Vietnam to Remove Business License Tax from 2026 – Critical Update for Every Business Owner

In a significant move to remove Business License Tax and foster a more business-friendly environment, Vietnam’s National Assembly has passed Resolution No. 198/2025/QH15, officially abolishing the Annual License Fee starting January 1, 2026. This marks a key milestone in Vietnam’s business tax reform, aimed at reducing compliance costs, eliminating redundant administrative procedures, and stimulating entrepreneurship nationwide.

The initiative to remove business license tax in Vietnam is expected to deliver tangible benefits to a broad spectrum of companies, especially small and medium-sized enterprises (SMEs) and foreign investors. As a cornerstone of ongoing Vietnam tax policy changes, this reform demonstrates the government’s commitment to modernizing its tax system and strengthening Vietnam’s position as a competitive investment destination.

What Is the Business License Tax in Vietnam?

The Business License Tax (Annual License Fee) is a compulsory yearly payment imposed on companies operating in Vietnam. This fee is calculated based on a company’s charter capital or annual revenue, with previous rates ranging from VND 1,000,000 to VND 3,000,000 per year. Notably, even non-operating or dormant entities were required to pay this tax.

With the new resolution in effect, Vietnam will abolish the license tax starting 2026—removing a longstanding financial burden that affected thousands of businesses across the country.

2. Key Highlights of Resolution No. 198/2025/QH15

Remove Business License Tax in Vietnam (effective from 2026):
Starting January 1, 2026, all legal business entities—whether domestic or foreign-invested—will no longer be required to pay the Annual Business License Tax. This measure to abolish license tax Vietnam represents a major step in Vietnam tax policy changes, reducing financial burdens and fostering a more competitive business environment.

Corporate Income Tax (CIT) exemption for newly established SMEs:
As part of this business tax reform in Vietnam, small and medium-sized enterprises (SMEs) established from May 17, 2025, onward will benefit from a 3-year Corporate Income Tax exemption, starting from the official date of business registration. This is designed to incentivize startup formation and early-stage growth.

Green growth and ESG-focused incentives:
Businesses aligned with green practices, ESG (Environmental, Social, and Governance) standards, or operating in the circular economy will have access to preferential financing options, including loans with interest rate support up to 2% per year via the SME Development Fund.

3. What the Removal of the Business License Tax Means for Foreign Investors and Startups

The decision to remove business license tax Vietnam has wide-ranging implications for both domestic and international stakeholders:

• Lower entry and operational costs for startups and SMEs

• Simplified compliance and reduced tax filing obligations

• Greater appeal to foreign investors looking to establish companies or representative offices in Vietnam

• Stronger support for sustainable, ESG-driven business models through dedicated financial incentives

This policy shift to abolish license tax Vietnam aligns with the government’s broader strategy to drive private sector development, streamline tax procedures, and position Vietnam as a competitive regional hub for investment and innovation.

4. What Should Businesses Do Next?

With the upcoming removal of the Business License Tax in Vietnam, businesses should take proactive steps to adapt to the new tax environment:

• Review your 2025 tax strategy to ensure a smooth transition into the updated regulatory framework under Vietnam tax policy changes.

• Consult with tax and legal professionals to determine your eligibility for Corporate Income Tax (CIT) exemptions and green or ESG-related financial incentives.

• Reassess market entry plans or expansion strategies—as this significant move to abolish license tax Vietnam lowers compliance costs and simplifies administrative procedures.

Now is the right time for startups and foreign investors to capitalize on these business tax reforms in Vietnam.

Conclusion

The decision to remove Business License Tax in Vietnam starting January 1, 2026, is a transformative development for the country’s business ecosystem. This reform not only reduces operational and compliance costs, but also underscores Vietnam’s commitment to building a transparent, investor-friendly, and sustainable economic environment.

Whether you’re an international investor exploring market entry or a local entrepreneur expanding operations, this change is a signal to act.
To understand how the abolishment of the license tax impacts your business or investment plans, contact Green NRJ today for expert advice and tailored compliance solutions.