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Loss Carryforward for 5 Consecutive Years: CIT Rules

3 min readFLAT LAW FIRM
Minh họa quy định chuyển lỗ 5 năm liên tiếp trong thuế thu nhập doanh nghiệp 2026

Loss Carryforward for 5 Consecutive Years: Rules Under the CIT Law 2025

A loss this year — can it offset next year's profits, and for how long? Every chief accountant asks this, and the answer sits in Article 16 of the Corporate Income Tax Law 2025 (67/2025/QH15, effective 01/10/2025): losses are carried forward entirely and continuously, for no more than 5 years from the year following the loss year.

This guide covers the carryforward rules applying in 2026, including Article 7 of Decree 320/2025/ND-CP (effective 15/12/2025).

Contents

1. Carryforward principles

Article 16 of the CIT Law 2025 sets three core principles:

  1. Entire: losses are carried forward in full against taxable income of following years — no discretionary slicing for tax planning beyond the statutory frame;
  2. Continuous: carryforward runs continuously year to year — no skipping then resuming;
  3. Max 5 years: counted from the year following the loss year.

These replace and clarify prior rules — apply them now for the 2025 CIT finalization (done in 2026).

2. Counting the 5 years

Example: losses arise in 2025.

  • Loss year: 2025;
  • Carryforward window: 5 years from the following year — i.e., 2026, 2027, 2028, 2029, 2030;
  • After 2030, any unabsorbed loss expires.

Crucially, the 5-year clock keeps running even in years with no profit to absorb. There is no pausing.

3. Which years absorb losses?

  • Profitable years: may absorb prior-year losses within the 5-year window, continuously;
  • Further loss years: nothing to absorb against, but the new loss opens its own 5-year cycle;
  • No carryback: Vietnamese law permits forward carry only — prior years cannot be restated.

Enterprises with consecutive loss years need a loss-tracking schedule per loss year — each year's loss is a separate "batch" with its own 5-year clock.

4. Losses from incentivized activities

The most-missed point. The rule: losses from tax-incentivized activities may only offset income of those incentivized activities — not regular business income (and vice versa, per specific rules).

Practical consequence: enterprises with both incentivized and ordinary activities must account and track losses separately per activity from the start. Merging first and splitting at finalization invites disallowance on inspection.

5. Dossier and tracking

Carryforward is documented through a loss-carryforward appendix to the annual CIT finalization return, declaring:

  • Losses per year of origin;
  • Amounts already carried;
  • Remaining carryforward.

Tax authorities verify continuity and the 5-year limit on inspection. Keep an internal loss schedule reconciled with filed appendices — the first document inspectors ask for.

6. Common mistakes

  1. Miscounting the 5 years — from the loss year instead of the following year, losing one year;
  2. Breaking continuity — a profitable year "forgotten," then trying to resume later;
  3. Cross-offsetting incentivized/non-incentivized losses;
  4. No tracking schedule — reconstructing 5 years of data only when inspected;
  5. Ignoring the new law — applying pre-2025 rules to the 2025 finalization.

FAQ

Full 5 Q&As (5-year limit, absorbing years, carryback, incentivized losses, dossier) in frontmatter `faq_items`.

When to seek tax counsel

When you need: multi-year, multi-activity loss schedules; pre-inspection continuity reviews; loss handling on mergers/divisions; or applying the new rules to the 2025 finalization. Contact FLAT Law Firm — hotline 0988424851.

  • Corporate Income Tax Law 2025 (67/2025/QH15), effective 01/10/2025 — Art. 16 (loss carryforward: entire, continuous, max 5 years from year after loss year). Independently cross-checked 28/9/2026.
  • Decree 320/2025/ND-CP, effective 15/12/2025 — Art. 7 carryforward guidance. Independently cross-checked 28/9/2026.