Corporate income tax incentives are one of the important financial policies that help businesses reduce costs, increase competitiveness and optimize investment strategies. In a volatile business environment, taking advantage of tax exemptions and reductions not only promotes technological innovation but also supports economic development in remote areas, high-tech zones or priority industries.
To enjoy corporate income tax incentives, businesses need to clearly understand the conditions regarding industry, location of operation, investment scale and project implementation time. In addition, businesses must ensure complete records, clear accounting and compliance with tax settlement regulations to avoid the risk of being overpaid.
Overview of corporate income tax incentives
Corporate income tax (CIT) incentives are one of the important tools of the Government to encourage investment, develop technology, promote the economy in disadvantaged areas and priority industries. This policy includes forms such as exemption and reduction. corporate income tax, apply a lower tax rate than the standard rate or extend the incentive period depending on the type of activity, investment location and project scale.
The main objective of corporate income tax incentives is to motivate enterprises to expand production, innovate technology, increase competitiveness and contribute positively to socio-economic development. These incentives are often applied to enterprises investing in high-tech industry, clean agriculture, information technology, scientific research and new product development, as well as projects in remote areas, special economic zones and high-tech zones. Corporate income tax incentives are implemented in popular forms such as:
- Corporate income tax exemption for the first few years from when the project begins to generate taxable income.
- Reduce corporate income tax at a fixed rate in subsequent years after the tax exemption period.
- Apply a lower preferential tax rate than the standard rate (e.g. 10–15% instead of 20%).
Applying corporate income tax incentives requires businesses to comply with conditions on industry, location and investment period, and must have transparent accounting records to be accepted by tax authorities. When implemented correctly, tax incentives help businesses reduce costs, increase cash flow for reinvestment and improve competitiveness in the market.
Legal basis related to corporate income tax incentives
To help businesses understand and properly apply corporate income tax incentives, it is necessary to summarize the legal bases. The table below lists important legal documents, decrees, circulars and resolutions, along with the scope of application of each document, to help accountants and business leaders easily look up and properly implement regulations.
| Legal basis | Main content | Scope of application / Notes |
| Corporate Income Tax Law 2008 (amended and supplemented 2020, 2025) | Basic regulations on corporate income tax incentives: tax exemption and reduction according to industry, locality, and specific projects. | Applicable to all eligible businesses. |
| Decree 126/2020/ND-CP & Circular 78/2025/TT-BTC | Detailed instructions on how to apply incentives: tax exemption and reduction period, declaration, supporting documents, calculation of preferential tax rates. | Enterprises applying incentives must follow the correct procedures and documents as instructed. |
| Specific resolutions and policies (e.g. Resolution 198/2025/QH15) | Special tax incentives for businesses investing in remote areas, high-tech zones or priority industries. | As a basis for investment planning and applying legal incentives. |
| Circular 96/2015/TT-BTC and documents related to documents and accounting | Instructions on documents, vouchers, non-cash payments, and reasonable cost accounting for deductions. | Businesses must comply in order for benefits and tax incentives to be accepted upon settlement. |
Conditions for enjoying corporate income tax incentives
To be eligible for corporate income tax incentives, enterprises must fully meet the requirements regarding industry, location, investment scale and operating time, and comply with regulations on records, documents and accounting. Specifically as follows:
Conditions on business lines
Enterprises must operate in industries that are encouraged by the State to invest. These typically include high-tech industries, research and development of new products, information technology, clean agriculture, agricultural and aquatic product processing, as well as specific areas specified in resolutions of the Government and the National Assembly. Determining the correct industry helps enterprises have enough legal basis to apply tax incentives.
Conditions on operating area
Corporate income tax incentives are often focused on businesses investing in remote areas, high-tech zones, special economic zones or industrial zones listed by state agencies. This is to promote economic development in disadvantaged areas and encourage high-tech and innovative projects.
Conditions on investment scale and operating time
Enterprises must meet the minimum investment capital requirements and must demonstrate that the project is actually in production and business operations, generating taxable revenue. The operating period must also be long enough to be eligible for tax exemptions and reductions as prescribed. These factors help tax authorities assess the feasibility and actual contribution of the project.
Conditions on records, documents and accounting
To be accepted by the tax authority, enterprises must prepare complete and transparent documents and comply with accounting and document regulations as guided in Circular 96/2015/TT-BTC and related documents. Including contracts, invoices, payment documents, financial reports and documents proving actual production and business activities.
