For almost a decade, enterprises looked up area incentives in Decree 218/2013/ND-CP. The 2025 Law on Corporate Income Tax together with Decree 320/2025/ND-CP has replaced that entire framework: the area list is reissued on the post-merger administrative map, preferential rate structures are rewritten in the law itself, and a transition mechanism decides the fate of existing projects’ incentives. This article compares the two frameworks and guides enterprises to self-check their project areas.
Legal Basis
- Articles 12 and 18 of the Law on Corporate Income Tax 67/2025/QH15: preferential rates and exemption/reduction durations are prescribed directly in the law along two axes — area (specially difficult, difficult) and sector — replacing the scattered approach of the old law and its guiding decree.
- Decree 320/2025/ND-CP guides the 2025 Law on Corporate Income Tax, replacing the guidance framework of Decree 218/2013/ND-CP; the list of areas with difficult and specially difficult socio-economic conditions is issued under the new framework, updated to the administrative units after the 2025 reorganisation.
- Article 20 of the Law on Corporate Income Tax 67/2025/QH15 (transition): an enterprise whose project is enjoying incentives under the earlier rules continues for the remaining period — including where the new area list no longer records the project’s area.
- Selection principle under the 2025 CIT Law: a project simultaneously meeting area-based and sector-based incentive conditions at different levels applies the highest (most favourable) level among those met; the two packages are not accumulated.
Analysis in Practice
The biggest structural difference between the frameworks is where the area list lives. Under Decree 218/2013/ND-CP, the lists of difficult and specially difficult areas were issued by district and town on the old administrative map and survived through many piecemeal amendments. Under the 2025 Law framework, the list is reissued in sync with the post-reorganisation administrative units (new provinces and communes/wards), while the law itself fixes the preferential rates attached to each area group in Article 12 and the exemption/reduction durations in Article 18. The consequence: the same plot of land can see its “area label” move in either direction — an area formerly difficult may drop off after merging into a more developed centre; a remote area of a former province may be reassessed in the new list.
For a project granted incentives under the old list whose area is absent from the new one, the treatment is preserving transition, not a wipe-out: Article 20 of the 2025 CIT Law lets the fixed incentives continue for the remaining period. The condition for invoking transition is that the original file proves the project sat in an incentivised area at grant (investment registration certificate, approval decision recording area and incentive level; an extract of the old list at that time). Conversely, a project newly established after the new list takes effect, and expansion investment seeking its own incentives, are assessed entirely under the new list — even on the very land of an old project enjoying transition next door.
On the relationship between area and sector incentives: the two axes do not stack into a “double” package. Under the 2025 Law’s principle, a project meeting both axes at different levels applies the highest level among those it qualifies for — for example, a project in an incentivised sector located in a difficult area chooses the more favourable of the sector level and the area level, with the corresponding exemption/reduction duration of the chosen level. The enterprise should model both options before self-determining incentives in its filings, because the difference usually lies not only in the rate but also in the number of exemption/reduction years and the start point.
A self-check of the project area takes four steps. Step one: identify the project area under the current administrative units — the commune/ward and province after merger where the project sits. Step two: match that commune/ward against the list of difficult and specially difficult areas issued under the Decree 320/2025/ND-CP framework (and the investment incentive area list under Decree 31/2021/ND-CP for investment incentives generally). Step three: reconcile with the incentive conditions recorded in the investment registration certificate to separate the preserved transition portion from the portion governed by the new list. Step four: if the match is unclear (the area was split in the commune merger), obtain written confirmation from the investment registration authority or the managing tax authority before filing at an incentive level.
Recommended Actions
- Look the project area up by its new commune/ward in the difficult-area list under the Decree 320/2025 framework; file the list extract with the lookup date in the project tax file.
- Split the incentive file into two layers: incentives granted under the old list (preserved under Article 20 of the 2025 CIT Law) and incentives for new/expansion investment (under the current list).
- Model both incentive options (by area and by sector) for projects meeting both axes, choose the most favourable level, and record the basis of choice in the self-determination file.
- Where an area was split by the commune/ward merger: obtain written confirmation of the project area from the investment registration authority before applying a new incentive level.
Frequently Asked Questions
How does the CIT incentive area list under the 2025 Law change compared with Decree 218/2013?
Three main changes: first, the guidance framework moves from Decree 218/2013/ND-CP (under the old CIT Law) to Decree 320/2025/ND-CP guiding the 2025 Law; second, the lists of difficult and specially difficult areas are reissued on the post-2025-reorganisation administrative units (new communes/wards and provinces) instead of the old district map; third, preferential rates and exemption/reduction durations by area are prescribed directly in Articles 12 and 18 of the Law on Corporate Income Tax 67/2025/QH15.
What happens to a project in an area that was incentivised under the old list but is absent from the new one?
The project’s incentives are preserved under transition: Article 20 of the Law on Corporate Income Tax 67/2025/QH15 lets the enterprise continue enjoying the incentives fixed under the earlier rules for the remaining period, even if the new list no longer records the project area. The condition is that the original file (investment registration certificate, approval decision, list extract at the time of grant) proves the project was in an incentivised area when granted. New projects and later expansions are assessed under the new list.
Are area-based and sector-based incentives combined, or must one be chosen, under the new framework?
They are not accumulated. Under the 2025 CIT Law’s principle, a project simultaneously qualifying for area-based and sector-based incentives at different levels applies the highest (most favourable) level among those met, with that level’s corresponding exemption/reduction duration. The enterprise should model both options — the difference lies in the rate as well as the exemption/reduction years — before self-determining incentives when filing.
How can an enterprise check which incentive group its project area falls into under the new list?
In four steps: identify the project area by current commune/ward and province after the merger; match it against the list of areas with difficult and specially difficult socio-economic conditions issued under the Decree 320/2025/ND-CP framework; reconcile with the incentive conditions recorded in the investment registration certificate to separate the transition portion from the new-list portion; and seek confirmation from the investment registration authority or tax authority if the area was split or the result is unclear.
This article has been quality-reviewed by the FLAW AI Legal Council
