Subjects subject to corporate income tax are organizations that conduct production and business activities and generate profits, and are subject to financial obligations according to the provisions of Vietnamese law. According to the General Department of Taxation, in 2024, more than 620,000 enterprises declared and paid corporate income tax, contributing about 120,000 billion VND to the state budget (General Department of Taxation, 2024). Determining the correct taxable entity helps businesses comply with the law, calculate taxes accurately and avoid inspection risks.
For example, a medium-sized export enterprise in Ho Chi Minh City has saved more than 1 billion VND/year by correctly applying the regulations on tax-exempt income under the new policy in 2025 (Instructions for corporate income tax settlement, Hanoi Tax Department, 2024). This article will provide a comprehensive overview of corporate income tax, including taxable objects, tax bases, calculation methods, and important updates according to the revised law in 2025.
Overview of corporate income tax
Understanding what corporate income tax is and grasping the role of corporate income tax helps corporate income tax payers declare accurately, comply with the law and optimize financial obligations.
This section will provide a comprehensive overview, explaining the nature, subjects of application and socio-economic significance of corporate income tax, thereby serving as a foundation for delving into detailed regulations and methods of tax calculation, declaration and payment for businesses.
What is corporate income tax?
Corporate income tax (CIT) is a direct tax, applied directly to taxable income of organizations producing and trading goods, services or other sources of income in Vietnam. This is a mandatory financial obligation according to the Corporate Income Tax Law No. 14/2008/QH12 (amended and supplemented).
Taxable income includes profits from production and business activities, that is, the difference between revenue and reasonable expenses arising in the course of business.
There are also other incomes such as capital transfer, real estate, copyright, interest on deposits and other legal incomes. Determining the correct taxable income helps businesses calculate taxes accurately and comply with the law.
The role of corporate income tax
Corporate income tax (CIT) plays an important role in ensuring revenue for the state budget and maintaining stable economic operations. When performing this obligation, CIT subjects contribute directly to public finance, supporting spending in the fields of health, education, infrastructure and social security.
In addition, corporate income tax is also an economic management tool, helping the state monitor production and business activities and evaluate the efficiency of enterprises. Correctly identifying the subjects of corporate income tax and accurately calculating taxable income helps ensure financial transparency, limit the risk of tax evasion and encourage enterprises to comply with the law.
In addition, CIT also encourages businesses to optimize costs, use resources effectively and take advantage of legal tax incentives. Thanks to that, CIT subjects can both fulfill their financial obligations and improve their competitiveness and sustainable development in the market.
Corporate Income Tax Law: Latest Update 2025
The legal system regulating corporate income tax (CIT) in Vietnam is built on the foundation of many important documents, ranging from original laws to guiding decrees and implementing circulars.
Legal documents related to corporate income tax subjects
To understand the regulations on subjects subject to CIT, enterprises need to refer to the relevant legal system, including the original law, guiding decrees and implementing circulars. The table below summarizes important documents, main contents and highlights, helping enterprises easily monitor, correctly apply regulations and optimize tax obligations.
| Legal documents | Main content related to corporate income tax subjects | Highlights / Updates |
| Corporate Income Tax Law No. 14/2008/QH12 | Regulations on subjects subject to corporate income tax, taxable income, tax calculation methods, tax exemption/reduction cases | Legal basis for corporate income tax |
| Law No. 32/2013/QH13 | Amendments to the Law on Corporate Income Tax on tax rates | Adjust the general tax rate from 25% → 22% → 20% |
| Law No. 71/2014/QH13 | Consolidate some tax regulations and add incentives | Simplify procedures, add tax incentives |
| Decree 218/2013/ND-CP | Guidelines for the implementation of the Law on Corporate Income Tax | Clarifying tax-free income, reasonable expenses, carry-forward losses; criteria for small and medium-sized enterprises to apply preferential tax rates |
| Circular 78/2014/TT-BTC | Detailed instructions for Decree 218 | List of non-deductible expenses, how to handle tax-free income, procedure for determining taxable income |
| Circular 80/2021/TT-BTC | Instructions for declaring, paying and refunding corporate income tax | Allow businesses to self-declare quarterly if revenue is <50 billion/year; regulate settlement records and responsibilities of legal representatives |
New points related to corporate income tax subjects in 2025
In 2025, a number of important changes related to corporate income tax subjects have been applied, including:
- Preferential tax rate 15%: Applicable to businesses with revenue under 3 billion VND/year, supporting micro-enterprises to overcome post-pandemic difficulties.
- Expanding the list of preferential industries: Focusing on areas such as digital transformation, high-tech agriculture, green logistics and renewable energy.
