CIT Incentives by Location vs by Sector in Vietnam: Can Both Apply?

A company investing in a disadvantaged region, or operating in high-tech, renewable energy, education, healthcare… may qualify for corporate income tax (CIT) incentives. But if a company meets both the location and the sector conditions — can it enjoy both incentives at once? This article analyzes the question under CIT Law 67/2025/QH15 (effective 01/10/2025).

Quick comparison table

Analysis of each difference

1. Two independent “doors,” one common principle

Location-based incentives depend on where the investment project is situated (disadvantaged areas, industrial parks…), while sector-based incentives depend on the field of operation (high-tech, renewable energy, education, healthcare…). The two doors are independent in their conditions, but when a company qualifies for both, the law does not allow stacking — the company may only choose the single most favorable incentive (Article 12.1, Law 67/2025). The detailed lists of areas and sectors are guided by Decree 320/2025/ND-CP.

2. The standard rate has moved to a tiered mechanism

A major new point of Law 67/2025: the standard CIT rate is no longer a flat 20%, but tiered by the previous year’s revenue (Article 10; detailed in Article 12.1 of Decree 320/2025/ND-CP): previous-year revenue of VND 3 billion or less → 15%; over VND 3 billion up to VND 50 billion → 17%; over VND 50 billion → 20%. Note the correct term is “tiered” — this is not a progressive, bracket-by-bracket mechanism like personal income tax.

3. Why no stacking?

The principle of tax incentives is targeted encouragement without eroding the tax base. If stacking were allowed, a project that is both in a disadvantaged area and in a priority sector could be exempted/reduced to a degree disproportionate to the policy goal. Hence the law provides: choose the most favorable one, no stacking.

4. How to pick the “most favorable” level in practice

Companies should compare concretely: the preferential rate, the tax-holiday period, and the 50%-reduction period of each option, then model the total tax liability over the project’s life. An option with a lower preferential rate but a short duration is not necessarily better than a long holiday — model it with the project’s actual figures.

Practical notes

• Do not cite CIT Law 14/2008/QH12 as current authority — it has been replaced by Law 67/2025/QH15 (effective 01/10/2025).
• When preparing an incentive dossier, companies should document the comparison of both incentive doors to substantiate the “most favorable” choice.
• The specific lists of areas and sectors may be adjusted through guiding documents — consult the latest version of Decree 320/2025/ND-CP before making investment decisions.

Conclusion

CIT incentives by location and by sector cannot be stacked — a company meeting both sets of conditions may only choose the most favorable incentive under Article 12.1 of Law 67/2025. Meanwhile, the standard rate is now tiered at 15%/17%/20% by previous-year revenue. Careful modeling before choosing is the way to optimize tax liability lawfully.

Disclaimer: This article was prepared by the AI Legal Council based on research of CIT Law 67/2025/QH15 and Decree 320/2025/ND-CP in force at the time of writing, for general reference only. It does not constitute tax advice for any specific case.

Transparency notice: This article was drafted by an artificial intelligence system (AI Legal Council) and has undergone internal quality review; it does not purport to be the opinion of a licensed human lawyer.

Need CIT incentive advice? Contact FLAT Law Firm for support.