment projects in industrial parks will enjoy tax incentives according to the conditions of industries, occupations, and preferential locations when the project meets the requirements).

Amend and supplement the incentive level of investment projects in economic zones not located in tax-incentive areas to apply a preferential tax rate of 17% for 10 years, tax exemption for 02 years, and 50% reduction of payable tax for 04 years (maintain the current tax incentive level for investment projects in economic zones located in tax-incentive areas).

Amendments and supplements to the time for applying preferential tax rates, tax exemptions and tax reductions for high-tech enterprises, high-tech agricultural enterprises, science and technology enterprises, high-tech application projects, and projects for manufacturing supporting industrial products; on incentive criteria and the application of tax incentives for expansion investment projects.

Supplementing regulations on corporate income tax exemptions and reductions for a number of subjects:

(i) 50% reduction of tax payable on income of public service units from providing public service in areas with difficult socio-economic conditions;

(ii) Tax exemption for 02 consecutive years for enterprises converted from business households;

(iii) Tax exemption for public science and technology organizations and public higher education institutions operating not for profit.

Increase the level of deduction for the Science and Technology Development Fund of enterprises from the current 10% to 20% of annual taxable income; amend and supplement the regulations on interest rates applied to the unused portion of the Fund in accordance with the interest rates of bonds issued in practice and the management and use of the Fund in cases of mergers, consolidations, divisions, separations, conversion of ownership, and conversion of enterprise types.

Supplement regulations related to the conditions for applying corporate income tax incentives:

(i) Criteria for allocation by cost in cases where income from production and business activities eligible for tax incentives cannot be separately accounted for;

(ii) Exclude incentives for income from production and business of online electronic games; income from production and business of goods and services subject to special consumption tax (except for projects for production and assembly of automobiles, airplanes, helicopters, gliders, yachts, and petrochemical refining).

With many important innovations, the 2025 Corporate Income Tax Law is expected to create a fair and transparent investment environment, encouraging domestic and foreign enterprises to invest in innovation, green development and digital economic integration.