Quick answer: When a CIT incentive period ends, an FDI company moves to the standard 20% rate and loses the project-based exemption or reduction — there is no automatic “extension” mechanism. Before expiry, review the incentive term stated on the Investment Registration Certificate, model the new tax cost, assess the impact of the global minimum tax (15% QDMTT), and consider whether a new or expansion project could qualify for its own incentives. Late preparation means a cash-flow shock in the first post-incentive finalization.
Applicable legal bases
The framework below is in force as of 20 October 2026 and directly governs this article:
- Law on Corporate Income Tax 67/2025/QH15 (effective 01/10/2025, applicable from tax year 2025) — the standard 20% rate and the CIT incentive framework for new investment projects.
- Law on Investment 143/2025/QH15 (effective 01/3/2026) — incentive duration and conditions attached to the specific project on the Investment Registration Certificate.
- Resolution 107/2023/QH15 (effective 01/01/2024) — global minimum tax (QDMTT): multinational groups with consolidated revenue of EUR 750 million or more face a 15% minimum effective rate in Vietnam regardless of domestic incentives.
- Law on Tax Administration 108/2025/QH15 (effective 01/7/2026, replacing Law 38/2019/QH14) — filing and finalization obligations after incentives expire.
In-depth analysis
CIT incentives are not a permanent company right but a project-specific right with a fixed term counted from the first year of taxable income (or first revenue year, depending on the incentive terms). The most common FDI mistake is treating the incentive period as an administrative detail — only discovering at the first post-incentive finalization that tax payable has multiplied. In principle, once incentives end, all taxable income of the project is taxed at 20%, unless the company has a separate new project qualifying for its own incentives.
The point many companies miss is the interaction between domestic incentives and the global minimum tax. Since 01/01/2024, groups within QDMTT scope must pay a top-up for the gap between the effective Vietnamese rate and 15% — meaning domestic CIT incentives can be partly “neutralized” by the top-up obligation. Post-incentive tax modeling must therefore cover both layers: domestic CIT and the QDMTT top-up where applicable.
A 12-month runway before incentives expire
- Review the incentive file: reconcile the remaining incentive term on the Investment Registration Certificate and identify the exact last tax year of exemption/reduction; verify ongoing conditions (capital, headcount, location) to avoid early clawback.
- Model the new tax cost: recompute CIT at the 20% rate on the same projected profit base; for large groups, add an estimated QDMTT top-up for a realistic cash-flow figure.
- Assess new/expansion projects: a genuinely new or qualifying expansion project (sector, location, capital scale) may earn its own incentives under Law 67/2025 — but it must be accounted for separately; an old project’s incentives cannot be “extended” by renaming.
- Prepare filing systems: review accounting policies, deductible expenses, and transfer-pricing documentation before the first standard-rate year — the year tax authorities scrutinize most closely.
Common risks and how to prevent them
- Misreading the expiry year: incentive time is counted by tax years with taxable income, not the licensing year — check the original incentive document, never guess.
- Ignoring QDMTT: groups above EUR 750 million in revenue must model the 15% top-up to avoid understated forecasts.
- Mixing old/new project accounting: a new project seeking incentives must separately account its income — commingling can forfeit incentives for both.
- Letting incentive conditions lapse: downsizing, relocating, or changing business lines can terminate current incentives — check before any restructuring decision.
Frequently asked questions
1. Can we apply to extend incentives for a few more years after expiry?
There is no extension mechanism for an old project. New incentives arise only from a new investment project or a qualifying expansion meeting the conditions under Law 67/2025 and recorded on the license.
2. Is the post-incentive rate exactly 20%?
In principle yes — the standard rate under Law 67/2025. Groups within QDMTT scope must additionally consider a possible top-up to reach the 15% minimum effective rate.
3. How is the final exemption year counted if the project makes losses?
The exemption period runs from the first year of taxable income; loss years do not count toward exemption but may count toward the overall incentive timeline depending on the license terms — always check the original document.
4. Should we set up a new company to “restart” incentives?
The law counters artificial splitting or re-incorporation to duplicate incentives; a new project must involve genuinely new investment (new capital, new activity). Formalistic maneuvers risk clawback and penalties.
Key takeaway for investors
Incentive expiry is not a surprise — the end date has been on the license since day one. FDI companies should start a preparation runway at least 12 months ahead, fully modeling both the 20% CIT and QDMTT, and expect new incentives only from genuinely new projects.
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.
