Corporate Income Tax Rates in Vietnam 2026: A Guide to Determining the Applicable Tax Rate Under Current Regulations

Corporate Income Tax (CIT) rates play a crucial role in determining a company’s tax obligations in Vietnam. Applying the correct tax rate not only ensures compliance with Vietnamese tax regulations but also helps businesses minimize potential tax risks during provisional tax payments and annual tax finalization.

To provide detailed guidance on the implementation of the Law on Corporate Income Tax, the Vietnamese Government issued Decree No. 320/2025/ND-CP, introducing comprehensive provisions on applicable CIT rates, turnover thresholds, and eligibility requirements. This article explains the key regulations under the new Decree, enabling businesses to determine the appropriate tax rate and comply with the applicable tax rules from the 2025 tax period.

What Does Decree No. 320/2025/ND-CP Regulate?

Effective from 15 December 2025, Decree No. 320/2025/ND-CP provides detailed guidance on several provisions and implementation measures of the Law on Corporate Income Tax.

One of the most significant aspects of the Decree is its clarification of the Corporate Income Tax rates applicable to different categories of enterprises. Rather than applying a single tax rate to all businesses, the Decree specifies different tax rates depending on the enterprise’s annual turnover or the nature of its business activities. It also introduces detailed guidance on how annual turnover should be determined when assessing eligibility for the preferential 15% and 17% CIT rates.

Understanding these regulations is essential for businesses because an incorrect assessment of applicable tax rates may result in underpayment of tax, additional tax liabilities, and late payment interest during tax inspections or audits. Accordingly, businesses should carefully review the new provisions before determining their Corporate Income Tax obligations for each tax period.

Corporate Income Tax Rates Applicable from the 2025 Tax Period

Under Decree No. 320/2025/ND-CP, Corporate Income Tax rates are determined based on the size of the enterprise or the industry in which it operates. Each tax rate has its own eligibility requirements, and businesses should carefully assess their circumstances before applying the appropriate rate.

Standard Corporate Income Tax Rate – 20%

The 20% Corporate Income Tax rate remains the standard tax rate applicable to most enterprises operating in Vietnam. This rate applies to businesses that are not eligible for preferential tax treatment under Vietnamese tax laws and are not engaged in industries subject to special Corporate Income Tax rates. In other words, unless an enterprise qualifies for the 15% or 17% preferential tax rates or operates in sectors such as oil and gas exploration or the exploitation of rare natural resources, the standard 20% CIT rate will generally apply. For the majority of enterprises, this continues to be the default Corporate Income Tax rate under Vietnamese tax legislation.

15% Corporate Income Tax Rate for Small Enterprises

Enterprises with annual turnover not exceeding VND 3 billion may apply this preferential tax rate, provided that they satisfy all statutory conditions. The purpose of this policy is to reduce the tax burden on small businesses, allowing them to retain more financial resources for business operations, expansion, and long-term development. However, annual turnover alone is not sufficient to qualify for the preferential rate. Enterprises must also meet other eligibility criteria prescribed by the Decree and must not fall within any excluded categories. These conditions will be discussed in greater detail later in this article. Therefore, businesses should conduct a comprehensive assessment of all applicable requirements rather than relying solely on their annual turnover when determining whether the 15% CIT rate applies.

17% Corporate Income Tax Rate for Medium-Sized Enterprises

In addition to the tax rate applicable to small enterprises, businesses with an annual turnover exceeding VND 3 billion but not exceeding VND 50 billion are subject to a 17% Corporate Income Tax (CIT) rate. This policy extends tax incentives to medium-sized enterprises, enabling more businesses to benefit from reduced Corporate Income Tax rates and supporting their sustainable growth. Nevertheless, enterprises should note that having annual turnover within the prescribed threshold does not automatically qualify them for the 17% tax rate.

Businesses must continue to satisfy all applicable legal requirements under the Decree and must not fall within any category excluded from the preferential tax regime. Consequently, enterprises should review both their turnover and legal status before determining the applicable Corporate Income Tax rate.

Special Corporate Income Tax Rates for Certain Industries

The preferential and standard tax rates discussed above do not apply to every type of business activity. Certain industries that involve the exploitation of natural resources are subject to separate Corporate Income Tax rates due to their specific economic characteristics. For oil and gas prospecting, exploration and production activities, the applicable Corporate Income Tax rate ranges from 25% to 50%.

Unlike the standard CIT rates applicable to ordinary enterprises, the specific rate for each petroleum project is determined by the Prime Minister of Vietnam, taking into account factors such as the location of the oil field, extraction conditions, and the estimated reserves under the relevant petroleum contract. Meanwhile, enterprises engaged in the exploration and extraction of rare natural resources are generally subject to a 50% Corporate Income Tax rate. However, where at least 70% of the mining area is located in regions with specially disadvantaged socio-economic conditions, a reduced 40% Corporate Income Tax rate will apply in accordance with the Decree. These special tax rates reflect the Government’s policy of applying separate tax regimes to industries involving the exploitation of strategic natural resources.

How Is Annual Turnover Determined for the 15% and 17% Corporate Income Tax Rates?