Corporate income tax incentives by location
The preferential corporate income tax policy based on the locality is one of the important tools of the State to encourage investment in disadvantaged areas, key economic zones and high-tech zones. The goal is to promote even economic development, reduce the gap between regions, and at the same time attract investment capital into priority development industries.
Remote, isolated areas
Enterprises investing in economically disadvantaged, remote and isolated areas are often subject to tax exemptions for the first few years and tax reductions in subsequent years. The level of incentives may vary depending on the difficulty level of the area. This helps enterprises reduce initial investment costs, thereby encouraging production expansion, creating jobs and developing local infrastructure.
High-tech zones and special economic zones
Enterprises investing in high-tech zones and special economic zones enjoy preferential tax rates lower than the standard rate. For example, the tax rate can be reduced to 10% for the first 15 years instead of the standard tax rate of 20%. In addition, enterprises also enjoy additional incentives on import tax exemption, land tax and other support policies to encourage technology development and innovation.
Industrial parks, export processing zones
Tax incentives also apply to enterprises investing in industrial parks and export processing zones according to the list prescribed by state agencies. The goal is to attract investment in industrial production sectors, promote exports and increase the competitiveness of the economy. Incentives often include exemption or reduction of corporate income tax in the first years of operation, depending on the scale of investment and production sector.
Corporate income tax incentives by industry
The preferential corporate income tax policy by industry is designed to encourage strategic production and business sectors, technological innovation and major contributions to the economy. The goal is to attract investment in key sectors, improve competitiveness and develop national priority sectors.
High-tech and research and development (R&D) industry
Enterprises operating in the high-tech sector, researching and developing new products, enjoy corporate income tax incentives with preferential tax rates lower than the standard rate, usually 10–15% for the first few years since the project comes into operation. This policy encourages enterprises to invest in innovation, develop new products and improve technological capacity.
Information technology and software production industry
Enterprises in the fields of information technology, software production, and digital services are also entitled to preferential tax rates, aiming to promote the development of the digital economy, improve the quality of human resources, and compete internationally.
Clean agriculture, agricultural and seafood processing industry
Enterprises producing clean agriculture and processing agricultural and aquatic products enjoy tax incentives to encourage sustainable agricultural development, improve product quality, create jobs in rural areas and increase export value.
Renewable energy and environment industry
Enterprises investing in renewable energy (solar power, wind power) and environmental protection projects enjoy corporate income tax incentives, including tax exemptions and reductions in the first few years to encourage green investment, reduce environmental pollution and develop sustainable economy.
Duration of application of corporate income tax incentives
The table below summarizes the tax exemption period, 50% tax reduction period and preferential tax rates applicable to different types of enterprises. Understanding this information helps enterprises plan their finances, investment projects and optimize corporate income tax benefits in accordance with the law. The notes in the table also clarify the specific conditions, industries and locations where incentives are applied.
| Type of offer | Tax-free period | Time to reduce tax 50% | Preferential tax rates | Note |
| Enterprises invest in difficult, remote and isolated areas | First 2–4 years depending on level | Next 4–9 years | 10% | Incentive levels vary depending on the difficulty level of the area. |
| Enterprises investing in high-tech zones and special economic zones | first 2 years | The next 4 years | 10% | Applicable to new projects going into production and business operations. |
| Enterprises operating in priority industries (high technology, R&D, clean agriculture, renewable energy) | First 2–4 years depending on project type | Next 4–9 years | 10–15% | The exemption period depends on the provisions of the resolution or decision of the state agency. |
| Enterprises in industrial parks and export processing zones | first 2 years | The next 4 years | 10% | Applicable to new investment projects, export production industries or those prioritized by law. |
| Enterprises in the area are not eligible for incentives | Not applicable | Not applicable | 20% (standard tax rate) | Enterprises are not entitled to tax incentives. |
How to calculate preferential corporate income tax
Preferential corporate income tax (CIT) is calculated based on the taxable income of the enterprise, applying preferential tax rates and tax exemption and reduction periods according to regulations. The calculation must comply with the following steps:
Determining taxable income
Taxable income is the total revenue from production, business and service activities, minus deductible expenses, losses carried forward to the next period and tax exemptions according to the law. Enterprises need to ensure that expenses are fully accounted for and have legal documents.
Determine preferential tax rates
Preferential tax rates apply depending on industry, location and project type. For example:
- Preferential tax rate 10% for high-tech projects or investment in high-tech zones.
