Vietnam Tax Regime

Vietnam operates a single-tier corporate income tax system with a standard rate of 20%, applied to both domestic enterprises and foreign-invested enterprises operating through locally established entities. There is no formal concept of corporate tax residency; instead, business organisations established under Vietnamese law are taxed on worldwide income, while foreign organisations without a locally established legal entity are captured through the separate foreign contractor tax (FCT) mechanism. The regime is undergoing significant reform: a new Law on Corporate Income Tax took effect from 1 October 2025 and applies from the 2025 tax year onward, substantially reworking incentive rules, and Vietnam has implemented the OECD Pillar Two global minimum tax with effect from 1 January 2024. The system is administered nationally, with no local or provincial income taxes.

1.1 Sources

Primary legislation includes the Law on Corporate Income Tax (as amended and replaced with effect from 1 October 2025), the Law on Personal Income Tax, the Law on Value Added Tax, the Law on Tax Administration, and the National Assembly Resolution implementing the Pillar Two global minimum tax.

1.2 Recent developments

The National Assembly ratified a new Law on CIT in June 2025, effective 1 October 2025 and applying from tax year 2025 onward, which expands incentivised sectors (digital technology products and services, AI data centres, automobile manufacturing and assembly, and support services for small and medium enterprises), removes the incentive scheme previously available to companies located in industrial zones and to new investment projects with capital of VND 6 trillion or more, and reduces incentives in economic zones outside designated difficult or especially difficult socio-economic areas. The new law also introduces tiered preferential rates of 15% to 17% for qualifying small and medium enterprises. Separately, the National Assembly approved a Resolution on Global Minimum Tax policy in November 2023, effective from 1 January 2024, introducing a Qualified Domestic Minimum Top-up Tax (QDMTT) and an Income Inclusion Rule (IIR); the Ministry of Finance has since issued implementing decrees.

Headline statutory corporate income tax rate for a resident company. Where sub-national (state, provincial, cantonal or municipal) corporate taxes apply, the combined rate reported by the OECD is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

Top marginal statutory personal income tax rate on employment income for a resident individual. Where sub-national (state, provincial, cantonal or municipal) income taxes are a standard part of the system, the combined top rate is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

2.1 Rates and residence

The standard corporate income tax (CIT) rate is 20%, applied at the national level with no local or provincial income tax layered on top. There is no formal statutory concept of tax residency for CIT purposes: business organisations established under Vietnamese law are subject to CIT on worldwide income, including foreign-source income, which is also taxed at 20% with no separate incentive regime available for it. Enterprises in the oil and gas sector are taxed at rates from 25% to 50% depending on the specific contract, and enterprises engaged in prospecting, exploration and exploitation of certain mineral resources are taxed at 40% to 50% depending on the project. Under the new CIT Law effective from tax year 2025, qualifying small and medium enterprises benefit from tiered preferential rates of 15% to 17%.

Foreign organisations conducting business in Vietnam without establishing a local legal entity — whether or not services are physically performed inside Vietnam — are treated as foreign contractors and are instead subject to Foreign Contractor Tax (FCT), a withholding-style mechanism combining VAT and CIT elements collected by the Vietnamese counterparty (see Section 4).

2.2 Dividends and participation exemption

Dividends received by a Vietnamese company from another Vietnamese company out of after-CIT profits are not subject to further CIT, avoiding double taxation at the corporate level; there is no separate participation exemption regime as such because Vietnam does not impose a further layer of corporate tax on domestic dividend flows. Dividends remitted by resident enterprises to foreign corporate shareholders are not subject to Vietnamese withholding tax, reflecting Vietnam's policy of taxing profits once at the paying entity. Capital gains realised by a foreign investor on the transfer of an interest in a Vietnamese company are, however, subject to Vietnamese CIT (commonly 20% of the gain, or a deemed-gain method for share transfers), which investors frequently manage through holding-company and treaty planning.

2.3 Income determination and deductions

Taxable profit is the difference between total revenue (domestic and foreign-sourced) and deductible expenses, plus other assessable income, with an annual CIT return reconciling accounting profit to taxable profit through statutory adjustments. Expenses are generally deductible if they relate to business activities, are properly substantiated by invoices and, above prescribed thresholds, are settled through non-cash payment methods. Non-deductible items include unsubstantiated expenses, certain welfare and marketing expenditure exceeding statutory caps in specific circumstances, provisions not made in accordance with regulations, and interest expense exceeding statutory thresholds (see Section 2.4). Depreciation follows the straight-line method as the default, with declining-balance and units-of-production methods available for certain assets subject to Ministry of Finance rules; useful lives are prescribed by asset category.

