The National Assembly of Vietnam has officially passed the new Corporate Income Tax (CIT) Law, which is set to come into effect on October 1, 2025 and will be applicable to the 2025 tax period onwards.
Among the key amendments, the adjustments in tax rates to increase support for small and medium enterprises (SMEs) are particularly noteworthy, reflecting the government’s strong commitment to fostering the SME sector— the backbone of Vietnam’s economy.
Reduced Tax Rates for SMEs Based on Revenue Thresholds
According to Article 10 of the new CIT Law, the standard corporate income tax rate remains at 20%.
However, in addition to the preferential tax rates for the incentivizes companies previously regulated, two new lower tax rates have been introduced for SMEs, based on annual revenue:
- 15% tax rate: Applies to businesses with annual revenue not exceeding VND 3 billion.
- 17% tax rate: Applies to businesses with annual revenue above VND 3 billion but not exceeding VND 50 billion.
The revenue used to determine eligibility is based on the previous fiscal year’s outcome. For newly established enterprises, the Government will issue separate guidelines to ensure proper implementation.
This new tax scheme is seen as a practical measure to help SMEs reduce financial burdens, reinvest in production, and scale up operations. Using revenue as the key criterion aligns well with business realities and simplifies compliance, while remaining consistent with the Law on Supporting Small and Medium Enterprises.
Anti-Avoidance Measures and Higher Rates for Resource Sectors
Crucially, to ensure transparency and prevent misuse of incentives, the 15% and 17% rates are not applicable to subsidiaries or companies with related-party relationships where the related entity fails to meet the eligibility criteria.
This provision is designed to ensure that benefits are directed solely to independent SMEs, rather than permitting large corporations to exploit the system for tax evasion.
Meanwhile, the CIT Law maintains higher tax rates for certain high-profit or resource-based sectors, including:
- Oil and gas exploration and extraction: Tax rates range from 25% to 50%, depending on the specifics of each project, as determined by the Prime Minister.
- Mining of rare and precious resources (e.g. gold, silver, rare earths): Subject to a 50% tax rate, reduced to 40% if 70% or more of the mine area is located in specially difficult socio-economic zones.
These provisions ensure fair revenue contributions from industries exploiting natural resources and reinforce sustainable development principles in fiscal policy.
How Fidinam Can Help
With clearly defined tax brackets, transparent eligibility rules, and enforcement mechanisms, the new framework is expected to unlock greater growth potential for small and medium enterprises, contributing to a more resilient and inclusive national economy.
At Fidinam, we offer tailored tax advisory services to help businesses navigate the new CIT regime effectively. Contact us to learn how we can assist your company.
