Corporate income tax incentives for FDI projects — conditions and applicable periods

What corporate income tax incentives can FDI projects enjoy?

Corporate income tax (CIT) is a decisive factor when foreign investors choose where to locate a project. From 01/10/2025, the Law on Corporate Income Tax No. 67/2025/QH15 (replacing Law No. 14/2008/QH12) took effect, introducing a new incentive framework — detailed in Decree No. 320/2025/ND-CP (issued 15/12/2025).

This article maps the three tiers of CIT incentives available to foreign-invested projects in Vietnam, with the conditions and applicable periods of each tier.

Tier 1: Standard rates differentiated by revenue scale

The biggest change in the 2025 CIT Law is that the rate is no longer one-size-fits-all. Under Article 10 of the Law, the rate is determined by revenue of the immediately preceding fiscal year:

• 15% — enterprises with prior-year revenue below VND 3 billion;
• 17% — enterprises with prior-year revenue from VND 3 billion to VND 50 billion;
• 20% — all other enterprises (the standard rate).

Oil and gas exploration and extraction are subject to 25%–50%; extraction of rare resources (gold, rare earths, gemstones) to 50%, or 40% where 70% or more of the mine area lies in an especially difficult socio-economic zone.

Practical note: because this year’s rate depends on last year’s finalized revenue, FDI enterprises must review closed figures before setting quarterly provisional payments — applying the wrong rate means additional tax plus late-payment interest.

Tier 2: Preferential 10% rate for 15 years

Under Articles 12–13 of the Law and Article 19 of Decree No. 320/2025/ND-CP, a 10% rate for 15 years applies to income from new investment projects in the following groups:

Eligible sectors

• High-tech application, venture investment for high-tech development; high-tech incubation;
• Software production; network information security; key digital technologies; semiconductor chip R&D, design, manufacturing, packaging and testing; AI data center construction;
• Manufacture of supporting-industry products on the priority list;
• Renewable and clean energy production; environmental protection;
• Development of power plants, water supply and drainage systems, bridges, roads, railways, airports, seaports and other particularly important infrastructure works as decided by the Prime Minister.

Eligible locations

• New projects in hi-tech parks, hi-tech agricultural parks, concentrated digital-technology zones;
• New projects in economic zones located in especially difficult or difficult socio-economic areas.

Tier 3: Up to 4 years of exemption, then up to 9 years at 50% reduction

Under Article 20 of Decree No. 320/2025/ND-CP, projects qualifying for the 10%/15-year preferential rate are further entitled to tax exemption for up to 4 years and a 50% reduction for up to the next 9 years. The exemption/reduction period runs from the first year the project generates taxable income.

Conditions for obtaining and keeping incentives

1. New investment project: incentives attach to the project, not to the enterprise generally. Projects formed via merger or acquisition are in principle not “new”, unless the law provides otherwise.
2. Separate accounting: income from incentivized activities must be separately accounted. Without separate accounting, the incentive cannot be claimed on that income.
3. Continuous compliance: if during the incentive period the project ceases to meet the conditions (e.g. a change of business lines), the incentive is withdrawn for the remaining period.
4. No stacking: the same income may enjoy only one incentive — the enterprise may choose the most favorable where several apply.

Transitional rule: projects already enjoying incentives under the old law

Article 20 of the 2025 CIT Law provides a business-friendly transition: projects granted incentives under the law in force at licensing/IRC issuance, if they also meet the new law’s conditions, may choose to continue under the old law or switch to the new law for the remaining period — whichever is more favorable.

Checklist for foreign investors

• Confirm whether the project falls in an eligible sector or location under Article 18 of Decree 320/2025;
• Register and commit to the incentive conditions from the project dossier stage;
• Set up separate accounting for incentivized income from year one;
• Track exemption/reduction timelines for cash-flow planning and filing obligations;
• Monitor new guiding instruments periodically (Decree 320/2025, Circular 20/2026/TT-BTC).

Article quality-reviewed by the FLAW AI Legal Council. For reference only; not a substitute for legal advice on specific cases.