2.4 Interest limitation

Vietnam applies a BEPS Action 4-aligned interest deduction cap for enterprises with related-party transactions: total deductible net interest expense (interest expense net of deposit and loan interest income) is limited to 30% of tax EBITDA. Interest denied under the cap may be carried forward and deducted in the five subsequent tax years, subject to the cap continuing to apply in those years. Certain regulated entities, such as credit institutions and insurers, and loans under official development assistance programmes, are excluded from the limitation.

2.5 Losses

Tax losses may be carried forward in full and offset against taxable income for up to five consecutive years following the year in which the loss arose; there is no loss carryback. Losses from the transfer of real estate or investment projects may generally only offset profits from the same category of activity, while losses from ordinary production and business activities may be offset against other income, including certain capital transfer gains, subject to specific ordering rules.

2.6 Group taxation

Vietnam does not have a formal consolidated or group-relief tax filing regime; each incorporated entity files and pays CIT on a standalone basis, and losses or profits cannot generally be pooled across separate legal entities within a corporate group. Groups instead manage overall efficiency through intercompany service and financing arrangements, subject to related-party transfer pricing rules, and through restructuring via mergers, consolidations, division or conversion of enterprise form under the Law on Enterprises, which can in some circumstances qualify for tax-neutral treatment of asset transfers.

2.7 Controlled foreign companies

Vietnam does not operate a dedicated CFC attribution regime taxing undistributed profits of controlled foreign subsidiaries in the hands of Vietnamese parent companies. Outbound investment income is instead captured when repatriated as dividends or on disposal of the foreign investment, and Vietnamese resident companies are taxed on worldwide income including foreign-source profits actually received. The absence of CFC rules is a point of ongoing policy attention as Vietnam aligns further with OECD BEPS and Pillar Two standards, particularly given the Income Inclusion Rule now targeting outbound investment under Pillar Two (Section 2.10).

2.8 Transfer pricing

Vietnam's transfer pricing rules, most recently consolidated in Decree 132/2020/ND-CP, follow the OECD arm's-length principle and require contemporaneous documentation comprising a master file, a local file and, for ultimate parent entities of groups with consolidated global revenue of at least VND 18,000 billion (or the foreign-currency equivalent), a country-by-country report. Related-party interest deductibility interacts directly with the general 30% EBITDA cap in Section 2.4. Taxpayers meeting safe-harbour thresholds for related-party revenue and margins may be exempted from certain documentation obligations. Advance pricing agreements are available and increasingly used by multinational taxpayers to obtain certainty on related-party pricing.

2.9 Incentives

Vietnam offers preferential CIT rates of 10%, 15% or 17% (down from the standard 20%), together with tax holidays and reductions, for investment in encouraged sectors (high technology, software production, environmental protection, healthcare, education) and in disadvantaged or especially disadvantaged geographic areas, as well as for large-scale investment projects meeting capital and output thresholds. The new CIT Law effective from tax year 2025 expands incentivised sectors to include certain digital technology products and services, AI data centres, automobile manufacturing and assembly, and SME support services, while withdrawing the general incentive previously available to companies simply located in industrial zones and to large new projects of VND 6 trillion or more, and scaling back incentives in economic zones outside the most disadvantaged areas. Special investment incentives remain available for qualifying research and development and for large-scale investment projects under the Law on Investment. The interaction between these incentives and the Pillar Two minimum tax is an active area of policy development, since a low effective domestic rate can trigger top-up tax liability abroad or under Vietnam's own QDMTT.

2.10 Pillar Two

Vietnam adopted the OECD Pillar Two Global Anti-Base Erosion (GloBE) framework through a National Assembly Resolution approved in November 2023 and effective from 1 January 2024, implementing a Qualified Domestic Minimum Top-up Tax (QDMTT), aimed principally at foreign-invested groups benefiting from low effective rates in Vietnam, and an Income Inclusion Rule (IIR), aimed at Vietnamese parent groups with low-taxed foreign operations. Top-up tax collected is paid to the central state budget rather than shared with provinces, unlike ordinary CIT. Filing deadlines are 12 months after the fiscal year-end for QDMTT returns, and 18 months after year-end for the first IIR return in scope (15 months for subsequent years). A transitional country-by-country reporting safe harbour, aligned with the OECD's GloBE transitional safe harbour, is available. Groups with consolidated revenue below the EUR 750 million threshold fall outside scope.

