A clear understanding of the current legal regulations governing the method of calculating Corporate Income Tax (CIT) enables enterprises to proactively plan their finances, lawfully optimize costs, and minimize risks of tax law violations. The following article provides a detailed analysis of the current regulations on the tax base for the calculation of Corporate Income Tax to assist enterprises in applying such regulations accurately and effectively.

I. Importance of the current method of calculating Corporate Income Tax

Corporate Income Tax is one of the principal sources of State budget revenue and plays an important role in guiding enterprises’ production and business activities toward sustainable development goals. Accurate and adequate calculation of Corporate Income Tax not only ensures compliance with legal obligations but also directly affects profits, cash flow, and an enterprise’s competitiveness in the market.

In the context of international economic integration, legal regulations on the calculation of Corporate Income Tax are becoming increasingly stringent, transparent, and aligned with international standards. Enterprises that thoroughly understand the principles and methods of tax calculation will be able to:

  • Proactively plan finances: Determining tax liabilities to forecast budgets and allocate resources efficiently.
  • Lawfully optimize costs: Maximizing deductible expenses and tax incentives to reduce financial burdens.
  • Minimize legal risks: Avoiding errors that may result in tax arrears, late payment penalties, or administrative sanctions for tax violations.

Accordingly, understanding and correctly applying current legal regulations on the calculation of Corporate Income Tax is an essential requirement for all enterprises, particularly in today’s competitive and fluctuating business market. 

II. Legal provisions relating to the method of calculating Corporate Income Tax

1. What is the method of calculating Corporate Income Tax?

Corporate Income Tax is a direct tax imposed directly on the taxable income of enterprises, including income derived from the production and trading of goods and services, as well as other income as prescribed by law, after deducting reasonable and lawful expenses related to such income.

The method of calculating Corporate Income Tax refers to the approach used to determine the amount of tax payable by an enterprise to the State based on taxable income during a tax period. The calculation of Corporate Income Tax must comply with the principles, formulas, and bases prescribed by law.

2. Legal basis for calculating Corporate Income Tax under the Law on Corporate Income Tax

Pursuant to Articles 6 and 7 of the Corporate Income Tax Law 2025 (effective from October 01, 2025), the basis for calculating Corporate Income Tax is as follows:

The tax base consists of taxable income and the tax rate.

In which:

Taxable income for the tax period is determined as follows:

  • Taxable income = Taxable revenue − Tax-exempt income + Losses carried forward in accordance with regulations

Taxable revenue is determined as follows:

  • Taxable revenue = Revenue − Deductible expenses + Other income (including income earned outside Vietnam)

Revenue for determining taxable revenue includes the total proceeds from the sale of goods, processing fees, and service provision fees, including subsidies, surcharges, and additional charges to which the enterprise is entitled, regardless of whether payment has been received.

Deductible expenses for determining taxable revenue are prescribed in Article 9 of the Corporate Income Tax Law 2025.

The standard Corporate Income Tax rate is 20%, except for cases eligible for tax incentives. A tax rate of 15% applies to enterprises with total annual revenue not exceeding 3 billion VND, while a tax rate of 17% applies to enterprises with total annual revenue exceeding 3 billion VND but not exceeding 50 billion VND. 

3. Latest method of calculating Corporate Income Tax

The latest method for calculating Corporate Income Tax is prescribed in Article 11 of the Corporate Income Tax Law 2025, as follows:

The amount of Corporate Income Tax payable in a tax period is determined by multiplying taxable income by the applicable tax rate, except where the Government provides that Corporate Income Tax shall be calculated as a percentage of revenue in the following cases:

  • Enterprises specified at Points c and d, Clause 2, Article 2 of this Law, regarding entities subject to tax declaration and payment obligations, the timing, and the method of determining revenue generating taxable revenue in Vietnam;
  • Enterprises with total annual revenue not exceeding 3 billion VND as stipulated in Clause 2, Article 10 of this Law, in cases where revenue can be determined but costs and income from production and business activities cannot be determined;
  • Cooperatives, cooperative unions, public service units, and other organizations specified at Points c, d, and đ, Clause 1, Article 2 of this Law, that conduct production and business activities generating income subject to Corporate Income Tax (excluding tax-exempt income under Article 4 of this Law), where such entities can determine revenue but cannot determine costs and income from production and business activities.

