Business Tax in Vietnam: Compliance, Corporate Rates, and Investment Incentives

Vietnam has rapidly emerged as one of Asia’s most attractive destinations for business and investment. Known for its vibrant economy, strategic location, and pro-growth policies, the country offers significant potential for both local and foreign enterprises. However, understanding business tax in Vietnam is crucial for maintaining compliance, optimizing profits, and ensuring long-term success.

Whether you’re an entrepreneur planning to launch a company or a global investor expanding into Southeast Asia, this comprehensive guide will help you navigate Vietnam’s tax system, including corporate income tax, value-added tax, and business license tax, with clarity and confidence.

Understanding Business Tax in Vietnam Matters

Taxation is one of the elements that has the greatest influence on business decision-making. The Vietnamese tax system has been set up in such a way as to not only ensure the collection of revenues for the government but also provide attractive incentives for the growth of the economy. By acquiring a good knowledge of the corporate tax rate in Vietnam and conforming to the requirements, business owners can reduce the risks of breaking the law and increase cash flow efficiency.

In general, foreign investors need to be very careful when it comes to tax planning, even before the stage of incorporation. Disregarding local tax laws may lead to punishments, loss of good public image, and difficulties in sending money back home.

Therefore, efficient tax management goes beyond mere tax payment; it entails profit maximization, transparency, and credibility gaining in the Vietnamese market, which is on the rise.

Why does Business Tax in Vietnam Matter?

Overview of the Business Tax Structure in Vietnam

Vietnam’s tax system is governed by the Ministry of Finance and administered through the General Department of Taxation (GDT). The main types of business tax in Vietnam include:

1. Corporate Income Tax (CIT)
2. Value Added Tax (VAT)
3. Business License Tax (BLT)
4. Foreign Contractor Tax (FCT)
5. Personal Income Tax (PIT) for employees
6. Import and Export Duties (where applicable)

Among these, corporate income tax, value-added tax, and business license tax are the three key obligations every company must understand.

Corporate Income Tax in Vietnam (CIT)

Corporate income tax in Vietnam is levied on the profits of companies operating within the country. It applies to both domestic and foreign entities, including subsidiaries, branches, and representative offices that generate income in Vietnam.

As of 2025, the corporate income tax rate in Vietnam remains at 20% for most businesses, except for oil, gas, and certain natural resource projects, which are subject to higher rates ranging from 32% to 50%. However, preferential rates may apply depending on the sector, location, or investment incentives:

• 10% CIT rate – Applied to high-tech industries, renewable energy projects, education, healthcare, and R&D initiatives for a specified period.
• 15% CIT rate – May apply in specific cases under special investment projects as approved by the Government, though it is less common than the 10% and 17% preferential rates.
• 17% CIT rate – Granted to enterprises in industrial zones or sectors prioritized by the government.

These incentives aim to attract investment into Vietnam’s key development areas, supporting innovation and sustainability.

Taxable Income

Taxable income is calculated based on total revenue minus deductible expenses, losses carried forward, and tax incentives. Deductible expenses must meet three conditions:

1. They are related to business operations.
2. They are supported by proper invoices and documentation.
3. Payments above VND 20 million must be made via bank transfer.

Loss Carry-Forward

Enterprises can carry forward losses for up to five consecutive years to offset future taxable income. However, loss carry-back (offsetting previous years’ profits) is not allowed.

CIT Filing and Payment

• Annual filing deadline: Within 90 days after the fiscal year ends.
• Quarterly tax payments: Companies must make provisional payments based on estimated income, ensuring that the total paid during the year equals at least 80% of the final annual tax to avoid late payment interest.

Failure to comply with deadlines can result in interest charges and administrative penalties.

Corporate income tax in Vietnam is levied on the profits of companies

Value Added Tax in Vietnam (VAT)

Value-added tax in Vietnam is a consumption tax applied to goods and services used for production, business, or consumption. Businesses act as tax collectors on behalf of the government, adding VAT to the price of goods or services and remitting it to tax authorities.

VAT Rates in Vietnam

As of 2025, the following VAT rates apply:

• 10% Standard Rate – Applies to most goods and services.
• 5% Reduced Rate – Applies to essential goods like food, clean water, medicine, and educational supplies.
• 0% Rate – Applied to exported goods and services, international transportation, and certain software services.

VAT Registration and Filing

All companies conducting taxable activities must register for VAT with their local tax authority under the General Department of Taxation. Businesses with annual revenue below the statutory threshold may use a simplified calculation method, but most companies use the credit-invoice method.

Filing deadlines:

• Monthly or quarterly VAT returns, depending on company size and revenue.
• Electronic filing is mandatory for most businesses.

VAT Deductions and Refunds

Input VAT (VAT paid on purchases) can be credited against output VAT (VAT collected on sales). If input VAT exceeds output VAT, the company can claim a refund, common for exporters or large infrastructure projects.

