Keeping CIT Incentives for FDI Projects: A Compliance Checklist Against Clawback

Corporate income tax (CIT) incentives are among the key reasons foreign investors choose Vietnam — yet many FDI companies focus only on obtaining incentives and forget the second half of the equation: keeping them until the incentive period ends. Recent tax inspections show a number of companies being assessed tens of billions of dong in clawed-back taxes, plus late-payment interest and penalties — not because of fraud, but because they inadvertently lost eligibility midway.

This article is a practical checklist to help the management and finance teams of FDI projects periodically review the conditions for maintaining CIT incentives under the Law on Corporate Income Tax 2025 (67/2025/QH15) and its guiding instruments — so that incentives are never clawed back.

Table of contents

• 1. The foundational principle: tax incentives are not "granted once, enjoyed forever"
• 2. The conditions to keep: Article 18 of Law 67/2025 in brief
• 3. Checklist A — Maintaining the project's substantive conditions
• 4. Checklist B — Separate accounting and correct declaration
• 5. Checklist C — Periodic reporting and audit
• 6. Checklist D — Evidence dossiers ready for inspection
• 7. One-page condensed checklist (print and pin to your desk)
• 8. Seven common mistakes that cost companies their incentives
• 9. What to do if eligibility has already been lost
• 10. Frequently asked questions
• 11. When to work with counsel

1. The foundational principle: tax incentives are not "granted once, enjoyed forever" {#1-foundational-principle}

Two legal principles determine how FDI companies must manage CIT incentives:

Principle 1 — Self-assess, self-declare, self-bear responsibility. There is no procedure to "apply for an incentive certificate." Under Article 4 of Circular 20/2026/TT-BTC, companies self-assess the conditions for tax exemption, reduction and preferential rates, as well as the applicable exemption/reduction periods, and declare them on their CIT finalization returns. The procedures and dossiers for incentives follow tax administration law — i.e., incentives are claimed directly on the annual CIT finalization return with the accompanying incentive appendix.

Principle 2 — Lose the conditions, lose the incentives. Clause 5, Article 18 of Law 67/2025 provides that where a company fails to meet the tax incentive conditions, the competent authority shall retroactively collect the tax and impose penalties as prescribed by law. Circular 20/2026/TT-BTC reiterates: if an inspection concludes that a company does not satisfy the conditions, the authorities will claw back the tax, charge late-payment interest and impose tax penalties.

In other words, a tax incentive is a multi-year "compliance contract." A company must prove it remains worthy every year — not just once at the beginning. The checklist below is built on exactly that logic.

2. The conditions to keep: Article 18 of Law 67/2025 in brief {#2-conditions-framework}

Article 18 of the 2025 Law on Corporate Income Tax sets out the conditions for tax incentives. FDI companies must continuously satisfy all of the following throughout the incentive period:

1. **Proper accounting, invoicing and documentation; tax paid under the declaration

method** (Clause 1, Article 18). Companies taxed under a presumptive method or failing to maintain accounting records and vouchers fall outside the incentive regime.

1. No disqualifying corporate events for new-investment incentives: merger,

consolidation, division, split, change of ownership or conversion of enterprise type (Clause 1, Article 18).

1. Separate accounting of income from incentivized activities versus

non-incentivized activities (Clause 2, Article 18).

1. No incentive claims on excluded income: income from transfers of capital or

capital contribution rights; transfers of real estate (except social housing development); transfers of investment projects (except mineral-processing projects); income from production or business conducted outside Vietnam; income from oil, gas and minerals; income from goods and services subject to special consumption tax (except certain designated projects) — Clause 3, Article 18.

1. The 15%/17% rates by revenue scale do not apply to subsidiaries or affiliated

enterprises where the affiliated enterprise does not meet the prescribed conditions (Clause 4, Article 18).

Each checklist section below turns these five conditions into concrete tasks with owners and deadlines.

3. Checklist A — Maintaining the project's substantive conditions {#3-checklist-a}

CIT incentives attach to a specific investment project (its registered business lines, location and scale). A project that changes without a re-assessment of the conditions is the shortest route to a clawback.

