The application of the 15% corporate income tax (“CIT”) rate for enterprises whose annual revenue does not exceed VND 3 billion has become a matter of keen interest within the micro and small-enterprise community. While this policy represents supportive measures, it is also accompanied by numerous legal conditions which leave many enterprises in a state of confusion.
In the context of continuously evolving tax regulations, properly understanding and accurately applying them is the key to avoiding inspection risks and legally optimising tax obligations. With in-depth advisory experience and a practical ‘on-the-ground’ partnership style, DNP Viet Nam Law Firm provides clear legal guidance, enabling enterprises to confidently apply this preferential tax rate in full compliance with the law and in an effective manner.
1. Legal Basis for Applying Corporate Income Tax
The Corporate Income Tax Law No. 67/2025/QH15 (enacted on 14 June 2025) becomes effective as of 1 October 2025. Article 10 of this Law explicitly stipulates the Corporate Income Tax rates by enterprise revenue scale. In particular: enterprises with annual total revenue not exceeding VND 3 billion are eligible for the 15% tax rate.
Furthermore, an enterprise whose revenue is more than VND 3 billion up to and including VND 50 billion will be subject to a tax rate of 17%, instead of the general 20% previously in force. The revenue used as the basis for determining the tax rate is the “total revenue of the preceding year (or immediately preceding tax period)”, and this revenue includes all amounts from sales of goods, services, subsidies, surcharges…, even if the monies have not yet been collected.
2. Conditions for Application & Legal Notes
An enterprise seeking to apply the 15% rate must first be an enterprise established under Vietnamese law and have total annual revenue not exceeding VND 3 billion. If the enterprise has affiliated or related entities and the related entity does not meet the condition, then the enterprise will be ineligible for the 15% preferential rate. A newly-established enterprise (which does not yet have a full preceding tax year) must determine its revenue according to the guiding rules in order to assess eligibility. The accounting records, invoices, and documentation of revenue and expenses must be transparent; if they are incorrect or incomplete the enterprise will lose the right to apply the preferential rate and may be subject to tax reassessment.
This 15% tax rate clearly signals the State’s intent to support small and micro-enterprises, reduce tax burden and encourage entrepreneurship. However, it does not amount to tax exemption – enterprises are still required to declare and pay tax in full. If revenue exceeds the threshold or the conditions are breached, a higher tax rate will apply, which increases risk. This obliges enterprises to proactively manage finances, revenue and expenses, and not become complacent merely because the rate is lower.
3. Implementation Guide for the 15% Corporate Income Tax Rate
Step 1: Determine the tax period clearly (calendar year or financial year if that option is chosen) and identify the total revenue of the immediately preceding period.
Step 2: Compare the total revenue with the VND 3 billion threshold. If ≤ VND 3 billion then the tax rate of 15% may be considered; if > VND 3 billion and ≤ VND 50 billion then the rate of 17% applies.
Step 3: If eligible, file the tax return using the 15% rate; if not eligible, apply the appropriate higher rate. Avoid making an error in a bid to “save small” – because the risk may be larger.
Step 4: Retain full records: revenue, invoices, surcharges, subsidies, costs, accounting reports. These are the proof in case of inspection.
Step 5: Periodically review tax law – since regulations may continue to change; the enterprise must not “sleep on” the preferential rate.
4. Illustrative Examples & Case Discussions
| Example A: Enterprise A had revenue in the immediately preceding year of VND 2.8 billion, has no affiliated company violating the condition | → Eligible for the 15% rate. |
| Example B: Enterprise B, established in May 2025 (less than 12 months of business) | → Needs to determine revenue per guidance to assess eligibility. |
| Example C: Enterprise C had revenue of VND 3.2 billion in the immediately preceding year | → Does not meet the ≤ VND 3 billion threshold, therefore cannot apply the 15% rate but must apply 17%. |
| Example D: Enterprise D had revenue of VND 2.9 billion but has an affiliated company that fails to meet conditions | → Risk of removal from the preferential rate and being taxed at a higher rate. |
5. Conclusion & Recommendations from DNP Viet Nam Law Firm
In summary: the 15% tax rate regulation is a significant opportunity for small enterprises, but it is not a “tax holiday”, and not automatically granted to all. Enterprises must proactively verify the conditions, prepare documentation, and manage carefully.
DNP Viet Nam Law Firm recommends enterprises: do not skip the step of verifying the immediately preceding year’s revenue; do not underestimate the importance of retaining invoice documentation – because when the tax authority inspects, consequences may be unpleasant. If there is affiliated activity, foreign capital investment, or special industry type – you should obtain in-depth advice to avoid “collateral damage”.
Finally: law changes – enterprises must evolve accordingly. Early compliance helps optimise tax and avoid long-term legal risk.
DNP VIET NAM LAW FIRM
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