- Preferential tax rate of 10–15% for clean agriculture, renewable energy or R&D projects.
Apply tax exemption and reduction period
For businesses to fully understand the benefits of corporate income tax incentives, they need to understand how to apply tax exemption and reduction periods. This accurately determines the amount of tax payable in each stage of the project, helping to optimize costs, plan finances and effectively take advantage of incentives according to legal regulations.
- During the tax exemption period, enterprises do not have to pay corporate income tax.
- After the tax exemption period, during the period of 50% tax reduction, the enterprise only pays 50% of tax calculated at the preferential tax rate.
Preferential corporate income tax calculation formula
To accurately determine the amount of corporate income tax payable during the incentive period, businesses need to base on the following formula:
|
Corporate income tax payable = Taxable income x Preferential tax rate x Preferential time coefficient |
Illustrative example of corporate income tax incentives
ABC Company operates in the field of software production and invests in building a research center in the high-tech park of Ho Chi Minh City. The project will start operating from June 2025, with a total investment capital of VND50 billion and is expected to generate revenue of VND5 billion per year.
Enterprises in the information technology and software production industries should enjoy corporate income tax incentives according to their industries. At the same time, the project is implemented in a high-tech zone, where enterprises are entitled to preferential tax rates of 10% and tax exemption and reduction policies according to the law. The incentive period is tax exemption for the first 2 years and tax reduction of 50% for the next 4 years from the date the project comes into operation.
In years 1-2, the taxable income of the enterprise is 5 billion VND per year. Due to tax exemption during this period, the corporate income tax payable is 0 VND. In years 3-6, the enterprise only has to pay 50% of tax calculated at the preferential tax rate, equivalent to 250 million VND/year. From year 7 onwards, when the tax exemption and reduction period ends, the corporate income tax payable is 500 million VND/year at the standard preferential tax rate of 10%.
Thanks to the preferential corporate income tax policy, ABC enterprise saved 1 billion VND in taxes in the first 6 years. This money can be reinvested in expanding production, developing new products and improving human resources capacity, thereby increasing competitiveness in the market.
Understanding the conditions of the industry, location and duration of the incentive is the key for businesses to maximize tax benefits. At the same time, preparing complete documents and transparent accounting is a prerequisite for the tax authority to accept the incentive, helping to reduce costs and increase investment efficiency.
Cases not eligible for corporate income tax incentives
In order for businesses to apply corporate income tax incentives in accordance with regulations and avoid the risk of being overpaid, it is very important to clearly understand the cases that are not eligible for incentives. This section will summarize the conditions and situations that businesses will not be eligible for tax exemption or reduction, helping to plan investments and manage taxes effectively.
Enterprises operating outside priority industries
Enterprises not on the list of priority industries will not enjoy CIT incentives. This includes industries not on the list of high technology, research and development (R&D), software production, clean agriculture, renewable energy or special industries that the State encourages investment in.
Enterprises investing in non-preferential areas
Enterprises implementing projects in normal areas, not in disadvantaged areas, high-tech zones, special economic zones or preferential industrial zones, will not be entitled to preferential tax rates. In this case, enterprises must pay tax according to the standard rate 20% without any tax exemption or reduction in any period.
Failure to meet requirements for records, documents and accounting
Enterprises that do not ensure transparent records and documents or have incomplete accounting will not be eligible for incentives. For example, if the project has not yet come into actual operation, has not generated taxable revenue, or the records proving the incentive conditions are incomplete, the tax authority has the right to refuse to apply tax exemption or reduction.
Abuse of tax incentives or false declarations
Enterprises that abuse tax incentives, falsely declare their business lines, locations, or falsify documents to enjoy lower tax rates than prescribed will be removed from the list of preferential beneficiaries. At the same time, enterprises may be subject to additional tax collection and fines according to the law.
Benefits of taking advantage of corporate income tax incentives
Taking advantage of corporate income tax incentives directly benefits businesses by reducing tax costs, thereby increasing working capital and reinvestment capacity. The amount saved through tax exemptions and reductions can be used to expand production, upgrade technology, train staff or develop new products, helping businesses improve their competitiveness in the market.
In addition to financial benefits, tax incentives also help businesses optimize their investment strategies. Knowing in advance the tax rate to be paid and the duration of the incentives, businesses can plan long-term projects, allocate capital effectively and reduce financial risks. This is especially important for high-tech, R&D or renewable energy projects, which often require large capital investments and long payback periods.
