Quick answer: Vietnam, Thailand and Indonesia all use CIT incentives to compete for FDI, but their structures differ fundamentally across four dimensions: the headline rate, holiday length, qualifying conditions, and how each handles the 15% global minimum tax. Vietnam (20% headline; 10%/15%/17% preferential rates for up to 15 years; up to 4 years exemption plus up to 9 years of 50% reduction) competes with a long-stable sector-and-location framework. Thailand (20% headline; BOI holidays of 3–8 years, up to 13 for pioneer A1+ tech) is strong on project-based one-stop approval. Indonesia (22% headline; 100% tax holidays of 5–20 years scaled to capital) uses investment thresholds as its main lever. Since 2025 all three have implemented the global minimum tax — a 0% holiday on paper can be topped up to 15% for large groups, so any comparison ignoring that layer is incomplete.
Applicable legal bases
The framework below is in force as of the writing date (20/10/2026); Thai and Indonesian figures follow public sources at the time of writing and should be confirmed with local counsel before decisions:
- Vietnam — CIT Law 67/2025/QH15 (effective 01/10/2025) and Resolution 107/2023/QH15 (top-up CIT under the global minimum tax).
- Thailand — the Revenue Code (20% headline CIT); Board of Investment (BOI) incentives by activity group; 15% global minimum tax floor from 01/01/2025.
- Indonesia — the HPP Law (22% headline CIT); PMK 69/2024 (tax holiday, amending PMK 130/2020); global minimum tax: IIR and QDMTT from 01/01/2025, UTPR from 01/01/2026.
In-depth analysis
Dimension one — the headline rate — sets the starting point: Vietnam and Thailand both at 20%, Indonesia higher at 22%. But nominal rates only matter beside effective rates after incentives, where the three diverge. Vietnam applies 10%/15%/17% preferential bands tied to sectors (hi-tech, renewables, infrastructure…) and locations (economic zones, disadvantaged areas), with up to 4 years exemption and up to 9 years of 50% reduction — a stable, predictable framework suited to long-horizon manufacturing. Thailand concentrates on the BOI mechanism: 3–8 year exemptions by activity group (up to 13 years for A1+ frontier tech), plus non-tax perks like 100% foreign ownership and machinery import-duty exemption — strong for projects wanting packaged fast approval. Indonesia uses capital thresholds as leverage: 100% holidays of 5 to 20 years scaled to investment size (full relief from IDR 500 billion), plus a further 50% reduction for 2 years after — most attractive for mega-projects, least for mid-size ones.
Dimension two — conditions and procedure — determines real compliance cost. Vietnam: companies self-assess incentive eligibility and file, with the tax authority checking afterwards — fast but with retroactive disqualification risk if self-assessment is wrong. Thailand: BOI application and approval come first — slower (typically 6–9 months) but high legal certainty once certified. Indonesia: registration through the OSS system with joint BKPM–Finance Ministry review — centralized but the high capital bar excludes many mid-size projects. Investors must price time cost and legal risk into the equation, not just count holiday years.
Dimension three — the global minimum tax — is the leveling layer many older comparisons miss. All three have implemented it: Vietnam (Resolution 107/2023/QH15), Thailand (15% floor from 01/01/2025), Indonesia (IIR/QDMTT from 01/01/2025, UTPR from 01/01/2026). For multinational groups with EUR 750 million consolidated revenue, incentives pushing the effective rate below 15% trigger top-up tax — a 0% holiday may keep only nominal value. For out-of-scope businesses (mid-size firms, sub-threshold groups), all three countries’ incentives keep full value. The practical conclusion: large groups should negotiate non-rate support (land, infrastructure, training); mid-size firms can still meaningfully compare traditional holidays.
Four dimensions for comparing the three countries’ CIT incentives
- Headline rate: Vietnam 20%, Thailand 20%, Indonesia 22% — the pre-incentive baseline.
- Maximum holiday: Vietnam up to 4 years exemption + up to 9 years of 50% reduction; Thailand BOI 3–8 years (up to 13 for A1+); Indonesia 100% for 5–20 years by capital + 50% for 2 more years.
- Conditions and procedure: Vietnam self-assessment with ex-post checks; Thailand pre-approval BOI (6–9 months); Indonesia high capital bar via OSS.
- Global minimum tax: all three now apply the 15% floor to large groups — 0% incentives may be topped up; out-of-scope firms keep full value.
Common risks and how to prevent them
- Comparing only holiday years: a long holiday with harsh conditions or slow procedures can underperform a shorter, certain one — compare total compliance cost.
- Ignoring the global minimum tax: large groups modeling only on nominal incentive rates will break plans when top-up tax hits — model the top-up layer too.
- Trusting stale foreign figures: incentive policies change often (Indonesia is reworking its holiday rules for global-minimum-tax fit) — confirm with local counsel before deciding.
- Choosing a country on tax alone: tax is one factor among many — logistics, labor, supply chains and policy stability often outweigh a few points of tax.
Frequently asked questions
1. Which country is best for a mid-size electronics manufacturing project?
There is no universal answer — it depends on capital size, the specific sector, and group scale (in global-minimum-tax scope or not). Build the four-dimension comparison with project-specific numbers before concluding.
2. Does a 0% incentive still mean anything under the global minimum tax?
For in-scope groups (EUR 750 million consolidated revenue), the sub-15% gap is topped up, so economic value shrinks sharply. For out-of-scope businesses, 0% keeps full value.
3. Can one project enjoy incentives in two countries?
No — CIT incentives attach to the legal entity and location in each country. Multi-country optimization runs through group structuring and allocating functions, risks and assets — within anti-base-erosion bounds.
4. How reliable are the Thai and Indonesian figures here?
They follow public sources at the writing date 20/10/2026 (headline rates, BOI framework, PMK 69/2024). Policies change frequently — confirmation with local tax counsel is mandatory before investment decisions.
Key takeaway for investors
Compare the three countries on four dimensions — rates, holidays, conditions/procedure and the global minimum tax — not just exemption years. And for large groups, negotiate support beyond the tax rate itself.
This article has been quality-reviewed by the FLAW AI Legal Council This content is legal reference only and does not replace counsel for a specific case.