Corporate Income Tax Exemption for Enterprises 2026

Corporate Income Tax Exemption for Enterprises has become a central tax incentive under Vietnam’s latest regulatory framework, following the issuance of Decree No. 20/2026/ND-CP guiding the implementation of Resolution No. 198/2025/QH15, which clarifies the conditions and scope of corporate income tax (CIT) exemptions applicable to newly established small and medium-sized enterprises.

In practice, many enterprises still have an incomplete or incorrect understanding of this policy, often assuming that “any newly established company automatically enjoys a three-year tax exemption.” This misconception commonly leads to two types of risks: either enterprises miss out on tax incentives they are still entitled to due to miscalculating the remaining exemption period, or they apply the exemption incorrectly and face potential retrospective tax collection during tax audits, particularly in the context of increasingly stringent post-audit enforcement.

The application of corporate income tax exemption for newly established enterprises must therefore be assessed based on the establishment timeline, the substance of first-time business registration, and the enterprise’s actual operational structure.

This article focuses on the issues most relevant to businesses: whether enterprises established before the effective date of the Resolution may still enjoy tax incentives, which cases are excluded despite appearing “new on paper,” and which categories of income remain taxable even when the enterprise otherwise qualifies for the exemption.

Corporate Income Tax Exemption for Enterprises Established Before 17 May 2025: How Does It Apply?

The answer is yes. But not every enterprise is entitled to the full three-year exemption. Under the guiding Decree, newly registered small and medium-sized enterprises are entitled to a corporate income tax exemption for a period of three consecutive years, calculated from the first year in which the enterprise is issued its initial Enterprise Registration Certificate.

At the same time, where an Enterprise Registration Certificate was issued prior to the effective date of Resolution No. 198/2025/QH15 and the enterprise still has remaining exemption time, the enterprise is entitled to continue enjoying the incentive for the remaining period.

One frequently overlooked point is that this policy applies from the 2025 tax period, while corporate income tax is determined on a fiscal-year basis. Accordingly, eligibility for the exemption depends not only on the issuance date of the Enterprise Registration Certificate, but also on which exemption year the enterprise is currently in, counted from its year of establishment.

Corporate Income Tax Exemption for Enterprises: Practical Application in Specific Cases

If an enterprise is established in 2025, it will, in principle, be entitled to a full three-year exemption covering the 2025, 2026, and 2027 fiscal years. Where an enterprise was established in 2024, that year is treated as the first year of the exemption cycle; consequently, by the 2025 tax period, the enterprise has only two remaining exemption years, namely 2025 and 2026. Similarly, for enterprises established in 2023, 2025 constitutes the final year of the three-year exemption period. This means that enterprises established prior to 2023 no longer have any remaining exemption period from the 2025 tax year onward, as the full three-year incentive has already elapsed based on the year of establishment.

This method of calculation is precisely what causes many enterprises to mistakenly believe that “enterprises established earlier are no longer eligible,” whereas in reality some enterprises may still be entitled to the exemption, but only for the remaining portion of the incentive period.

Not Every Newly Established Enterprise Is Entitled to Tax Exemption

Decree No. 20/2026/ND-CP clearly excludes certain cases where, despite the issuance of a new Enterprise Registration Certificate, the enterprise is not regarded as having been “registered for the first time” for tax incentive purposes. Substantively, the law does not intend for tax incentives to be used as a technical mechanism to recreate legal entities for the purpose of “resetting” tax exemption rights.

Accordingly, enterprises newly established as a result of mergers, consolidations, divisions, separations, changes in ownership, or conversions of enterprise form do not qualify for corporate income tax exemption under this policy, even though they may appear to be newly established from a formal perspective. In other words, corporate restructuring may give rise to a new legal entity, but it does not generate a new entitlement to tax exemption.

New Enterprise, but “Old Management”: Why the Exemption Still Does Not Apply

Another critical aspect concerns personnel and management history. Under the guiding Decree, a newly established enterprise is not entitled to the exemption if its legal representative (except where the legal representative is not a capital contributor), a general partner, or the largest capital contributor has previously engaged in business activities in a similar role in another enterprise that is still operating, or in an enterprise that was dissolved less than twelve months prior to the establishment of the new enterprise.

From a policy perspective, this provision is designed to prevent scenarios in which enterprises are dissolved and re-established, or newly formed, using the same management personnel in order to continue enjoying tax incentives. Consequently, for business owners who are already managing other enterprises, or who have dissolved an enterprise within the restricted timeframe, any assumption that a new enterprise will automatically qualify for tax exemption should be carefully reviewed from the outset to avoid misapplication risks.

Not All Income Is Eligible for Tax Exemption

Even where an enterprise satisfies the general conditions for corporate income tax exemption, the scope of the exemption does not extend to all types of income. The Decree refers to the categories of income specified in Clause 3, Article 18 of the Law on Corporate Income Tax No. 67/2025/QH15, which are excluded from exemption. These include income from the transfer of capital or capital contribution rights; income from the transfer of real estate (except for specific cases such as social housing projects as prescribed by law); income from the transfer of investment projects and related rights; income from production and business activities conducted outside Vietnam; income from oil and gas exploration, prospecting, and extraction, as well as mineral exploitation; and certain specialized sectors such as online gaming or goods and services subject to special consumption tax (except for specific projects permitted by law).

A key practical point is that an enterprise may simultaneously generate both exempt and non-exempt income. If the nature of each income stream is not properly segregated and substantiated, enterprises may incorrectly assume that all income is exempt and face significant exposure during tax inspections.

Effective Date: Why Does the Decree Take Effect in 2026 but Apply to the 2025 Tax Period?

Under the regulations, the Decree takes effect from 15 January 2026. However, the provisions on corporate income tax exemption are deemed effective from the effective date of Resolution No. 198/2025/QH15 and apply from the 2025 tax period. This is a common legislative structure in tax policy, whereby implementing regulations are issued later, but the tax incentives are retroactively applied to a tax period that has already commenced.

As a result, enterprises do not need to wait until 2026 to assess their eligibility for the exemption. Instead, eligibility conditions and scope should be determined during the 2025 tax finalization process in order to avoid delayed application or incorrect implementation.

Conclusion

The corporate income tax exemption under Resolution No. 198/2025/QH15 represents a significant incentive for newly established small and medium-sized enterprises, but it is not universally applicable and cannot be assessed solely on the basis of whether a new Enterprise Registration Certificate has been issued.

In practice, eligibility depends on the timing of establishment, the substantive nature of “first-time registration,” the management history of key individuals, and the structure of income generated. In an environment where tax authorities are increasingly focused on post-audit reviews, misunderstandings or mechanical application of the rules may result in substantial retrospective tax collection and penalties.

Green NRJ Advisory Perspective

Where enterprises remain uncertain as to whether they genuinely qualify for a corporate income tax exemption, which exemption year they are currently in, or how long the incentive remains available, a review based on the updated legal framework is essential.

Green NRJ focuses on assisting enterprises in assessing tax incentive eligibility on a case-by-case basis, identifying risks ahead of tax finalization, and advising on how to structure documentation, income streams, and operational models in a consistent and inspection-ready manner.