Exemption from corporate income tax for the first 3 years is one of the outstanding preferential policies for small and medium enterprises (SMEs) in Vietnam, aiming to support start-ups and promote private economic development. According to Resolution 198/2025/QH15, newly established enterprises will enjoy this incentive from the date of being granted the first Business Registration Certificate.
This policy helps businesses reduce financial burdens in the early stages of operation, creating conditions to focus on production and business, while improving competitiveness. This article provides detailed instructions on corporate income tax exemption for the first 3 years, from conditions, implementation process, benefits, to important notes, helping businesses apply regulations correctly and make the most of incentives.
What is the first 3 years of corporate income tax exemption?
Free corporate income tax The first 3 years means that the enterprise does not have to pay corporate income tax (CIT) for the first three years from the date of issuance of the first Business Registration Certificate. This policy only applies to newly established enterprises, small and medium enterprises, and does not apply to re-established enterprises or enterprises with profiteering behavior.
Legal basis related to corporate income tax exemption for the first 3 years
To help readers easily grasp the legal basis of the first 3 years of corporate income tax exemption, the table below summarizes important documents, related content and roles in guiding the application of the policy. This introduction helps businesses clearly understand the legal basis before implementing the procedure and ensuring compliance with regulations.
| Legal documents | Related content |
| Resolution 198/2025/QH15 | Prescribe mechanisms and preferential policies for private economic development, including corporate income tax exemption for newly established enterprises. |
| Law on Support for Small and Medium Enterprises 2017 | Definition of small and medium enterprises, basis for classification of scale and conditions for applying tax incentives. |
| Circular guiding the implementation of corporate income tax | Guidance on declaration, exemption and reduction of corporate income tax for small and medium enterprises, ensuring compliance with the law. |
Subjects exempted from corporate income tax for the first 3 years
To help businesses easily identify who is eligible for the first 3 years of corporate income tax exemption, the table below summarizes the details of the applicable subjects, specific criteria and important notes. This introduction will help you clearly understand the basis for determining benefits and avoid excluded cases.
| Object | Criteria and conditions | Note |
| Small and medium enterprises (SMEs) |
|
Only enterprises in the SME group are eligible for corporate income tax exemption for the first 3 years. |
| Enterprises are granted the first Certificate of Registration | The date of establishment is determined by the first Certificate of Business Registration. | Incentives are calculated from the date of certificate issuance and do not apply to businesses established before the policy takes effect. |
| Enterprises not subject to exclusion |
|
Ensure preferential policies for startups are genuine, transparent and in compliance with the law. |
Conditions for exemption from corporate income tax for the first 3 years
The corporate income tax exemption policy for the first 3 years brings many benefits to newly established enterprises, however, not all enterprises are eligible to enjoy it. corporate income tax incentives To properly apply and maximize benefits, businesses need to pay attention to the following specific conditions:
Business size
To be exempt from tax, enterprises must belong to the group of small and medium enterprises (SMEs), classified based on the number of employees, revenue and charter capital according to the provisions of the Law on Support for SMEs 2017.
- Micro-enterprise: has ≤10 employees, revenue ≤10 billion VND or charter capital ≤3 billion VND.
- Small enterprise: has ≤50 employees, revenue ≤50 billion VND or charter capital ≤20 billion VND.
- Medium enterprises: have ≤200 employees, revenue ≤300 billion VND or charter capital ≤100 billion VND.
Determining the correct scale helps tax authorities and businesses accurately confirm tax exemption benefits, while avoiding the risk of being denied incentives during inspections. This is an important step for businesses to comply with the principles of transparency and accuracy in tax declaration.
Time of establishment
Another important condition is the time of establishment of the enterprise. According to regulations, the enterprise must be granted the first Certificate of Business Registration from May 17, 2025.
- Enterprises established after this date will enjoy corporate income tax exemption for the first 3 years from the date of issuance of the certificate.
