The below article provides an in-depth analysis of the current state of corporate income tax (CIT) in Vietnam, clarifies the applicable legal provisions, and introduces essential legal consultancy services to help businesses optimize their tax obligations and avoid legal risks.

I. Current situation of evasion of corporate income tax 

At present, corporate income tax evasion is relatively common, often conducted through sophisticated methods such as: maintaining two sets of accounting books (one for internal use and one for tax declaration), creating fictitious purchase transactions, underreporting sales revenue, engaging in transfer pricing among related entities, overstating expenses, omitting revenues, or using illegal invoices and documents to legitimize costs.

These practices result in significant losses to the State budget and undermine a healthy business environment.

II. Legal provisions on corporate income tax

To prevent and address tax evasion, Vietnam’s legal framework has clearly defined the principles, tax rates, and calculation methods for corporate income tax.

1. Definition of corporate income tax

According to Article 1 of the Law on Corporate Income Tax 2025, corporate income tax is a direct tax imposed on taxable income earned by organizations engaged in the production and trading of goods or services as prescribed by law.

2. Applicable corporate income tax rates

To ensure fairness and suitability for different business sectors, the law provides various tax rates. Under Article 10 of the Law on Corporate Income Tax 2025, the applicable rates are:

  • Standard tax rate: 20%
  • Enterprises with annual revenue not exceeding 3 billion VND: 15%
  • Enterprises with annual revenue from over 3 billion VND to 50 billion VND: 17%
  • Petroleum exploration and exploitation: 25%–50%
  • Exploration and mining of rare resources: 50% (or 40% in special cases)

3. Method for calculating corporate income tax

To accurately determine the payable tax, businesses must apply the following formula as provided in Articles 6, 7, and 11 of the Law on Corporate Income Tax 2025:

  • Tax base: Taxable income and applicable tax rate
  • Taxable income = Taxable revenue – Tax-exempt income + Carried-forward losses (as regulated)
  • Taxable revenue = Total revenue – Deductible expenses + Other income (including overseas income)
  • Corporate income tax payable = Taxable income × Tax rate

If a business cannot determine its costs or income, the Government shall stipulate the tax amount to be paid based on a percentage of revenue.

III. Questions regarding corporate income tax

1. Are newly established businesses eligible for corporate income tax exemptions or reductions?

Many new businesses are entitled to incentives to encourage entrepreneurship and investment. Under Article 15 of the Law on Corporate Income Tax 2025:

  • Newly established businesses converted from household businesses are exempt from Corporate Income Tax for two consecutive years from the first year they generate taxable income.
  • Businesses newly established in investment-incentive sectors or localities may enjoy preferential tax rates and exemptions or reductions in accordance with Articles 12–14 of the Law.

2. Which expenses are non-deductible when calculating taxable income?

To ensure transparency and prevent tax evasion, Article 9 of the Law on Corporate Income Tax 2025 specifies that the following expenses are non-deductible:

  • Expenses lacking valid invoices, documents, or non-cash payment proof (unless otherwise permitted);
  • Fines for administrative violations;
  • Expenses covered by other funding sources;
  • Excess expenditures exceeding the limits prescribed by the Government;
  • Salaries and wages of private business owners, single-member LLC owners, or founders not directly managing operations; unpaid or undocumented wages;
  • Loan interest corresponding to unpaid charter capital, or interest exceeding prescribed limits;
  • Deducted VAT, Corporate Income Tax, and other taxes, fees, or charges not eligible as expenses;
  • Expenses unrelated to taxable revenue (except for certain cases);
  • Improper sponsorships;
  • Other expenses not compliant with specific legal requirements.

3. How is corporate income tax calculated for real estate transfer activities?

Given its unique nature, real estate transfer is subject to specific rules under Article 7 of the Law on Corporate Income Tax 2025:

  • Income from real estate transfer must be separately determined to declare and submit taxes and cannot be offset against other business profits or losses. Accordingly,
  • Taxable income = Revenue from real estate transfer – Cost of transferred real estate – Related expenses;
  • Applicable tax rate: 20% (unless otherwise stipulated);
  • Businesses must file and pay Corporate Income Tax separately for such an activity.

4. What are the deadlines for corporate income tax declaration and payment?

Timely filing and payment of corporate income tax are mandatory to avoid sanctions:

  • Annual finalization: No later than the last day of the third month following the end of the calendar or fiscal year;
  • Declaration upon dissolution, bankruptcy, or termination: Within 45 days from the date of the decision;
  • Quarterly provisional payment: No later than the 30th day of the first month of the following quarter.

5. Must loss-making businesses still declare corporate income tax?

Even if a business incurs continuous losses, it must still file its annual corporate income tax declaration. Under Article 7 of the Law on Corporate Income Tax 2025, losses may be carried forward to subsequent years to offset taxable income, thus reducing future tax burdens.

IV. Legal consultancy services related to corporate income tax

Pursuant to Article 104 of the Law on Tax Administration No. 38/2019/QH14 (effective from July 1, 2020), licensed tax agents and organizations providing tax procedure services are authorized to offer legal consultancy on tax matters, including tax registration, declaration, payment, finalization, exemption, reduction, refund, and representation in tax-related proceedings.

Common legal services include:

  • Legal advisory on corporate income tax regulations: Helping businesses understand taxpayers’ obligations, taxable income, exempted income, and preferential policies.
  • Support in tax declaration and finalization: Advising on documents, reviewing accounting data to minimize risks.
  • Consultancy on tax incentives and exemptions: Assisting businesses in applying tax benefits related to investment, technology innovation, and operations in incentivized areas.
  • Dispute and complaint resolution: Drafting complaints or administrative petitions against improper tax collection or sanctions. 
  • Tax compliance training: Providing internal training for accounting and legal departments on updated tax policies.

Legal consultancy services on corporate income tax not only ensure compliance but also help businesses prevent risks and optimize tax efficiency. With the professional support of NPLaw, enterprises can confidently focus on sustainable business development.