• [ ] **A1. Keep to the business lines, location and scale registered in the

Investment Registration Certificate (IRC).** Every planned project adjustment — changing objectives, adding business lines, relocating, increasing or decreasing investment capital — must pass through an "incentive impact assessment" before implementation, not after.

• [ ] A2. Amend the IRC promptly when the project changes. The project's legal

file (the IRC and its amendments) is the first document tax authorities cross-check when inspecting incentive eligibility. A project that has factually changed while the IRC has not is a serious red flag.

• [ ] **A3. Treat mergers, consolidations, divisions, splits and conversions with

care.** Under Clause 1, Article 18, new-investment tax incentives do not apply to these cases. If the company undergoes restructuring, its entire incentive standing must be re-evaluated — never simply continue claiming as before.

• [ ] A4. Expansion investment: apply the correct two-branch mechanism. Clause 5,

Article 14 of Law 67/2025 distinguishes: (a) an operating project still within its incentive period — incremental income enjoys incentives as the operating project for the remaining period; (b) a project whose incentive period has expired — incremental income is only eligible for tax exemption/reduction (not preferential rates) and must be separately accounted for. Misidentifying the branch is a common filing error.

• [ ] A5. Keep qualifying certificates valid (high-tech enterprise certificates,

science-and-technology enterprise certificates, high-tech application project certificates, etc.). An expired or revoked certificate while the company keeps claiming incentives is a textbook clawback case.

• [ ] A6. Honor the commitments in special incentive decisions. For projects

enjoying special incentives under Article 17 of the Law on Investment 2025 (143/2025/QH15), commitments on investment capital, disbursement schedules, headcount and technology are existential conditions. Breaching them can lead to withdrawal of incentives already enjoyed.

• [ ] A7. Affiliated enterprises enjoying the 15%/17% rates: periodically review

the ownership structure and the qualifying status of enterprises within the affiliated relationship under Clause 4, Article 18. Group restructuring (buying or merging member companies) can terminate eligibility for revenue-based preferential rates.

4. Checklist B — Separate accounting and correct declaration {#4-checklist-b}

This is the chief accountant's domain — and the area tax inspectors scrutinize most closely.

• [ ] B1. Account separately for incentivized income. Clause 2, Article 18

requires separate accounting of income from incentivized activities versus non-incentivized activities. Set up segregated accounts and sub-ledgers from the start of the fiscal year.

• [ ] **B2. Where separate accounting is impossible, apply a consistent allocation

method.** The Law permits incentivized income to be determined by apportioning the revenue or expenses of the incentivized activity over the company's total revenue or expenses. The allocation method must be consistent across years, documented in an internal memorandum and reconcilable to the figures.

• [ ] B3. Carve out income excluded from incentives (Clause 3, Article 18):

transfers of capital or contribution rights, real estate transfers, investment project transfers, offshore activities, oil/gas/minerals, goods subject to special consumption tax. Declare these at the standard rate — never "blend" them into incentivized income.

• [ ] B4. Self-assess correctly on the annual CIT finalization return. Under

Article 4 of Circular 20/2026/TT-BTC, the company self-assesses the conditions, preferential rates and exemption/reduction periods, and declares them on the finalization return with the incentive appendix. Cross-check the return against the financial statements and accounting books before filing.

• [ ] B5. File the finalization return on time under tax administration law. A

late filing not only attracts administrative penalties but also draws closer attention to the company's incentive file in subsequent inspection rounds.

• [ ] **B6. Re-verify the conditions before every finalization — never file on

autopilot.** This year's conditions may differ from last year's (project adjustments, expired certificates, ownership changes). Fix an annual review into the calendar ahead of the filing deadline.

5. Checklist C — Periodic reporting and audit {#5-checklist-c}

Tax incentives do not exist in a vacuum: investment authorities and tax authorities cross-check each other's data. Complete, timely reporting is the company's shield.

• [ ] C1. Report on project implementation quarterly and annually. Article 47 of

the Law on Investment 2025 requires investors and project-implementing business organizations to report to the investment registration agency and the local statistics office on implemented investment capital, business results, labor, budget contributions, R&D investment, and environmental protection. File completely and on time, with figures consistent with tax filings.

• [ ] C2. Have the annual financial statements audited (mandatory for FDI).