Business License Tax in Vietnam (BLT)

The business license tax in Vietnam (also called the annual business registration fee) is a fixed amount payable by all businesses, including foreign-invested enterprises. It’s essentially a flat fee that reflects a company’s registered capital level.

Business License Tax Rates

The current business license tax in Vietnam (2025) is as follows:

Newly established businesses are exempt from paying business license tax in their first year of operation.

Payment Schedule

• Deadline: January 30 of each calendar year.
  
  
• Payments are made electronically through the eTax system or authorized banks, rather than directly at the tax office.

Failure to pay on time may result in fines and late payment interest.

The business license tax in Vietnam is a fixed amount payable by all businesses

Other Business Taxes and Contributions

1. Foreign Contractor Tax (FCT)

Applicable to payments made to foreign entities providing goods or services in Vietnam without a permanent establishment. FCT combines elements of VAT and CIT.

2. Import and Export Duties

Applied to goods entering or leaving Vietnam. Exported goods are often VAT-exempt, while imported items may face duties based on product classification.

3. Personal Income Tax (PIT)

It is the responsibility of the employers to deduct and send the PIT that is due to the employees. The rates are between 5% and 35% based on the income brackets.

4. Social Insurance Contributions

Both employers and employees are required to make contributions to the respective social, health, and unemployment insurance ‍‌‍‍‌funds.

Digital Transformation and E-Tax Filing in Vietnam

Vietnam is embracing digital transformation in tax administration. The eTax (Etax.GDT.gov.vn) platform now allows businesses to:

• File returns and make payments online
• Manage tax records digitally
• Receive official tax notifications electronically

This move toward digital governance reduces paperwork, improves transparency, and enhances ease of doing business.

Tax Incentives for Foreign Investors in Vietnam

The government offers multiple tax incentives to attract investment in key sectors such as:

• High-tech industries and renewable energy
• Education and healthcare
• Infrastructure development
• Software and IT services

Incentives may include:

• Reduced corporate income tax rates for up to 15 years
• Exemption from business license tax is granted only for the first year of business operation
• CIT holidays (tax-free for 2–4 years, followed by 50% reductions)

These incentives make Vietnam one of Asia’s most attractive destinations for business expansion.

The government offers multiple tax incentives to foreign investors

Challenges and Common Tax Issues

While Vietnam has a tax environment that is generally attractive to investors, there are still some difficulties:

• Frequent Regulation Changes: Tax legislations are changed on a regular basis, thus it is necessary to keep track of them all the time.
• Interpretation Differences: Sometimes local tax authorities ill decide and implement the rules differently.
• Language Barriers: Most of the official tax documents are written in Vietnamese.
• Transfer Pricing Compliance: Multinational enterprises are required to keep transfer pricing documentation for related-party transactions.

It is advisable that companies engage the services of licensed accountants and corporate service providers who are knowledgeable about local tax laws in order to lessen these ‍‌‍‍‌risks.

Example: Calculating Corporate Tax in Vietnam

Let’s consider an example for clarity:

• Annual revenue: VND 10 billion
  
  
• Deductible expenses: VND 7 billion
  
  
• Taxable income: VND 3 billion

With a corporate income tax rate in Vietnam of 20%, the payable tax would be:

VND 3,000,000,000 × 20% = VND 600,000,000

If your business qualifies for a reduced rate (e.g., 10%), your tax liability would drop to VND 300,000,000.

Why Professional Tax Assistance Matters?

For both local and foreign enterprises, managing business tax in Vietnam requires technical understanding and precise compliance. Errors in tax filings can lead to costly fines, audits, or even license suspension.

Engaging professional firms like OneIBC VietNam ensures:

• Accurate tax registration and reporting
• Efficient corporate tax planning
• Claiming of available tax incentives
• Full compliance with local laws and accounting standards

With expert guidance, businesses can focus on growth while maintaining financial transparency.

Conclusion: Navigating Business Tax in Vietnam Successfully

Knowing the business tax system in Vietnam is crucial to operate in a trouble-free and profit-making way. Besides corporate income tax, value-added tax and business license tax are part of the financial and compliance management system.

Considering corporate tax rate in Vietnam is quite competitive, the government is providing incentives while digital reforms are ongoing, the country is offering one of the most attractive tax environments in Asia. Whether you are a startup or a multinational company, the changes in the business world of Vietnam will benefit you if you comply with the rules, act efficiently and plan your taxes strategically.

For seamless incorporation, tax registration, and advisory support, OneIBC VietNam provides comprehensive solutions for entrepreneurs and foreign investors. From optimizing your corporate income tax in Vietnam to ensuring smooth VAT and license filings, our team helps your business grow confidently within Vietnam’s regulatory framework.