- Maximum 5-year loss transfer mechanism: Helps avoid abuse of extending losses or unclear declarations, ensuring transparency and accuracy in tax declarations.
Businesses need to update these changes to correctly identify corporate income tax subjects, declare accurately and optimize financial obligations.
Subjects subject to corporate income tax under current regulations
According to Article 2, Law on Corporate Income Tax No. 14/2008/QH12, the subjects of corporate income tax not only include domestic enterprises but also extend to many forms of organizations that generate income in Vietnam. Correctly identifying this group of subjects is the first step to ensure compliance with tax obligations and avoid risks of being overcharged and administratively sanctioned later.
Below is a summary table of groups of subjects subject to corporate income tax:
| Target group | Detailed description |
| Enterprises established under Vietnamese law | Including limited liability companies, joint stock companies, private enterprises, cooperatives, financial institutions, banks, insurance companies and other types of legal enterprises. |
| Production and business organization in Vietnam | Organizations not registered under the Enterprise Law but having commercial activities that generate income, such as social organizations and charitable funds that have property leasing and profitable investment activities. |
| Foreign enterprises with permanent establishments in Vietnam | Including branches, factories, representative offices, warehouses, construction works if there are income-generating activities in Vietnam. |
| Non-resident foreign organizations with income in Vietnam | Even if there is no permanent establishment, if income arises from providing services, transferring assets, copyrights, etc. in Vietnam, it is still necessary to declare and pay corporate income tax. |
| Other organizations that generate taxable income | Including investment funds, project management boards, and non-governmental organizations if they have income-generating activities in Vietnam, even if they do not operate for profit. |
Agency performing corporate income tax payment procedures
When performing their tax obligations, corporate income tax payers must declare, pay and settle their tax obligations at the competent tax authority. In Vietnam, the main responsible agency is the Tax Department/General Department of Taxation at the provincial or municipal level where the enterprise is headquartered. Determining the correct implementing agency helps enterprises declare taxes accurately, reducing the risk of administrative sanctions.
Specifically, enterprises subject to corporate income tax will submit corporate income tax declarations according to the tax period (quarterly or annually) and make final settlements at the directly managing tax authority. Enterprises with many branches or facilities in many localities need to coordinate with the corresponding tax authorities to ensure full tax declaration and payment.
For entities subject to CIT that are foreign organizations or have specific business models, the tax authority will provide detailed guidance on tax declaration, payment and application of incentives as prescribed. Complying with the correct procedures at the tax authority not only helps businesses fulfill their legal obligations but also optimizes their financial obligations and protects their legitimate economic interests.
Corporate income tax rates applicable from October 1, 2025
To apply Corporate income tax (CIT) in accordance with regulations from October 1, 2025, businesses need to clearly understand the tax rates corresponding to each type and scale of operation. The amended and supplemented Law on Corporate Income Tax in 2025 has specifically prescribed tax rates for regular businesses, small businesses, as well as special preferential industries. Understanding these tax rates helps businesses declare accurately, take advantage of tax incentives and reduce the risk of being charged back. The table below summarizes the corporate income tax rates applicable from October 1, 2025 for businesses' reference.
| Applicable objects | Corporate income tax rate | Note |
| Regular business | 20% | Enterprises not eligible for tax incentives |
| Small businesses with revenue ≤ 3 billion VND/year | 15% | Support for micro-enterprises |
| Small businesses with revenue > 3 billion - ≤ 50 billion VND/year | 17% | According to the regulation, it decreases gradually depending on the scale. |
| Special preferential industries (High technology, education, agriculture, renewable energy, green logistics...) | 10% | Can be exempted for the first 4 years, reduced 50% for the next 9 years |
Basis for calculating corporate income tax
The correct calculation of corporate income tax (CIT) payable depends on two core factors: taxable income and applicable tax rate. Taxable income is the difference between revenue and reasonable expenses, after deducting losses carried forward from previous periods.
Corporate income tax calculation formula
To determine the amount of corporate income tax (CIT) payable, businesses need to calculate taxable income first, based on revenue, reasonable expenses and losses carried forward from previous periods. This ensures that the tax declaration is accurate, complies with the law and takes advantage of losses carried forward from previous years.
Corporate income tax calculation formula:
|
Taxable income = Revenue – Reasonable expenses – Losses carried forward from previous period |
Explain the components:
- Revenue: Includes all revenues from production, business activities of goods, services and other sources of revenue.
- Reasonable expenses: Are actual expenses incurred, with full legal invoices and documents, directly serving production and business activities, and not exceeding the control level according to legal regulations.