2.11 Branch income and reorganisations

A foreign company operating in Vietnam through a licensed branch or permanent establishment is generally taxed at the standard 20% CIT rate (or applicable preferential rate) on Vietnamese-source profits attributable to that presence; Vietnam does not impose a separate branch remittance tax on the repatriation of after-tax branch profits to the foreign head office. Corporate reorganisations — mergers, consolidations, divisions, spin-offs and conversions of enterprise form under the Law on Enterprises and Law on Investment — can generally be structured to defer immediate taxation of unrealised gains where assets and liabilities transfer at book value, though share and asset transfers to unrelated third parties as part of a reorganisation typically trigger CIT on any realised gain, and licensing/regulatory approval from the Ministry of Planning and Investment (or provincial equivalent) is required for foreign-invested enterprises.

3.1 Residence and rates

An individual is tax resident in Vietnam if present for 183 days or more in a calendar year or within 12 consecutive months from arrival, or has a registered permanent residence or a leased residence in Vietnam for 183 days or more (with limited treaty exceptions). Residents are taxed on worldwide employment and business income at progressive rates from 5% to 35% across five brackets, with the top 35% rate applying to monthly taxable income above VND 100 million. Non-residents are taxed at a flat 20% on Vietnamese-source employment income, with no personal allowances or progressive relief. Personal deductions include a personal allowance (VND 15.5 million per month) and dependant allowances (VND 6.2 million per month per qualifying dependant), together with mandatory social, health and unemployment insurance contributions.

3.2 Capital income and real estate

Investment income of individuals is generally taxed at flat final rates rather than the progressive schedule: dividends at 5%, capital gains on securities transfers at 0.1% of the gross sale proceeds (regardless of gain or loss), and capital gains on transfers of interests in limited liability companies at 20% of the net gain (with a deemed-transfer-price mechanism where documentation is insufficient). Gains on the transfer of real estate are taxed at 2% of the gross transfer price, again regardless of actual gain, subject to limited exemptions for a sole residential property. Rental income above VND 100 million per year is subject to a combined VAT and personal income tax withholding, commonly around 10% of gross rental revenue for individuals leasing property directly.

3.3 Social security and payroll

Employees contribute to social insurance (8%), health insurance (1.5%) and unemployment insurance (1%) on salary up to prescribed statutory caps, a combined employee contribution of roughly 10.5%; employers contribute a further approximately 21.5% (social insurance 17.5%, health insurance 3%, unemployment insurance 1%, plus occupational accident and disease insurance). Personal income tax on employment income is withheld monthly by the employer under the progressive schedule (Section 3.1) and reconciled through an annual finalisation return, either by the employer on behalf of employees with a single employer, or directly by the individual where required.

3.4 Inbound individuals

There is no net wealth tax and no inheritance or gift tax as a general matter, although the transfer of certain high-value assets (real estate, registered securities, vehicles) between individuals above statutory thresholds and outside close-family exemptions can attract personal income tax at 10% on the value received. Expatriates working in Vietnam are taxed under the same resident/non-resident framework as local individuals, with residence determined by the day-count and abode tests in Section 3.1; foreign employees seconded to Vietnam should monitor treaty relief and totalisation arrangements where posted from a treaty jurisdiction with a social security agreement. There is no special expatriate tax regime comparable to inpatriate regimes found in some other jurisdictions.

Vietnam applies withholding tax on outbound payments to foreign organisations and individuals without a Vietnamese permanent establishment, principally through the Foreign Contractor Tax (FCT) mechanism, which combines a deemed VAT element and a deemed CIT element calculated as a percentage of gross payment depending on the nature of the service. Dividends paid to foreign corporate shareholders out of after-CIT profits are not subject to further withholding tax. Vietnam's treaty network exceeds 80 double tax agreements, typically reducing withholding on interest and royalties and providing permanent establishment thresholds more favourable than domestic FCT deemed rates; treaty relief requires advance notification or a retrospective refund claim supported by a certificate of residence.

