Ho Chi Minh City, 30 July 2025
The 2025 Law on Corporate Income Tax (the “New CIT Law”), passed by the National Assembly on 14 June 2025, introduces several significant amendments and supplements. These updates reflect Vietnam’s efforts to keep pace with the digital economy and promote investment in innovation and environmental sustainability. This week’s edition of our Weekly Debrief highlights key changes regarding taxable income and tax-exempt income that enterprises – particularly foreign enterprises – should take note of.
1. Taxable Income
Article 2.2(c), 2.2(d), and Article 3.3 of the New CIT Law provide a clearer definition of taxable income originating from Vietnam by offshore enterprises and organizations, regardless of their business location, especially in light of the rapid growth of e-commerce and digital platform-based business models.
Under these provisions, taxable income arising from Vietnam for offshore enterprises and organizations includes:
(a) Income derived by offshore enterprises that have a permanent establishment (PE) in Vietnam, and such income is not related to the activities of the PE in Vietnam; and
(b) Income derived by offshore enterprises that do not have a PE in Vietnam, including those engaged in e-commerce or digital platform-based business activities.
Such income is considered to be sourced from Vietnam, regardless of the location where the business is conducted.
This expanded definition broadens the tax obligations of various types of offshore businesses operating in the Vietnamese market.
2. Tax-Exempt Income
The New CIT Law also supplements several provisions to encourage investment in science, technology, and sustainable development. In addition to the tax exemptions provided under the old CIT Law, the key highlights in the New CIT Law are as follows:
(a) A tax exemption period of up to three (3) years is granted for income derived from:
- The implementation of contracts for scientific research, technological development, innovation, and digital transformation;
- The sales of products made using new technologies applied for the first time in Vietnam;
- The sale of products during the experimental production period, including controlled experimental production as prescribed by law.
(b) The policy of tax exemption is also granted for funding received for educational, cultural, artistic, charitable, humanitarian and other social activities in Vietnam; funding from unaffiliated domestic and foreign organizations and individuals for use in scientific research, technology development, innovation, and digital transformation; direct support from the state budget and from the Investment Support Fund established by the Government; and compensation from the State in accordance with the law.
Please note that if an enterprise uses funding received under this clause for purposes other than those prescribed by law, it shall be subject to tax recovery and penalties for violations in accordance with applicable regulations.
(c) In addition, incomes from the transfer of Certified Emission Reductions (CERs), incomes derived from carbon credits and green bonds are now also tax-exempt. This change is designed to stimulate investment in carbon markets and green financial instruments, contributing to Vietnam’s sustainable development goals.
(d) The tax exemption policy is granted to public service units for incomes earned from providing:
- Essential public services that are eligible for state budget support;
- Public services for which the state covers operating expenses due to incomplete cost recovery through service pricing;
- Public services in socio-economically disadvantaged areas.
The new CIT Law introduces updates that are responsive to real-world developments. The amended and supplemented provisions on taxable income and tax-exempt income not only aim to strengthen tax management but also create incentives for investment in priority sectors. Enterprises are encouraged to review and understand these new regulations early to ensure compliance and to fully leverage the available tax incentives.