III. Questions regarding corporate income tax calculation

1. Is a newly established enterprise trading in household equipment required to submit Corporate Income Tax returns and pay Corporate Income Tax if no revenue has been generated?

Pursuant to Article 2 of the Corporate Income Tax Law 2025, Corporate Income Tax taxpayers are organizations engaged in the production and trading of goods and services that generate taxable income as prescribed by law. Accordingly, if an enterprise does not generate revenue or taxable income, it is not required to make provisional Corporate Income Tax payments.

However, the enterprise is still required to submit an annual Corporate Income Tax finalization return to report its financial status and confirm that no tax liability has arisen.

2. Does a VAT refund affect the calculation of Corporate Income Tax?

Pursuant to Point l, Clause 2, Article 9 of the Corporate Income Tax Law 2025, from October 01, 2025, input VAT that has not been fully deducted and is not eligible for refund may still be included as a deductible expense when determining taxable income for Corporate Income Tax purposes.

Input VAT that has been included as a deductible expense for Corporate Income Tax may not be deducted against output VAT.

Accordingly, VAT refunds do not alter the determination of reasonable expenses for Corporate Income Tax calculation. However, if input VAT has already been included as a deductible expense, it may not be reused for deducting output VAT to avoid double counting the same tax amount.

3. Is the method for quarterly provisional Corporate Income Tax payment different from the year-end finalization?

The method for calculating quarterly provisional Corporate Income Tax and year-end finalization applies the same formula:

  • Provisional Corporate Income Tax payable = Taxable income × Corporate Income Tax rate

However, the differences are in the data used:

  • Quarterly provisional payment is based on estimated income and actual expenses incurred up to the provisional calculation time.
  • Year-end finalization is based on actual figures for the entire year, after adjustments for deductible and non-deductible expenses and loss carryforward.

4. Are there lawful methods to optimize costs in order to reduce Corporate Income Tax payable?

Enterprises may lawfully reduce their Corporate Income Tax burden by:

  • Fully and properly recording deductible expenses;
  • Taking advantage of Corporate Income Tax incentives (preferential tax rates, tax exemptions, or reductions) when eligible;
  • Planning asset purchases and depreciation of fixed assets in a reasonable manner;
  • Properly carrying forward losses in accordance with regulations to reduce taxable income.

5. Is Corporate Income Tax payable on dividends received from another company?

Pursuant to Clause 7, Article 4 of the Corporate Income Tax Law 2025, income distributed from capital contributions, share purchases, joint ventures, or associations with domestic enterprises, after such income has been subject to Corporate Income Tax in accordance with this Law, including cases where the distributing entity enjoys CIT incentives, shall be exempt from Corporate Income Tax.

Accordingly, enterprises are not required to pay Corporate Income Tax on dividends received from another company.

IV. Legal advisory services relating to corporate income tax calculation

NPLaw provides comprehensive legal advisory services to assist enterprises in complying with the law and optimizing Corporate Income Tax obligations, including:

  • Advisory on Corporate Income Tax calculation in accordance with the latest regulations;
  • Review of accounting records and supporting documents to ensure reasonably deductible expenses are compliant;
  • Assistance in preparing and submitting tax returns (provisional and year-end finalization);
  • Advisory on tax incentive policies applicable to investment projects, business sectors, or preferential areas;
  • Representation in working with tax authorities during explanations, inspections, or audits.

Should you require consultation on Corporate Income Tax calculation, please contact NPLaw for direct advice and guidance from our professional team.