- Enterprises established before this time are not subject to application, even if they meet the criteria on scale.
This condition ensures that incentives focus on supporting new start-ups, encouraging investment and private economic development in the current period.
Not subject to exclusion
The corporate income tax exemption policy for the first 3 years does not apply to enterprises in excluded cases, in order to limit the exploitation of tax incentives. Specifically:
- Enterprises re-established after dissolution or bankruptcy within 12 months from the date of re-establishment.
- Enterprises that take advantage of policies, for example, merging, consolidating, and splitting to enjoy corporate income tax incentives for the wrong purposes.
Compliance with this regulation helps businesses avoid the risk of tax arrears, administrative fines or reputational damage in business operations. At the same time, this mechanism ensures that incentives are truly given to startups that are transparent and in compliance with the law.
Process and procedures for corporate income tax exemption for the first 3 years
To enjoy the preferential corporate income tax exemption for the first 3 years, enterprises need to comply with the correct processes and procedures, ensuring both legal declaration and full enjoyment of the benefits according to the law. Below are the detailed steps:
Business registration
The first and most important step is to properly establish the business. This not only helps the business to have legal status but also determines the exact time when it will be exempt from corporate income tax.
| Step | Detailed content | Note |
| Prepare documents |
|
Complete and accurate documents help the registration process to be quick and legal. |
| Submit application |
|
Choose a convenient form, make sure to receive a receipt for tracking |
| Receive the first Business Registration Certificate | Confirmation of the starting time of corporate income tax exemption for the first 3 years | The certificate is the legal basis for businesses to declare taxes and enjoy tax exemption incentives in accordance with regulations. |
Completing the business registration procedure accurately and transparently will help businesses avoid the risk of refusing incentives or being subject to tax arrears later.
Periodic tax declaration
Although enterprises are exempt from corporate income tax for the first 3 years, there are still some periodic tax declaration obligations that enterprises must perform to ensure transparent records and compliance with the law:
- Value added tax (VAT) declaration: monthly or quarterly depending on business scale and industry.
- Personal income tax declaration (PIT): for employees in enterprises.
- Business license tax declaration: applicable if the enterprise's charter capital is ≥10 billion VND.
Making full declarations helps businesses protect their corporate income tax exemption rights, while creating transparent records to prepare for audits or inspections by tax authorities.
Archiving records and documents
An important step that cannot be overlooked is storing records and documents related to business operations and taxes.
- Including invoices, vouchers, accounting books, submitted tax returns, and documents related to corporate income tax exemption incentives.
- Purpose: to serve inspections and audits, ensuring transparency and legality. Fully maintained records will help businesses prove their tax exemption rights, avoid being charged back or administratively sanctioned.
Strictly following the above steps will help businesses effectively take advantage of the 3-year corporate income tax exemption, while maintaining transparency and legal safety in business operations.
Benefits of being exempted from corporate income tax for the first 3 years
To better understand the benefits that businesses receive when applying the first 3 years of corporate income tax exemption, it is necessary to consider the direct impacts on finances, startup motivation and business reputation. This policy not only helps reduce the tax burden but also creates favorable conditions for businesses to build a foundation for sustainable development right from the first years of establishment.
Reduce financial burden
When exempted from corporate income tax for the first 3 years, the enterprise does not have to pay corporate income tax for 3 years from the date of issuance of the first Business Registration Certificate. This helps save a significant amount of costs, especially for small and medium enterprises with limited capital in the start-up phase. The saved capital can be reinvested in production, business expansion, equipment purchase or marketing investment, thereby increasing competitiveness and sustainable development.
Encourage start-ups and development of small and medium enterprises
The tax exemption policy creates incentives for individuals, business households or founding groups to convert their business activities into formal enterprises to enjoy tax incentives. This contributes to increasing the number of small and medium enterprises, diversifying the private economic market and promoting local economic development. At the same time, new enterprises have the opportunity to focus on building products, services and developing brands instead of having to worry about the initial tax burden.
