Conditions for application of corporate income tax incentives 2025

Conditions for application of corporate income tax incentives 2025

Clauses 1 and 2, Article 18 of the Law on Corporate Income Tax 2025 provide for conditions for the application of tax incentives as follows:

Corporate income tax incentives of this Law apply to enterprises that implement regulations on accounting, invoices, and documents, and pay tax according to the declaration method.

Corporate income tax incentives applicable to new investment projects shall not apply in cases of merger, consolidation, division, separation, change of ownership, conversion of enterprise type, and other cases as prescribed by the Government.

Enterprises must account separately income from production and business activities eligible for tax incentives from income from production and business activities ineligible for tax incentives. In cases where separate accounting cannot be made, income from production and business activities eligible for tax incentives shall be determined based on the ratio between turnover or expenses of the production and business activities eligible for tax incentives and total turnover or total expenses of the enterprise.

Conditions for the application of the tax rates of 15% and 17%

According to Clauses 2 and 3, Article 10 of the Law on Corporate Income Tax, the tax rates of 15% and 17% are applied as follows:

• The tax rate of 15% applies to enterprises with annual turnover not exceeding VND 3 billion.

• The tax rate of 17% applies to enterprises with annual turnover of over VND 3 billion but not exceeding VND 50 billion.

In addition, the tax rate of 15% also applies to enterprises’ income from activities in the following sectors: crop products, planted forests, animal husbandry, aquaculture, processing of agricultural and aquatic products outside areas with difficult or exceptionally difficult socio-economic conditions, economic zones, hi-tech zones… as prescribed in Clause … Article 13.

The tax rate of 17% for a period of 10 years applies to certain new investment projects in incentivized sectors, new investment projects implemented in areas with difficult socio-economic conditions… as prescribed in Clause 4, Article 13.

Pursuant to Clauses 3, 4, 5, and 6, Article 18 of the Law on Corporate Income Tax, the tax rates of 15% and 17% specified in Clauses 2 and 3, Article 10 of this Law, and the tax incentives specified in Articles 4, 13, 14, and 15 of this Law shall not apply to the following incomes:

• Income from capital transfer, transfer of capital contribution rights; income from real estate transfer, except for income from investment in social housing construction; income from the transfer of investment projects (excluding mineral processing projects), transfer of rights to participate in investment projects, transfer of rights to explore, exploit, and process minerals; income from production and business activities outside Vietnam;

• Income from activities of searching for, exploring, and exploiting oil and gas and other precious and rare natural resources, and income from mineral exploration and exploitation activities;

• Income from the production and trading of online games; income from the production and trading of goods and services subject to excise tax under the Law on Excise Tax, except for projects producing or assembling automobiles, aircraft, helicopters, gliders, yachts, and oil refining and petrochemical projects;

• Special cases as prescribed by the Government.

The tax rates of 15% and 17% specified in Clauses 2 and 3, Article 10 of this Law shall not apply to enterprises that are subsidiaries or related companies where any enterprise within the related-party relationship fails to meet the conditions for application of the tax rates specified in Clauses 2 and 3, Article 10 of this Law.

In cases where an enterprise fails to satisfy the conditions for tax incentives, the competent authority shall recover the tax and impose sanctions in accordance with the law.