Point a, Clause 1, Article 37 of the 2011 Law on Independent Audit: foreign- invested enterprises fall within compulsory annual financial-statement audit. Audited financial statements are a key cross-reference when tax authorities inspect incentive eligibility.

• [ ] **C3. Keep the project's data current on the National Investment Information

System.** Under the Law on Investment 2025, project information stored in this system has the legal value of the project's source data — inaccuracies here will complicate any defense of incentive eligibility.

• [ ] C4. Reconcile figures across reporting systems. Implemented capital,

revenue, headcount and budget contributions must be consistent across investment reports, audited financial statements and tax returns. Unexplained discrepancies are red flags for an inspection team.

6. Checklist D — Evidence dossiers ready for inspection {#6-checklist-d}

Under the self-assessment mechanism (Article 4, Circular 20/2026/TT-BTC), companies do not file an advance application for incentives — but they must prepare and retain complete dossiers to evidence eligibility during inspections. The dossier should contain:

• [ ] D1. Project legal file: the Investment Registration Certificate with all

amendments; the Enterprise Registration Certificate with all changes.

• [ ] D2. Eligibility evidence: high-tech / science-and-technology enterprise

certificates (if applicable); special incentive decisions with accompanying commitment documents; vouchers evidencing business lines, location, scale and capital disbursement progress.

• [ ] D3. Tax filing file: annual CIT finalization returns with incentive

appendices for each incentivized year; detailed accounting books showing separate accounting (or the internal memorandum on the apportionment method).

• [ ] D4. Reconciliation file: audited financial statements for the years; filed

project-implementation reports; the company's annual minutes reviewing incentive eligibility (item B6).

Note: dossiers must be complete, valid and retained for inspection throughout the statute of limitations under tax administration law.

7. One-page condensed checklist (print and pin to your desk) {#7-condensed-checklist}

8. Seven common mistakes that cost companies their incentives {#8-common-mistakes}

1. Assuming incentives survive restructuring. Continuing to claim new-investment

incentives after a merger, split or ownership change — in breach of Clause 1, Article 18.

1. Adjusting the project without re-checking the conditions. Adding business

lines, moving the factory to another locality, increasing capital without re-assessing incentive standing.

1. One accounting pot for everything. Failing to segregate incentivized and

non-incentivized income, then being unable to prove which portion qualifies when inspected — the authorities may disallow the whole claim.

1. Claiming incentives on capital or real estate transfer income. Income

excluded by Clause 3, Article 18, yet many companies "blend" it in because it sits in the same legal entity.

1. Letting qualifying certificates lapse unnoticed. Particularly for high-tech

enterprises: an expired certificate means lost eligibility from that point on.

1. Neglecting project-implementation reporting. Missing reports, or figures

contradicting tax filings, invite the tax authority to dig into the incentive file.

1. Miscalculating the exemption/reduction timeline. Getting the "first year with

taxable income" wrong and claiming exemption in the wrong years — one wrong year taints the whole chain.

9. What to do if eligibility has already been lost {#9-lost-eligibility}

Discovering lost eligibility is not a death sentence if handled properly — but delay multiplies the consequences:

1. Stop claiming from the tax period in which the conditions ceased to be met.

Do not keep claiming in the hope that no one notices.

1. **Self-adjust, file supplementary returns and pay the shortfall plus

late-payment interest immediately.** Voluntary remediation before an inspection is always treated more favorably than a discovered violation.

1. Prepare for an inspection scenario: assemble evidence of when eligibility was

lost, any objective causes, and the remediation steps taken — the basis for discussing penalty levels with the tax authority.

1. Re-evaluate the entire incentive structure: losing eligibility for one project

does not mean losing everything — check whether other projects or activities still qualify, and declare correctly for subsequent periods.

Legal consequences if discovered (without self-remediation): retroactive collection of all wrongly exempted or reduced tax; late-payment interest; administrative tax penalties — under Clause 5, Article 18 of Law 67/2025 and Article 4 of Circular 20/2026/TT-BTC.