Increase transparency and business reputation
Exemption from corporate income tax for the first 3 years also helps businesses enhance their reputation and build a transparent profile. Officially registered businesses can easily access loans, business contracts and strategic partners. Complete and correct tax declaration helps businesses maintain transparent financial records, facilitating commercial transactions and appraisals by banks, partners or management agencies. Reputation and transparency also contribute to reducing legal risks, ensuring sustainable business operations and long-term expansion.
Notes and risks when exempting corporate income tax for the first 3 years
To legally and effectively enjoy the first 3 years of corporate income tax exemption, businesses need to pay attention to some important points to avoid legal risks and loss of benefits.
Compliance with industry and laws
Enterprises must ensure that their business activities are in line with the registered business lines in the Business Registration Certificate. At the same time, enterprises must fully comply with legal regulations on accounting, tax, labor and other financial obligations. Strict compliance not only helps maintain tax exemption rights but also avoids violations that may lead to penalties or tax arrears.
Do not take advantage of the policy
Enterprises should avoid taking advantage of policies, such as merging, consolidating, and splitting enterprises just to enjoy corporate income tax exemption incentives. These actions can be detected and handled by tax authorities, leading to loss of benefits and administrative penalties. Compliance with the purpose of establishing an official enterprise and sustainable development will help enterprises maintain incentives legally.
Update information promptly
Tax policies are constantly adjusted through legal documents such as decrees, circulars or guidance documents. Enterprises need to regularly monitor and update these documents to apply the regulations correctly, avoiding false declarations or missing benefits. Timely information capture also helps enterprises to be proactive in tax management, accounting and building appropriate financial strategies.
Illustrative example of a business exempted from corporate income tax for the first 3 years
ABC Company Limited was established in 2025, operating in the field of software production. This is an industry on the list of businesses that are eligible for corporate income tax incentives by the State. According to the applicable policy, the company is exempt from corporate income tax for the first 3 years from the time taxable income arises. After the tax exemption period, the company will continue to receive a 50% reduction in corporate income tax payable in the next 2 years and enjoy a preferential tax rate of 10% for a period of 15 years.
In 2025, the company begins to have revenue from business activities but has not yet generated profit. Since there is no taxable income, the tax exemption period has not been calculated yet. By 2026, the enterprise has a pre-tax profit of VND 2 billion, this is the time to start calculating the tax exemption incentives. Thus, in 2026, 2027 and 2028, all corporate income tax arising will be completely exempted.
By 2029, the company will have a pre-tax profit of VND5 billion. From this year, the 3-year corporate income tax exemption policy has ended, but the company will continue to receive a 50% reduction in corporate income tax payable in 2029 and 2030. This helps the company save a significant amount of costs, while also having more financial resources to reinvest, expand production and improve competitiveness in the market.
Through this example, it can be seen that the corporate income tax exemption policy for the first 3 years brings practical benefits, especially for newly established businesses in the technology sector, when the initial investment cost is large but it takes time to exploit effectively.
Conclude
Exemption from corporate income tax for the first 3 years is an important incentive policy, creating favorable conditions for newly established enterprises to have more resources for development in the initial stage. This tax exemption period not only helps enterprises reduce the cost burden, but also provides an opportunity for reinvestment, strengthening the business foundation and increasing competitiveness in the market.
From the illustrative example, it can be seen that applying the corporate income tax exemption policy has helped businesses save a large amount of capital in the first years of operation. This is the "launching pad" for businesses to stabilize, gradually expand their scale and move towards sustainable growth. Therefore, understanding and correctly applying the regulations on exemption and reduction periods and preferential tax rates is essential for every administrator.
If you want to learn more about tax policies and how to apply them optimally for your business, connect now with us. MAN – Master Accountant Network. The team of experienced experts at MAN is always ready to accompany, advise and support businesses in managing, complying with and effectively utilizing current tax incentive policies.
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