The Law on Corporate Income Tax 2025 is expected to create a fair and transparent investment environment, encouraging domestic and foreign enterprises to invest in innovation, green development and digital economic integration.
At the Dialogue Conference with the Korean business community on tax and customs policies and administrative procedures in 2024-2025, the Ministry of Finance introduced many notable new contents of the 2025 Corporate Income Tax Law.
Foreign enterprises doing business through digital platforms must pay taxes in Vietnam.
One of the major changes of the Law is the addition of regulations requiring foreign enterprises providing goods and services in the form of e-commerce and digital platform-based business to pay tax on taxable income arising in Vietnam; the permanent establishment of a foreign enterprise includes the e-commerce platform and digital platform through which the foreign enterprise provides goods and services in Vietnam.
The Law also clarifies how to determine taxable income at home and abroad: other income (other than income from main production and business activities) of enterprises in general, taxable income arising in Vietnam of foreign enterprises (with or without permanent establishments in Vietnam) and overseas income of Vietnamese enterprises; in which it specifically stipulates the obligation to pay additional corporate income tax on overseas income of Vietnamese enterprises according to the global minimum tax mechanism (IIR).
Expanding the list of tax-exempt incomes, encouraging green and innovative development
Regarding tax-exempt income (Article 4), the Law supplements a number of tax-exempt income items to contribute to implementing the Party and State's policies on developing priority industries and occupations, including:
Income from initial carbon credit transfer, initial green bond transfer after issuance; income from green bond interest.
Direct support from the state budget and from the Investment Support Fund established by the Government ; State compensation according to the provisions of law.
Difference due to revaluation of assets for equitization and restructuring of enterprises in which the State holds 100% of charter capital.
Income of public service units from providing public service.
Income from implementing contracts for scientific research, technology development and innovation, and digital transformation.
Funding received from enterprises without any affiliation, domestic and foreign organizations and individuals to be used for scientific research, technology development, innovation and digital transformation.
More flexible regulations on tax calculation period and tax calculation method
Regarding the tax calculation period, determination of taxable income and tax calculation method (Article 5, Article 7, Article 11), amend and supplement the provisions on choosing the tax calculation period according to the calendar year or fiscal year; for foreign enterprises generating income in Vietnam from e-commerce business activities and digital platform-based business activities, the tax calculation period shall be implemented according to the law on tax administration.
Amending and supplementing regulations allowing enterprises to offset profits from real estate transfers, investment project transfers, and transfer of investment project participation rights against losses from production and business activities, except for profits from production and business activities that are enjoying tax incentives.
Specific regulations on the method of calculating tax based on a percentage of revenue for the following subjects: foreign enterprises without a permanent establishment generating income in Vietnam; cooperatives, cooperative unions, public service units and other organizations; enterprises with a total annual revenue of no more than VND 3 billion that can account for revenue but cannot determine expenses and income.
In addition, the Law on Corporate Income Tax 2025 removes the provisions on where to pay corporate income tax to align with the Law on Tax Administration.
More deductions to encourage research investment and emissions reduction
Regarding deductible and non-deductible expenses when determining taxable income for corporate income tax (Article 9), the amended and supplemented Law details a number of expenses that are included in deductible expenses, such as:
Supplement the deductible additional expenses based on the percentage of actual expenses incurred in the tax period related to the enterprise's research and development activities and assign the Government to prescribe the additional expense level, conditions, time and scope of application for this expense.
Supplementing funding for scientific research, technological development and innovation, digital transformation; expenses for scientific research, technological development and innovation, digital transformation in enterprises are deductible expenses when calculating corporate income tax.
Add some other actual expenses that are included in deductible expenses such as: expenses serving the production and business of the enterprise but not corresponding to the revenue generated in the period; expenses supporting the construction of public works, at the same time serving the production and business activities of the enterprise; expenses related to reducing greenhouse gas emissions to neutralize carbon and net zero, reduce environmental pollution, at the same time related to the production and business activities of the enterprise; contributions to funds established under the Prime Minister's decision and Government regulations;...
Details of some non-deductible expenses such as overspending or expenses for activities that are not in accordance with specialized laws.