Many enterprises mistakenly assume that annual turnover only includes revenue generated from the sale of goods or the provision of services. However, the Decree adopts a broader approach. Annual turnover comprises not only operating revenue but also certain other income generated during the tax period. An incorrect calculation may cause an enterprise to apply an inappropriate tax rate, potentially resulting in additional tax liabilities and late payment interest during tax inspections or audits. Accordingly, businesses should carefully determine their annual turnover in accordance with the regulations before applying either the 15% or the 17% Corporate Income Tax rate.

What Is Included in Annual Turnover?

Annual turnover is calculated by aggregating all sources of revenue and income generated during the tax period. The following table summarizes the components of annual turnover.

Accordingly, annual turnover is determined using the following formula:

Annual Turnover = Revenue from the Sale of Goods + Revenue from the Provision of Services + Financial Income + Other Income

It is important to note that this calculation is used solely for determining whether an enterprise qualifies for the preferential 15% or 17% Corporate Income Tax rate. It is not the formula used to determine taxable income or the amount of Corporate Income Tax payable. For this reason, enterprises should ensure that every relevant source of revenue and income is properly identified before determining their applicable tax rate.

Revenue Reductions Are Excluded from Annual Turnover

Although revenue reductions are commonly reflected in accounting records and financial statements, they are not deducted when calculating annual turnover under the Decree. This distinction is particularly important because enterprises often confuse accounting revenue with annual turnover for tax purposes. Applying accounting figures without considering the specific rules under the Decree may lead to an incorrect assessment of turnover thresholds and, consequently, the application of an inappropriate Corporate Income Tax rate. Businesses should therefore review their accounting records carefully and distinguish between accounting treatments and tax regulations when preparing their Corporate Income Tax returns.

Legal Basis for Determining Annual Turnover

Annual turnover is determined based on the Appendix on Business Performance Results submitted together with the Corporate Income Tax finalization return for the immediately preceding tax period. This requirement ensures consistency between the turnover used for determining the applicable Corporate Income Tax rate and the financial information officially declared to the tax authorities. For enterprises that have already completed at least one tax period, reviewing the turnover reported in the previous year’s Corporate Income Tax finalization dossier is therefore an essential step before determining the applicable tax rate for the current year.

How Is Annual Turnover Determined for Enterprises Operating for Less Than 12 Months?

Not every enterprise operates throughout an entire tax year. Newly established enterprises, businesses formed through mergers or consolidations, or enterprises undergoing corporate restructuring may have operated for only part of the preceding tax period.

If turnover were assessed solely based on the actual operating period, these enterprises might appear significantly smaller than businesses operating for a full year. To ensure consistency and fairness, Decree No. 320/2025/ND-CP requires annual turnover to be annualized before assessing eligibility for the preferential Corporate Income Tax rates. The annualized turnover is calculated using the following formula:

Actual Turnover During the Tax Period ÷ Number of Months of Actual Business Operations × 12 Months

This approach converts the enterprise’s actual turnover into an equivalent annual figure, allowing tax authorities to evaluate businesses on a comparable basis regardless of the length of their operating period.

Example

Assume that Company A commenced operations in July 2025 and generated VND 1.8 billion in total turnover during its first six months of operation. Its annualized turnover would be calculated as follows: VND 1.8 billion ÷ 6 × 12 = VND 3.6 billion

Although the company’s actual turnover during the tax period is only VND 1.8 billion, its annualized turnover is VND 3.6 billion. Consequently, the enterprise would not fall within the turnover threshold of not exceeding VND 3 billion for the purpose of determining eligibility for the 15% Corporate Income Tax rate.

This example is provided solely to illustrate the annualization method prescribed by the Decree.

Determining the Period of Business Operations

Where an enterprise is newly established, converted into another type of enterprise, changes its ownership structure, merges, consolidates, divides, or separates during any month of the immediately preceding tax period, that month is counted as a full month of business operations. This rule provides a uniform method for calculating annualized turnover and avoids inconsistencies in determining the actual operating period for tax purposes. Businesses experiencing corporate restructuring or organizational changes should pay particular attention to this provision to ensure that annual turnover is calculated correctly.

How Do Newly Established Enterprises Apply the 15% or 17% Corporate Income Tax Rates?

Vietnam’s current Corporate Income Tax regulations provide a separate mechanism for newly established enterprises during their first tax period. Since these businesses do not have turnover data from the immediately preceding tax period, they are permitted to determine a provisional Corporate Income Tax (CIT) rate based on their projected annual turnover.

Where an enterprise estimates that its total turnover for the tax period will not exceed VND 3 billion or VND 50 billion, and it satisfies the applicable statutory requirements, it may provisionally apply the corresponding 15% or 17% Corporate Income Tax rate when making quarterly provisional CIT payments. This mechanism allows businesses to determine their tax obligations from the outset of their operations instead of waiting until the end of the financial year. It also provides greater certainty for financial planning, budgeting, and cash flow management during the early stages of business development.

