In an increasingly competitive business environment, corporate income tax (CIT) incentives are an essential policy tool that helps enterprises reduce cost burdens and promote reinvestment. However, not all enterprises are eligible for the 6-year tax exemption and reduction under current regulations.
The following article, compiled by DNP Viet Nam Law Firm, provides legal information to help enterprises accurately determine their eligibility for CIT exemption and reduction and understand the implementation process.
1. Background of resolution No. 198/2025/QH15
Resolution No. 198/2025/QH15 was enacted in the context of Vietnam’s institutional reform, where the private sector is identified as a key driver of the economy. The resolution establishes special mechanisms and policies to create a transparent, flexible business environment and expand opportunities for private enterprises and innovative startups to grow, enhance competitiveness, and contribute to sustainable economic development.
2. Entities eligible for CIT exemption and reduction
Legal basis: Clause 1, Article 10 of Resolution No. 198/2025/QH15.
- Innovative start-up enterprises;
- Venture capital fund management companies;
- Intermediary organizations supporting innovative start-ups.
3. Main content of tax exemption and reduction policy
Legal basis: Clause 1, Article 10 of Resolution No. 198/2025/QH15; Clause 4, Article 13 and Clause 2, Article 14 of the Law on Corporate Income Tax 2025.
- Exemption from CIT for 2 years;
- 50% reduction of CIT for the following 4 years for income generated from innovative start-up activities.
Accordingly, a preferential tax rate of 17% for 10 years is applied to new investment projects in the following preferential industries and sectors:
- Production of high-grade steel; production of energy-saving products; manufacture of machinery and equipment serving agriculture, forestry, fishery, and salt production; production of irrigation equipment; manufacture of animal feed and aquafeed.
- Production and assembly of automobiles; manufacture of digital technology products.
- Investment in and operation of technical infrastructure facilities supporting small and medium-sized enterprises (SMEs); incubation facilities for SMEs; co-working spaces supporting innovative start-ups as provided under the Law on Support for Small and Medium-sized Enterprises.
4. Calculation of the CIT exemption and reduction period
Legal basis: Clause 4, Article 14 of the Law on Corporate Income Tax 2025.
- The exemption and reduction period is calculated from the first year the enterprise generates taxable income from the investment project. If the enterprise has revenue but no taxable income within the first 3 years, the exemption and reduction period starts from the 4th year.
- If an enterprise receives a certificate of eligibility or recognition for preferential treatment (for high technology, high-tech agriculture, science and technology, supporting industries, etc.) after generating income, the exemption and reduction period is calculated from the year of certification. If no taxable income arises in that year, the period starts from the first year taxable income is generated; if no income is generated within 3 years, the period starts from the 4th year after the certification date.
5. Sectors eligible for CIT incentives
Legal basis: Clause 4, Article 4; Points e and o, Clause 2, Article 12 of the Law on Corporate Income Tax 2025; Article 3 of the Law on High Technology 2008; Article 58 of the Law on Science and Technology 2013; Article 3 of the Law on Science, Technology and Innovation 2025.
Compared to the 2008 Law on Corporate Income Tax, the 2025 version expands the scope of industries and sectors eligible for incentives.
- Science and technology enterprises: Enterprises engaged in scientific research, technology development, production, and business activities to create goods and products derived from scientific and technological results. Ex: Producing bio-based pesticides from research on neem oil extraction.
- High-tech enterprises: Enterprises engaged in the production of high-tech products, provision of high-tech services, and conducting research and development in high technology. Ex: Applying advanced battery, chip, and intelligent control technologies in the production of electric vehicles.
- High-tech agricultural enterprises: Enterprises applying high technology in agricultural production to create high-quality, high-yield, and high-value products. Ex: Using irrigation systems, greenhouses, and automated sensors to produce clean vegetables.
- Innovative activities: The creation or application of technological, technical, or managerial solutions to enhance socio-economic efficiency, improve productivity, and increase the quality and added value of goods and products. Ex: Developing e-wallet applications that enable cashless payments.
- Investment in technical infrastructure, incubation facilities, and co-working spaces supporting SMEs and innovative start-ups (see also Circular No. 07/2020/TT-BKHCN).
This adjustment demonstrates a clear policy orientation toward technology, innovation, and SME support rather than broad-based incentives based on capital size or location as in the past.
“The above content is provided by DNP Viet Nam Law Firm for reference purposes only. For detailed, accurate, and tailored legal advice that meets your specific needs, please contact us using the information provided below.”
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