The FCT deemed CIT and deemed VAT rates vary materially by category of service (e.g., trading, construction, transportation, leasing of machinery, financial services), and correctly classifying the underlying contract is critical to determining the applicable composite rate. Where a foreign contractor has a Vietnamese permanent establishment and maintains proper Vietnamese accounting records, it may elect to be taxed on a declaration basis (net income at 20% CIT) rather than under the deemed FCT method, subject to registration with the tax authority. Treaty relief from FCT deemed CIT generally requires demonstrating the foreign contractor has no Vietnamese permanent establishment and holds a valid certificate of residence, filed in advance or via refund claim.

5.1 General anti-abuse and hybrids

Vietnamese tax law empowers the tax authority to re-characterise transactions and reassess tax liability where arrangements lack commercial substance or are structured principally to obtain a tax advantage, applied most visibly in transfer pricing re-assessments and in scrutiny of indirect share transfers by offshore holding vehicles. There is no codified, comprehensive hybrid-mismatch regime comparable to the EU's ATAD; instead, related-party interest deductibility limits (Section 2.4) and transfer pricing documentation (Section 2.8) serve as the principal structural safeguards against base erosion through related-party financing and licensing arrangements.

5.2 Exit taxation and disclosure

Vietnam does not impose a formal exit tax on individuals or companies ceasing Vietnamese residence or reorganising out of Vietnam; however, indirect transfers of interests in Vietnamese companies by non-resident sellers (offshore share deals) are subject to Vietnamese CIT on the attributable gain, a position the tax authority actively enforces through registration and reporting obligations imposed on the Vietnamese target company. There is no general mandatory disclosure regime comparable to DAC6, though transfer pricing documentation, related-party disclosure forms filed with the annual CIT return, and country-by-country reporting for in-scope groups provide the tax authority with visibility into cross-border structures. Vietnam is a signatory to the OECD's Multilateral Instrument process for treaty-related BEPS measures and continues to expand exchange-of-information arrangements under its treaty network.

6.1 VAT

VAT is levied at a standard rate of 10%, with a reduced rate of 5% for essential goods and services (clean water, agricultural products and inputs, medical equipment, educational materials, scientific and technological services) and a 0% rate for exported goods and services. Certain goods and services are VAT-exempt altogether (unprocessed agricultural products at the farming stage, credit and securities services, insurance, healthcare, and public transport in some cases). The government has periodically applied a temporary reduction of the standard rate from 10% to 8% for most goods and services (excluding certain sectors such as banking, real estate, and goods subject to special consumption tax) as a stimulus measure; taxpayers should confirm the applicable rate in force for the relevant filing period. VAT returns are generally filed monthly (or quarterly for smaller taxpayers), with input VAT creditable against output VAT and excess input VAT refundable in defined circumstances, notably for exporters and investment projects.

6.2 Transaction, payroll and other taxes

Special consumption tax (excise) applies to specified goods and services considered luxury or discretionary — including alcohol, tobacco, automobiles, gasoline, and certain entertainment services — at rates that vary widely by product, in some cases exceeding 100% for high-alcohol-content beverages and premium vehicles. Natural resources tax applies to the extraction of natural resources (minerals, oil and gas, forest products, natural water) at rates set according to resource category. Registration fees (a form of transfer/stamp duty) apply on registration of ownership of houses, land, vehicles and certain other assets, typically at 0.5% to 2% of the declared value. Import and export duties apply under Vietnam's tariff schedule and its network of free trade agreements, which in many cases eliminate or substantially reduce duties on qualifying originating goods. There is no net wealth tax and no general payroll tax beyond the mandatory social, health and unemployment insurance contributions described in Section 3.3.

7.1 Filing, assessment and audit

The standard tax year is the calendar year, though enterprises may adopt an alternative fiscal year ending on the last day of a quarter, with the tax authority's consent, provided consistent treatment for financial reporting and CIT purposes. CIT is generally settled through quarterly provisional payments (due by the 30th day of the month following the end of each quarter) with an annual finalisation return due within 90 days of the fiscal year-end. Tax audits are risk-based and are typically triggered by inconsistencies in declared data, industry risk profiling, or related-party transaction thresholds; large multinational taxpayers with related-party dealings face heightened transfer pricing scrutiny. The general statute of limitations for additional tax assessment is 10 years from the date of the tax violation, with no time limit where the taxpayer has failed to register for tax or has fraudulently evaded tax.