It should be noted, however, that the provisional application of the 15% or 17% Corporate Income Tax rate is based solely on the enterprise’s projected turnover. Upon completion of the tax period, the enterprise must determine its actual annual turnover and finalize its Corporate Income Tax in accordance with the applicable regulations. If the actual turnover no longer satisfies the conditions for the provisional tax rate applied during the year, the enterprise will be required to pay any outstanding Corporate Income Tax together with late payment interest, where applicable, under the Law on Tax Administration.

When assessing their Corporate Income Tax obligations, businesses should also distinguish between the applicable Corporate Income Tax rate and Corporate Income Tax incentives, as these are separate legal concepts governed by different eligibility requirements. The applicable tax rate determines the percentage of tax imposed on taxable income, whereas tax incentives are preferential policies introduced to encourage investment in specific sectors, industries, or geographical areas. Depending on the circumstances, these incentives may include tax holidays, tax reductions, or preferential tax rates for qualifying investment projects.

For example, enterprises engaged in software production or those implementing investment projects that satisfy the statutory incentive conditions may qualify for Corporate Income Tax incentives under Vietnam’s tax and investment legislation. Nevertheless, eligibility for these incentives should not be confused with the rules governing the applicable Corporate Income Tax rate. In particular, the establishment of a new enterprise does not, by itself, entitle the business to a Corporate Income Tax exemption or reduction.

Accordingly, when determining their Corporate Income Tax obligations, enterprises should first identify the appropriate Corporate Income Tax rate based on their turnover and legal status, and then separately assess whether they qualify for any available tax incentives. Although these are distinct assessments, both directly affect the amount of Corporate Income Tax ultimately payable and should therefore be carefully considered before preparing provisional tax payments and the annual Corporate Income Tax finalization.

What Happens If Actual Turnover Differs from the Projected Turnover?

Projecting annual turnover is an estimate based on expected business performance. In practice, actual turnover may differ from the original projection due to changes in market conditions, business expansion, or unforeseen circumstances. For this reason, Decree No. 320/2025/ND-CP requires enterprises to reassess their eligibility for the applicable Corporate Income Tax rate when preparing their annual tax finalization.

Where the actual annual turnover remains within the projected threshold, the enterprise may continue applying the corresponding 15% or 17% Corporate Income Tax rate during the annual tax finalization.

Conversely, if the actual turnover exceeds the threshold applicable to the projected tax rate, resulting in an underpayment of provisional Corporate Income Tax, the enterprise must pay the outstanding tax together with late payment interest in accordance with the Law on Tax Administration.

This provision emphasizes the importance of preparing realistic turnover projections. Although enterprises are permitted to estimate their turnover during the first tax period, projections should be based on reasonable business assumptions rather than optimistic estimates intended solely to obtain a lower tax rate. Regularly monitoring business performance throughout the year will also help enterprises adjust their provisional tax payments where necessary, thereby reducing the risk of significant tax adjustments at the year-end tax finalization.

Which Enterprises Are Not Eligible for the 15% and 17% Corporate Income Tax Rates?

Enterprises established under Vietnamese law that are subsidiaries or enterprises having related-party relationships are not eligible for these preferential tax rates. Likewise, enterprises having related-party relationships with enterprises that do not satisfy the statutory conditions for applying the 15% or 17% Corporate Income Tax rates are also excluded from the preferential regime. These restrictions are intended to ensure fairness in the application of tax incentives and to prevent enterprises from restructuring or splitting their operations solely to qualify for lower Corporate Income Tax rates.

Accordingly, before determining the applicable Corporate Income Tax rate, businesses should assess not only their annual turnover but also their ownership structure and related-party relationships under Vietnamese tax regulations. Failure to consider these conditions may result in the incorrect application of preferential tax rates and subsequent tax adjustments during tax inspections.

Key Considerations for Businesses

The introduction of Decree No. 320/2025/ND-CP requires businesses to pay closer attention to how they determine annual turnover and assess their eligibility for preferential Corporate Income Tax rates. Applying the correct tax rate involves more than simply identifying the enterprise’s turnover. Businesses should also review the legal basis for calculating turnover, verify whether any exclusion rules apply, and ensure that all information reported in their Corporate Income Tax returns is accurate and consistent with their accounting records.

Enterprises that are newly established, have operated for less than twelve months, or are involved in mergers, acquisitions, or corporate restructuring should exercise particular care when determining annual turnover, as these situations are subject to specific calculation methods under the Decree. A thorough review before submitting provisional tax payments and the annual Corporate Income Tax finalization can significantly reduce compliance risks and help avoid additional tax assessments and late payment interest.

Conclusion

Corporate Income Tax (CIT) rates are a key factor in determining an enterprise’s tax obligations under Vietnam’s current tax regulations. The applicable legislation sets out specific tax rates for different categories of enterprises and business activities, while also providing detailed guidance on determining annual turnover, annualizing turnover for enterprises operating for less than 12 months, the eligibility criteria for preferential tax rates, and the circumstances in which the 15% and 17% Corporate Income Tax rates cannot be applied. A thorough understanding of these regulations enables businesses to manage their accounting, tax declaration, and annual Corporate Income Tax finalization more effectively while minimizing potential compliance risks.

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