Add new tax rates to support small and medium enterprises
Regarding corporate income tax rates (Article 10), the Law adds two new tax rates: 15% and 17% applicable to enterprises with total annual revenue of no more than VND 3 billion and from over VND 3 billion to VND 50 billion. These rates aim to reduce the burden on small and micro enterprises, helping them have more resources to expand production and business.
Amending and supplementing regulations on tax rate framework for oil and gas exploration and exploitation activities, and tax rates for exploration and exploitation of rare resources.
Big tax incentives for high technology, innovation and green manufacturing
Regarding corporate income tax incentives (from Article 12 to Article 18), supplement provisions on principles for applying corporate income tax incentives to:
(i) In case another law has provisions on corporate income tax incentives different from the provisions of the Law on Corporate Income Tax, the provisions of the Law on Corporate Income Tax shall apply, except for the Law on the Capital and resolutions stipulating special and specific mechanisms and policies of the National Assembly;
(ii) In case, at the same time, an enterprise satisfies many different tax incentive levels as prescribed by this Law for the same income, it may choose to apply the most favorable tax incentive level.
Detailed regulations on subjects of corporate income tax incentives (industries, occupations, locations and activities eligible for incentives):
Supplementing corporate income tax incentives for: Projects eligible for special investment incentives and support; application of strategic technology; production of network information security products and provision of network information security services; production of key digital technology products and services, production of electronic equipment; research and development, design, production, packaging, testing of semiconductor chip products; construction of artificial intelligence data centers; production of key chemical industrial products and key mechanical products; production of national defense and security and production of industrial mobilization products; investment in technical facilities to support small and medium-sized enterprises and incubators for small and medium-sized enterprises; investment in shared working areas to support innovative start-up small and medium-sized enterprises; production and assembly of automobiles; production of other digital technology products.
In addition, income from other press activities (other than print newspapers), including newspaper advertising, is also subject to a preferential tax rate of 10%.
Eliminate incentives for industries and professions that are overlapping, scattered, have no clearly defined criteria, and are not in accordance with specialized laws such as: refining animal feed, poultry, and aquatic products.
No special incentives are applied to investment projects in industrial parks (investment projects in industrial parks will enjoy tax incentives according to the conditions of industry, profession, and preferential location when the project meets the requirements).
Amending and supplementing the incentive level of investment projects in economic zones not located in tax incentive areas, applying a preferential tax rate of 17% for 10 years, tax exemption for 02 years, and 50% reduction of tax payable for 04 years (maintaining the current tax incentive level for investment projects in economic zones located in tax incentive areas).
Amendments and supplements to the time for starting to apply preferential tax rates, tax exemptions and tax reductions for high-tech enterprises, high-tech agricultural enterprises, science and technology enterprises, high-tech application projects, and supporting industrial product manufacturing projects; and incentive criteria and application of tax incentives for expansion investment projects.
Supplementing regulations on corporate income tax exemption and reduction for a number of subjects:
(i) Reduce 50% of tax payable on income of public service units from providing public service in areas with difficult socio-economic conditions;
(ii) Tax exemption for 02 consecutive years for enterprises converted from business households;
(iii) Tax exemption for public scientific and technological organizations and public higher education institutions operating on a non-profit basis.
Increase the level of deduction for the Science and Technology Development Fund of enterprises from the current level of 10% to 20% of annual taxable income; amend and supplement regulations on interest rates applied to unused portions of the Fund in accordance with the actual interest rates of bonds issued and the management and use of the Fund in cases of merger, consolidation, division, separation, change of ownership, and change of enterprise type.
Supplementing regulations related to conditions for applying corporate income tax incentives:
(i) Cost allocation criteria in cases where income from production and business activities eligible for tax incentives cannot be separately accounted for;
(ii) Excluding incentives for income from production and trading of online electronic games; income from production and trading of goods and services subject to special consumption tax (except for projects on production and assembly of automobiles, airplanes, helicopters, gliders, yachts, and petrochemical refining).
With many important innovations, the Law on Corporate Income Tax 2025 is expected to create a fair and transparent investment environment, encouraging domestic and foreign enterprises to invest in innovation, green development and digital economic integration.
Chinhphu.vn
Source: https://baochinhphu.vn/luat-thue-moi-minh-bach-cong-bang-khuyen-khich-dau-tu-cong-nghe-cao-10225101912440247.htm
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