Corporate income tax incentives also help businesses increase their attractiveness to investors and partners. Businesses that effectively utilize incentive policies will have transparent financial reports and optimal operating costs, thereby enhancing their reputation and ability to mobilize capital. At the same time, properly applying incentive regulations also helps businesses avoid legal risks, avoid tax arrears or penalties for violations.
Finally, the use of CIT incentives also supports local economic development. When businesses invest in disadvantaged areas, high-tech zones or priority industries, they not only save on taxes but also contribute to job creation, improve product quality and promote sustainable development of the community and economy.
Solutions for businesses to effectively take advantage of corporate income tax incentives
To help businesses easily apply CIT incentives, it is necessary to synthesize practical solutions with illustrative examples. The table below presents details of each solution with implementation methods and specific examples, helping businesses plan investments, manage tax records and optimize tax benefits effectively.
| Solution | Detailed description | Illustrative example |
| Investment and financial planning | Determine the industry, location, and time of project operation before implementation. | ABC Enterprise plans to invest in a software project in a high-tech park, expecting to be exempt from tax for 2 years and reduce 50% for the next 4 years. |
| Prepare documents, vouchers and transparent accounting | Keep contracts, invoices, payment documents, financial reports and related documents | XYZ Enterprise keeps complete records of machinery purchase invoices, labor contracts and periodic financial reports. |
| Expert advice, accounting and tax advice | Get expert guidance on how to account for expenses, determine taxable income and apply the right incentives. | ABC Company hires a tax consulting company to prepare documents and calculate preferential corporate income tax. |
| Update new tax policy | Monitor and apply the latest corporate income tax legal documents | Enterprises monitor new circulars and decrees to adjust investment plans promptly. |
| Optimizing investment structure and business strategy | Allocate capital to priority projects, select preferential locations, and combine technology and productivity improvement. | Enterprises invest in high-tech zones, combining research on new products and upgrading machinery to increase productivity. |
Future trends in corporate income tax incentive policies
In the coming years, Vietnam is expected to increase corporate income tax incentives for businesses operating in the high-tech and green economy sectors. Sectors such as artificial intelligence (AI), semiconductors, renewable energy and research and development (R&D) will enjoy a preferential tax rate of 10% for 15 years, with tax exemption for the first 4 years and a tax reduction of 50% for the next 9 years. This is an effort to encourage technological innovation and sustainable development through preferential corporate income tax policies.
In addition, Vietnam has applied the global minimum tax rate of 15% to multinational corporations with revenue of over 800 million USD from 2024, to comply with international commitments and limit the transfer of profits abroad. This policy also creates a fair competitive environment for domestic enterprises, helping to optimize the benefits from corporate income tax incentives.
Project-based corporate income tax incentives are also being reformed, allowing new or expanded investment projects to enjoy incentives even if they were not previously eligible for incentives. This opens up opportunities for businesses to transform their business models, expand production, and take advantage of favorable corporate income tax incentives.
Increasing transparency and tax management is also an important trend. Enterprises need to fully comply with regulations on financial reporting, documents and contracts to ensure their rights and avoid legal risks, while helping tax authorities effectively control preferential corporate income tax policies.
Finally, Vietnam is establishing financial support funds for strategic investment projects, focusing on infrastructure, human resource training and technology transfer, especially in the fields of AI, semiconductors and R&D. These supports help businesses optimize capital resources, improve competitiveness and promote sustainable economic development, while making the most of the issued corporate income tax incentives.
Conclude
Corporate income tax incentives are an important strategic tool to help businesses reduce costs, optimize capital resources and improve competitiveness in the market. Understanding the conditions, scope, duration and correct application of tax incentives will help businesses maximize financial benefits, while limiting legal risks, avoiding tax arrears and ensuring transparent and effective business operations.
In addition, applying the right tax incentives also helps businesses have resources to invest in upgrading technology, training human resources and expanding production, thereby increasing productivity and long-term competitiveness. Especially, in the context of corporate income tax policies being constantly adjusted and new incentives constantly being introduced, timely information updates are extremely important so as not to miss out on opportunities to save costs and develop sustainably.
To stay up to date with corporate income tax incentives, practical guidance and in-depth tax management solutions, follow us. MAN – Master Accountant Network. This is a reputable source of information, helping you optimize costs, improve business efficiency and proactively respond to any tax changes, ensuring your business is always ahead and develops sustainably.
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