- Loss carried forward: Allowed to be deducted for a maximum of 5 consecutive years, starting from the year following the year in which the loss occurred.
Illustrative example of corporate income tax calculation
ABC Company Limited is a food production enterprise, headquartered in Hanoi. In the tax year 2025, the company recorded revenue of VND 10 billion and reasonable expenses of VND 6 billion for production and business activities. In addition, the company also had a loss of VND 1 billion from the previous period, which is allowed to be deducted according to current regulations. This enterprise belongs to the group of ordinary enterprises, therefore, the enterprise is subject to corporate income tax, applying the corporate income tax rate 20% to calculate the tax payable.
To determine corporate income tax (CIT) payable, ABC Company Limited first calculates taxable income based on revenue, reasonable expenses and losses carried forward from previous periods. Including:
| The corporate income tax number of ABC company is:
Taxable income = Revenue – Reasonable expenses – Loss carried forward from previous period = 10 billion – 6 billion – 1 billion = 3 billion The amount of corporate income tax that ABC company must pay is: Corporate income tax = Taxable income x Tax rate = 3 billion x 20% = 0.6 billion |
This method of calculating tax helps businesses determine the amount of corporate income tax payable accurately and in full compliance with the law. At the same time, businesses can take advantage of losses carried over from previous years, reducing tax obligations in the current period. Applying the correct formula and declaring in detail helps avoid the risk of being overpaid, administratively sanctioned, optimizing cash flow and making effective financial plans. Thanks to that, businesses can both fully fulfill their tax obligations, protect economic interests and improve competitiveness.
Reasonable expenses are deductible when calculating corporate income tax.
When calculating corporate income tax, taxpayers can deduct reasonable expenses according to the Corporate Income Tax Law No. 14/2008/QH12 (amended and supplemented in 2025) and detailed instructions in Circular 78/2014/TT-BTC. Correctly applying reasonable expenses helps taxpayers declare accurately, optimize tax obligations and avoid the risk of being overpaid.
The items deductible expenses include:
- Raw materials and input goods: Directly serving production and business, with legal invoices.
- Labor costs: Salary, bonus, social insurance, health insurance, unemployment insurance and reasonable benefits.
- Depreciation of fixed assets: Machinery, equipment, factories according to the provisions of the Law on Corporate Income Tax.
- Reasonable interest rate: For loans serving business activities, complying with interest rate ceiling limits.
- Other expenses: R&D, advertising, staff training, outsourcing, with legal invoices and documents.
Non-deductible expenses include:
- Costs not serving production and business.
- Asset purchase costs are not properly depreciated.
- Illegal expenses or personal expenses of the legal representative.
Some notes related to corporate income tax subjects
When determining the subject of corporate income tax, enterprises need to pay attention to clearly understanding the type of enterprise, from domestic companies, branches, representative offices to foreign organizations with income in Vietnam. Accurate classification helps to apply the right preferential tax rate or standard tax rate, avoiding errors in declaration.
In addition, enterprises need to continuously update legal documents, including the Law on Corporate Income Tax, Decrees and Circulars, to grasp the regulations on preferential industries, applicable tax rates and benefits from previous period losses. This helps corporate income tax subjects to properly exploit incentives, reduce tax payable and optimize cash flow.
Finally, storing valid documents such as invoices, contracts, and expenses incurred is an important factor to protect the legitimate rights of corporate income tax subjects. For enterprises with foreign elements or specific business models, accurate declaration helps avoid the risk of being collected or administratively sanctioned, while ensuring transparent and efficient financial operations.
Conclude
Subjects of corporate income tax are production and business organizations in Vietnam that must pay corporate income tax (CIT). Understanding the subjects of CIT, understanding the basis for calculating tax and complying with legal regulations are important steps to help businesses declare taxes accurately, ensure compliance with the law and optimize financial efficiency.
In the context of constantly updated tax policies, applying the correct tax rates and accurately classifying CIT subjects are key factors to help businesses limit legal risks, especially during tax settlement or tax audit periods. At the same time, accurately determining reasonable deductible expenses helps businesses legally save on tax obligations.
If your business needs assistance in identifying the correct corporate income tax subjects, reviewing valid expenses, calculating and declaring corporate income tax according to the latest provisions of the Corporate Income Tax Law 2025, please contact MAN – Master Accountant Network. With in-depth experience in the field of finance and tax, MAN accompanies businesses in optimizing tax obligations, operating transparently and improving business efficiency.
Contact information for corporate income tax services at MAN – Master Accountant Network
- Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City
- Mobile/Zalo: 0903 963 163 – 0903 428 622
- Email: man@man.net.vn
