For the first time, Vietnamese corporate income tax applies rates tiered by revenue size: 15% for enterprises with revenue up to VND 3 billion, 17% for the band above VND 3 billion to VND 50 billion, and the standard 20%. For an enterprise whose revenue hovers around these thresholds, the question is not which rate looks better, but the determination mechanism: which period’s revenue counts, which units are aggregated, and what happens when revenue jumps a threshold mid-year. This article decodes Article 10 of the 2025 CIT Law.
Legal Basis
- Article 10 of the Law on Corporate Income Tax 67/2025/QH15: the standard rate is 20%; a 15% rate applies to enterprises whose total revenue of the immediately preceding year does not exceed VND 3 billion; a 17% rate applies where the preceding year’s total revenue is above VND 3 billion and does not exceed VND 50 billion.
- Article 10 of the Law on Corporate Income Tax 67/2025/QH15 also sets an exclusion: the 15% and 17% rates do not apply to an enterprise that is a subsidiary, or has an associated relationship with an enterprise whose revenue exceeds the corresponding thresholds — an anti-fragmentation mechanism against splitting a large enterprise into small legal entities to enjoy low rates.
- The revenue basis is the enterprise’s total revenue in the immediately preceding tax period, determined under the guidance of Decree 320/2025/ND-CP; the enterprise is a single legal person, so revenue of dependent-accounting branches and units is aggregated into the enterprise’s total revenue.
- Article 19 of the Law on Corporate Income Tax 67/2025/QH15: the Law applies from the 2025 tax period — so 2024 revenue is the basis for tiering the 2025 tax period, and so on for later periods.
Analysis in Practice
The key to the tiering mechanism is the phrase “immediately preceding year”. The current tax period’s rate does not look at that period’s own revenue, but at the total revenue already determined for the period before. An enterprise with 2024 revenue of VND 2.8 billion applies 15% for the whole 2025 tax period — even if 2025 revenue jumps to VND 40 billion. Conversely, an enterprise reaching VND 60 billion in 2024 applies 20% in 2025 even if 2025 revenue falls to VND 20 billion; the 17% rate only arrives in 2026 if 2025 revenue lands in the above-3-to-50-billion band. “Fluctuating around the threshold” therefore never changes the rate mid-year — it only moves the enterprise to a different tier in the following period, and the accounting team must forecast tax cash flow with exactly this one-period lag.
On aggregation scope: the legal-person enterprise is the sole taxpayer, so total revenue includes the head office and every dependent-accounting unit (branches, plants, stores without legal personality). An enterprise cannot “split” revenue to a branch to bring the head office under the VND 3 billion line. A subsidiary that is a separate legal person determines its rate by its own revenue — but this is exactly where the Article 10 exclusion bites: if the subsidiary belongs to an enterprise or group whose revenue exceeds the thresholds, or has the prescribed associated relationship with an over-threshold enterprise, the subsidiary cannot enjoy 15%/17% and applies the standard 20%. FDI groups with a foreign parent should study this exclusion carefully before assuming their Vietnamese subsidiary qualifies for a low rate.
A newly established enterprise with no “immediately preceding year” is handled under Decree 320/2025/ND-CP guidance on the mechanism of determining by the actual revenue of the first tax period at annual finalisation: in its first year, the enterprise provisionally pays on a reasonable estimate and settles the applicable rate at finalisation based on the first period’s actual total revenue. A key practical point: a new enterprise within the exclusion (a newly formed subsidiary of a large group) applies 20% from the very first period, without passing through the revenue-determination step. Investors forming a new Vietnamese entity should build this into the financial model from the start instead of defaulting to 15% for a “small enterprise”.
When revenue crosses a threshold mid-year, as analysed, the current period’s rate does not change: there is no mechanism to adjust earlier quarters’ provisional payments, because quarterly rates rest on the same preceding-period revenue basis as the annual finalisation. What the enterprise must do is on the forecasting side: as soon as current-year revenue looks likely to close above VND 50 billion (or fall below VND 3 billion), the tax team should update the next period’s rate forecast and notify financial planning, to avoid cash-flow surprises when the new tier applies. And because the basis is finalised “total revenue”, any adjustment to the preceding period’s revenue (after audit or inspection) can cascade into redetermining the following period’s rate — a linkage to keep in mind when posting retrospective adjustments.
Recommended Actions
- Determine each period’s rate from the closed revenue of the immediately preceding period: ≤VND 3 billion → 15%; above 3 to 50 billion → 17%; above 50 billion → 20%; keep this determination table in the finalisation file.
- Check the Article 10 exclusion before applying 15%/17%: is the enterprise a subsidiary or associated with an enterprise exceeding the revenue thresholds?
- Aggregate revenue across the whole legal person (including dependent units) when testing the thresholds; do not carve branch revenue out of the rate basis.
- Forecast the next period’s tier as soon as current-year revenue swings strongly across a threshold; and assess the impact of any prior-period revenue adjustment on the following period’s rate.
Frequently Asked Questions
An enterprise whose revenue fluctuates around the VND 3 billion and 50 billion thresholds — does it pay 15%, 17% or 20%?
By the immediately preceding year’s revenue, not the current year’s: total revenue of the preceding year not exceeding VND 3 billion gives 15%; above VND 3 billion to VND 50 billion gives 17%; above VND 50 billion gives 20% — under Article 10 of the Law on Corporate Income Tax 67/2025/QH15. An enterprise fluctuating around the thresholds changes tier in the period after the revenue is finalised, not mid-year.
Which period’s revenue is the basis for the tiered rate, and does it include revenue of dependent units?
The basis is the total revenue of the immediately preceding tax period of the enterprise itself (the taxpayer legal person), determined under Decree 320/2025/ND-CP guidance. Revenue of dependent-accounting units (branches, plants) is aggregated because they are not separate legal persons. Note the Article 10 exclusion: an enterprise that is a subsidiary of, or associated with, an enterprise exceeding the revenue thresholds may not apply the 15% or 17% rates.
In its first year with no prior-period revenue, which rate does a newly established enterprise apply?
A newly established enterprise without an immediately preceding tax period has its rate determined by the actual revenue of its first tax period at annual finalisation under Decree 320/2025/ND-CP guidance (provisional payments during the year on estimates, settled at finalisation). A new enterprise within the exclusion — a subsidiary of an enterprise exceeding the revenue thresholds or with the corresponding association — applies the standard 20% rate from the first period.
If revenue crosses a threshold mid-year, from which period does the rate change, and must earlier provisional payments be adjusted?
It does not change mid-year, and earlier quarters’ provisional payments are not adjusted. A tax period’s rate is fixed from the start of the period by the immediately preceding period’s revenue (Article 10 of the Law on Corporate Income Tax 67/2025/QH15); revenue crossing a threshold in the current year only moves the enterprise to another tier from the next tax period. The enterprise should update its tax and cash-flow forecast for the next period as soon as this year’s revenue is seen to close in a different tier.
This article has been quality-reviewed by the FLAW AI Legal Council