10. Frequently asked questions {#10-faq}

1. Do FDI companies need to register or obtain separate approval to enjoy CIT incentives in Vietnam?

No. Companies self-assess eligibility, claim incentives on their annual CIT finalization returns and bear full responsibility; there is no separate incentive certificate procedure (Article 4, Circular 20/2026/TT-BTC). The task is to prepare complete supporting dossiers for inspection. Note: claiming without meeting the conditions leads to clawback and penalties under Clause 5, Article 18 of Law 67/2025.

2. If incentive conditions are lost midway, are all incentives ever enjoyed clawed back, or only from the period the conditions ceased to be met?

The company stops enjoying incentives from the tax period in which the conditions are no longer met; tax already claimed incorrectly is subject to retroactive collection, late-payment interest and administrative penalties (Clause 5, Article 18 of Law 67/2025; Article 4 of Circular 20/2026/TT-BTC). Upon discovering lost eligibility, self-adjust the filings and pay the shortfall immediately rather than waiting for an inspection.

3. Is income from capital transfers or real estate transfers of an FDI project eligible for CIT incentives?

No. Such income is excluded from incentives — except income from social housing development and transfers of mineral-processing projects (Clause 3, Article 18 of Law 67/2025). Account for and declare such income separately at the standard rate.

4. Does adjusting an FDI project — increasing capital or adding new business lines — affect the CIT incentives currently enjoyed?

It may. Any adjustment to objectives, scale or location must be re-assessed against the incentive conditions before implementation; expansion investment follows a separate regime under Clause 5, Article 14 of Law 67/2025 (distinguishing projects still within versus beyond their incentive period). Amend the Investment Registration Certificate promptly and re-verify all conditions before the finalization deadline.

5. Is an incentive lost if the company cannot separately account for incentivized income?

Not automatically. Where separate accounting is not possible, incentivized income is determined by apportioning the revenue or expenses of the incentivized activity over the company's total revenue or expenses (Clause 2, Article 18 of Law 67/2025). Separate accounting remains advisable to reduce dispute risk during inspections.

6. Can CIT incentives be extended once they expire?

As a principle, incentive periods are fixed and do not renew automatically; in certain special cases an extension may be considered by the competent authority for each specific project. This will be analyzed in depth in the companion piece on extending expiring tax incentives. Companies should review lawful investment restructuring options before the incentives lapse rather than waiting until the last minute.

7. Are FDI companies required to have their annual financial statements audited, and what does this have to do with tax incentives?

Yes, it is mandatory. Foreign-invested enterprises fall within compulsory annual financial-statement audit (Point a, Clause 1, Article 37 of the 2011 Law on Independent Audit). Audited financial statements are a key cross-reference when tax authorities inspect incentive eligibility — keep them with the company's incentive dossier.

11. When to work with counsel {#11-counsel}

The checklist above lets a company run incentive maintenance in normal conditions. But certain moments spike legal risk and call for counsel alongside:

• Before any project adjustment (objectives, scale, location) or

restructuring (merger, split, conversion) — to assess the impact on incentive standing before the decision takes effect.

• Upon receiving a tax inspection or examination decision touching on incentives

— to prepare evidence dossiers and defense strategies.

• Upon discovering incorrect incentive claims in prior years — to design a

self-remediation roadmap minimizing clawback and penalties.

• For projects enjoying special investment incentives and support — to manage

commitments and bespoke reporting duties.

FLAT Law Firm supports FDI companies across the full lifecycle of tax incentives: from initial eligibility assessment, compliance-system design and periodic reviews, to representing companies before tax authorities during inspections. Contact us (hotline 0988424851) for advice on your company's specific situation — because every FDI project has a different "incentive file," no generic checklist replaces case-specific legal assessment.

Language versions {#language-versions}

References {#references}

• Law on Corporate Income Tax 2025 (67/2025/QH15), effective 01/10/2025, applicable

from the 2025 CIT tax period

• Decree 320/2025/ND-CP dated 15/12/2025 detailing the Law on CIT
• Circular 20/2026/TT-BTC dated 12/3/2026 guiding the Law on CIT
• Law on Investment 2025 (143/2025/QH15), effective 01/3/2026
• Law on Independent Audit 2011 (67/2011/QH12)
• Law on Corporate Income Tax 2008 (14/2008/QH12) — expired 01/10/2025