An FDI enterprise receives its investment registration certificate and enterprise registration in October — by 31 December, its “first year” holds only three fragmented months of mostly preparatory costs. Tax law handles this short first period with a conditional combination mechanism, sparing the enterprise from finalising an ultra-short, all-cost tax period. This article sets out the rule and its conditions.
The combination rule: a first period under 3 months joins the following year
The CIT tax period is determined by calendar year or fiscal year (12 months). For the first tax period of a newly established enterprise (and the final period upon cessation), CIT guidance — a mechanism inherited from Circular 78/2014/TT-BTC into the Corporate Income Tax Law 67/2025/QH15 framework — permits: if the first period is shorter than 3 months, it may be combined with the following year’s tax period to form a single tax period, provided the two periods together do not exceed 15 months. Example: an enterprise established 15 October 2026 with a calendar fiscal year: the first period 15 October – 31 December 2026 is 2.5 months (<3 months) — it may combine with 2027 into one tax period 15 October 2026 – 31 December 2027 (14.5 months, within the 15-month cap). Combination is the enterprise’s choice when conditions are met, effected through consistent filing at the combined period’s finalisation — the enterprise should record its chosen tax period consistently in its tax registration file and provisional filings.
Conditions and limits of the combination
- Length condition: the first period must be shorter than 3 months — an enterprise established from November with a calendar fiscal year is the typical case; an October establishment sits near the threshold, so count the days/months precisely against the registered period.
- Total cap: the combined period must not exceed 15 months — if adding the first period to the following year breaches 15 months (e.g. an off-phase fiscal year), combination is unavailable.
- Fiscal year consistency: tax-period combination does not change the accounting period: first-year financial statements are still prepared for the registered accounting period; the combined period’s tax finalisation aggregates the corresponding accounting periods’ figures.
- Provisional payments during the combined period: the enterprise still provisionally pays quarterly throughout the combined period (if income arises); the combined period’s finalisation deadline is the last day of the 3rd month after the combined period ends.
- Incentives and loss carryforward: the incentive start year and the 5-year loss carryforward clock run by tax period — the combined period counts as one single tax period for these purposes (related to topics FDI-LC-2043, FDI-LC-2044).
Without combination, how is the short first period finalised separately?
If the first period is 3 months or longer (combination conditions unmet) or the enterprise elects not to combine, it finalises the short first period separately: filing return 03/TNDN for the tax period from the start of operations to the end of the first fiscal year, with the first accounting period’s financial statements and relevant appendices (03-2A for losses — the 5-year carry clock starts from the following year; 03-3A if the project has entered its incentive stage). In practice a short first period usually runs a loss from establishment and start-up costs, so separate finalisation mainly fixes the recognised loss for carryforward — which has clear legal value and suits enterprises wanting to “lock” the first-year file early.
Frequently asked questions
How is the first tax year finalised for a mid-year establishment?
The first tax period runs from the start of operations (per registration) to the end of the first fiscal year. If the first period is shorter than 3 months, it may be combined into the following year’s tax period (total not over 15 months); otherwise it is finalised separately as a standalone tax period.
Can a first fiscal year under 12 months be combined into the next year?
Yes, if the part of the first year forming the first tax period is shorter than 3 months and the combined period does not exceed 15 months. This is the period-combination mechanism under CIT guidance (inherited from Circular 78/2014/TT-BTC) — enterprises established late in the year (November–December) are the typical case.
What conditions apply to combining the first tax period?
Two conditions: the first tax period is shorter than 3 months; and the combined period (first period + following year) does not exceed 15 months. The registered fiscal year stays unchanged — combining tax periods does not alter the accounting period, and quarterly provisional payments continue during the combined period if income arises.
Without combination, must the first months be finalised separately?
Yes: a separate 03/TNDN finalisation for the first period (with first-period financial statements, appendix 03-2A if loss-making, 03-3A if incentivised). A short first period usually loses money, so separate finalisation mainly fixes the recognised loss for up to 5 years of carryforward.
This article has been quality-reviewed by the FLAW AI Legal Council