7.2 Rulings, appeals and penalties

Advance rulings are available on a limited basis for pricing methods used in related-party transactions (advance pricing agreements) and for classification of specific transactions; a broader private-ruling culture is less developed than in some other jurisdictions, and taxpayers often rely on official written responses (cong van) from the General Department of Taxation to specific queries, though these are not always treated as universally binding precedent. Administrative appeals proceed first to the issuing tax authority or its superior body, with further recourse to the courts. Penalties for late payment accrue interest at 0.03% per day; penalties for under-declaration or tax evasion range from 20% of the tax shortfall for administrative under-declaration up to one to three times the evaded tax for deliberate evasion, with potential criminal liability for serious cases.

Where quarterly provisional CIT payments fall short of 80% of the final annual liability, late-payment interest is charged on the shortfall from the original quarterly due date. Taxpayers filing electronically (the near-universal practice for corporate taxpayers) should retain acknowledgement receipts from the General Department of Taxation's e-filing portal as proof of timely submission.

9.1 Entity choice

The most common vehicles for foreign investment are the single-member or multi-member limited liability company (LLC), which limits liability to charter capital and requires no minimum capital in most sectors (though conditional sectors impose minimum capital or licensing requirements), and the joint-stock company (JSC), required for enterprises seeking to list or issue shares broadly. Representative offices may be established for liaison and market research but may not conduct direct revenue-generating activities. Branches of foreign companies are permitted only in specific licensed sectors (notably banking and a small number of other regulated activities) and are taxed on Vietnamese-source profits at the standard CIT rate with no separate remittance tax. Most foreign investors operate through a locally incorporated LLC to access the broadest range of permitted business lines and to qualify for sector-specific incentives.

9.2 Structuring and incentives

Investors should evaluate eligibility for preferential CIT rates (10%, 15% or 17%) and tax holidays tied to encouraged sectors, geographic location, or qualifying large-scale projects, particularly in light of the narrowing of industrial-zone-based incentives under the CIT Law effective from tax year 2025. Holding structures for outbound Vietnamese investment should account for the absence of a formal group relief or CFC regime, meaning tax efficiency is achieved primarily through the timing and character of repatriated income rather than consolidated group filings. Related-party financing must be tested against the 30% EBITDA interest cap and supported by contemporaneous transfer pricing documentation; groups within scope of Pillar Two must additionally model the QDMTT and IIR interaction with any preferential CIT rate to determine residual top-up tax exposure, since a headline rate materially below 15% can trigger a top-up liability that erodes the intended benefit of the incentive.

9.3 Worked effective-rate illustration

A Vietnamese manufacturing LLC earns EBITDA of VND 50,000,000,000, books depreciation of VND 8,000,000,000 and net interest expense of VND 6,000,000,000 on related-party financing. Tax EBITDA for the interest cap is EBITDA less depreciation-adjusted taxable income base, and the 30% of tax EBITDA limit (30% × 42,000,000,000 = VND 12,600,000,000) comfortably exceeds the VND 6,000,000,000 net interest expense, so the full interest deduction is allowed. Taxable profit is 50,000,000,000 − 8,000,000,000 − 6,000,000,000 = VND 36,000,000,000. CIT at the standard 20% rate is VND 7,200,000,000, giving an effective rate of 7,200,000,000 / 36,000,000,000 = 20.0% on taxable profit. If the enterprise instead qualifies for a preferential 15% rate under an encouraged-sector incentive, CIT would be VND 5,400,000,000, an effective rate of 15.0% — below the Pillar Two 15% minimum threshold only marginally, meaning the enterprise should model whether QDMTT top-up tax applies if it is part of an in-scope multinational group with consolidated revenue at or above EUR 750 million.

9.4 Compliance

Expect largely electronic filing for CIT, VAT and payroll withholding through the General Department of Taxation's e-tax portal, quarterly provisional CIT payments reconciled through an annual finalisation return, and mandatory Vietnamese-language statutory bookkeeping and invoicing (increasingly through mandatory e-invoicing). Transfer pricing documentation (master file, local file, and country-by-country report where applicable) must be maintained contemporaneously and produced on request, generally within a short statutory window. Related-party disclosure forms accompany the annual CIT finalisation return regardless of whether full master/local file documentation is required. Groups within scope of Pillar Two should budget for QDMTT and IIR registration, data collection spanning the consolidated group, and standalone minimum-tax filings in addition to ordinary CIT compliance.