An FDI project in an economic zone enjoyed corporate income tax incentives based on its location for years. After an audit, the tax authority concluded the project no longer met the incentive conditions because its labour ratio and revenue from incentivised activities fell short of registration, and part of its trading activity was carved out of the incentive scope. The revocation decision came with a clawback of all tax exempted or reduced over four years plus late payment interest, prompting the board to ask: can an incentive confirmed by the competent authority at investment licensing be taken back this easily, and what doors remain open to defend it.
The legal framework: CIT incentives under the 2025 CIT Law are conditional rights, not vested absolutes
The Law on Corporate Income Tax No. 67/2025/QH15 organises tax incentives along two axes: encouraged sectors and areas with difficult socio-economic conditions, expressed through preferential rates, exemption periods and reduction periods. The core legal feature is that incentives attach to conditions and apply to income from the incentivised activity: the enterprise must satisfy the conditions when enjoyed, account separately for incentivised and non-incentivised income, and maintain the conditions on project location and operating field throughout the enjoyment period. Where an audit finds the enterprise no longer meets the conditions, or that income enjoying the incentive includes amounts outside the incentivised activity, the tax authority may revoke the wrongly enjoyed incentive and claw back the tax difference plus late payment amounts under the Law on Tax Administration No. 108/2025/QH15. The incentive recorded in the investment registration certificate is important evidence but not absolute insurance: that document records the conditions at licensing time, while actual enjoyment each year remains subject to condition checks.
The boundary enterprises must grasp is between revocation for objectively lost conditions and policy change. Where an incentive is affected by a change in tax policy, the law usually provides transitional rules preserving the licensed project enjoyment for the remaining term — the investment law assurance mechanism for incentives when legal instruments change is the typical example. By contrast, where the project itself fails to maintain conditions (moving activities out of the incentivised area, changing its actual business lines, failing separate accounting), clawback is a sanction for breaching conditions and policy assurances are hard to invoke. A separate dispute zone is the global minimum tax under Resolution No. 107/2023/QH15: for groups within the consolidated revenue scope of EUR 750 million, top-up tax under the QDMTT can neutralise the economic value of an incentive without revoking it on paper — enterprises must distinguish the two phenomena because the responses differ entirely.
Applying the rules: at which layer a revocation complaint wins
Layer one is whether the incentive conditions were truly lost. Many revocation conclusions rest on a rigid reading of the original registration conditions, while the project had validly amended its investment registration certificate, or the condition in the incentive approval document is measured differently from how the audit team applied it. The enterprise must rebuild the condition file year by year: the incentive determination documents, investment amendments, labour figures, revenue by activity and the separate accounting applied when each year income arose. Layer two is the scope of clawback: even where part of the income fails the conditions, the authority may not automatically revoke the entire incentive for every year; income from qualifying activities must keep its incentive, and the clawback must be limited to the real difference. Layer three is late payment interest and penalties: where the enterprise enjoyed the incentive relying on guidance or confirmation documents of competent authorities at the time, the fault element behind charging interest and penalties deserves re-examination rather than mechanical application.
Procedurally, a clawback assessment is a tax administrative decision, so the enterprise complains first to the issuing tax authority within the ninety-day period under Article 9 of the Law on Complaints No. 02/2011/QH13, then to the superior level, or sues in the administrative court under the Law on Administrative Procedures No. 93/2015/QH13 where needed. During the dispute two tasks run in parallel: financial reserving for the clawback because a complaint does not automatically suspend enforcement, and freezing any operational restructuring that could worsen the incentive conditions further. In the long run, the lesson for projects enjoying incentives is to self-audit incentive conditions annually as a standalone compliance item, especially after every project amendment, revenue structure change or production relocation — because a revocation discovered after many years is always far more expensive than early self-detection and correction.
Checklist when a project receives a CIT incentive revocation notice
When the tax authority concludes the project no longer qualifies for its incentive, the enterprise should take the following steps:
- Rebuild the incentive file for each revoked year: the original incentive determination, investment amendments, registered conditions and the actual figures proving conditions were maintained year by year.
- Compare how conditions are measured across the incentive document, the amended investment registration certificate and the audit team application; record every point where the audit applied a different measure from the source documents.
- Split the clawback into the genuinely non-qualifying part and the still-qualifying part swept into the revocation, and request recalculation limited to the grounded difference.
- Examine late payment interest and penalties separately: gather the guidance and confirmation documents the enterprise relied on when enjoying the incentive to seek waiver or reduction of amounts arising from fault not attributable to the enterprise.
- File the complaint within the ninety-day period under Article 9 of the Law on Complaints No. 02/2011/QH13, reserve cash flow for the payment duty while awaiting resolution, and set up an annual incentive-condition self-audit for the following years.
Frequently Asked Questions
What should an enterprise do when its CIT incentive is revoked?
The enterprise reviews the entire incentive condition file year by year to determine how far the revocation conclusion is correct, separating income that still qualifies from the revoked part. It then complains against the clawback decision to the issuing tax authority within the ninety-day period under the Law on Complaints No. 02/2011/QH13, attaching the condition evidence and requesting recalculation of the clawback scope. Financial reserving is required in parallel because the complaint does not automatically halt enforcement of the assessment.
What happens when tax from years that already enjoyed the incentive is clawed back?
The tax authority may claw back tax wrongly exempted or reduced where the project failed the incentive conditions under the Law on Corporate Income Tax No. 67/2025/QH15, plus late payment interest on the clawed amount. However, the clawback scope must be limited to income that genuinely failed the conditions and to years in which conditions were truly lost; the enterprise may demand recalculation if the revocation sweeps in income from activities that remained incentivised. Paying under the decision does not forfeit the right to complain and recover the wrongly clawed part.
Where do we complain if we disagree with an incentive revocation?
The first complaint goes to the tax authority that issued the clawback assessment, within the ninety-day period under Article 9 of the Law on Complaints No. 02/2011/QH13. If dissatisfied with the first outcome, complain to the immediately superior tax authority or bring an administrative lawsuit. The complaint should carry the year-by-year condition file and a table separating the grounded clawback from the part alleged to be overreach.
Can we sue in court over a tax incentive revocation?
Yes. A clawback assessment following an incentive revocation is an administrative decision, and the enterprise may bring an administrative lawsuit at the competent people court under the Law on Administrative Procedures No. 93/2015/QH13, asking the court to review the legality of the revocation: whether conditions were truly lost, whether the clawback scope matches the non-qualifying part, and whether late payment interest was computed correctly. The year-by-year condition evidence file built during the complaint stage is the foundation of the case.
This article has been quality-reviewed by the FLAW AI Legal Council
