Vietnam Corporate Tax Guide: Tax Rates and Compliance Requirements

As a business operating in Vietnam, it is your legal obligation to maintain full tax compliance. You must ensure timely registration, accurate filings, payments, and documentation to mitigate financial risk which can have heavy penalties and late payment interests. 

With significant regulatory shifts in 2025, you need to make sure you are following new regulations to maintain a spotless tax record. You need to navigate through new mandates  such as tiered CIT rates for SMEs, mandatory e-invoicing, and 10% VAT on digital services as a company in Vietnam.

In this guide, we will outline your core tax obligations as a business and practical steps to maintain a high level of tax compliance. 

Corporate Income Tax (CIT): Structure and Rates

The scope of your Corporate Income Tax liability is fundamentally determined by the legal origin of your business entity. Resident enterprises are subject to CIT on their worldwide income, meaning any profit generated both within Vietnam and abroad must be declared and taxed at the standard rate. Conversely, foreign enterprises (non-residents) are only liable for tax on income sourced within Vietnam. 

If you’re a foreign entity, being a “Permanent Establishment” (PE) is a critical factor in determining how your local income is reported and taxed. Without a PE, a foreign company is generally only subject to Foreign Contractor Tax (FCT) on a withholding basis (often a flat percentage of revenue) which we will discuss later. 

Tiered CIT Rates for 2026

Vietnam’s new Corporate Income Tax Law 2025 (enacted as Law No. 67/2025/QH15) has shifted to tiered rates based on annual revenue. This progressive structure is a central part of the 2025 tax mandate designed to protect Small and Medium Enterprises (SMEs). By moving away from a one-size-fits-all 20% rate, the government provides immediate cash-flow relief to smaller players, allowing them to reinvest profits back into their operations.

Eligibility is generally determined by the revenue of the preceding tax period:

• 15% CIT: For micro-enterprises with annual revenue not exceeding VND 3 billion (~USD 125,000).
• 17% CIT: For small enterprises with annual revenue between VND 3 billion and VND 50 billion (~USD 2.1 million).
• 20% CIT: The standard rate for all other enterprises.

How to Calculate CIT in Vietnam?

To calculate CIT, you need to determine your taxable income. This is derived by subtracting your deductible expenses from your gross revenue. To arrive at the final assessable income, you then deduct any eligible tax losses carried forward from the previous five years.

The formula is straightforward: 

Taxable Income = Gross Revenue – Deductible Expenses Assessable Income = Taxable Income – Losses Carried Forward

Here is an example of how your CIT is calculated:

Calculation Step	Description	Amount (VND)
Total Revenue	All business income and interest	20,500,000,000
Business Expenses	Total valid deductible costs	(14,000,000,000)
Taxable Income	Profit subject to adjustment	6,500,000,000
Loss Utilization	Previous losses (max 5 years)	(500,000,000)
Assessable Income	Final amount used for tax calculation	6,000,000,000
Tax Due (17% Rate)	Applied to Assessable Income	1,020,000,000

Value-Added Tax (VAT) Rates in Vietnam

VAT is a broad-based consumption tax assessed on the value added to the goods and services you offer to your clients/customers. While the actual economic burden is borne by the consumer, you are still responsible for declaring and paying VAT to the General Department of Taxation (GDT). 

The Amended VAT Law and Resolution 204/2025/QH15 has introduced major changes starting July 2025:

• VAT Exemption Threshold: VAT exemption has been raised from VND 100 million to VND 200 million (with further proposed increases to VND 500 million under Law 149 for 2026). This is beneficial for micro-sellers, the annual revenue threshold is less than VND 100 million. 
• 2% VAT Reduction (from 10% to 8%): the government has officially extended the 2% VAT reduction (to 8%) until December 31, 2026. This VAT reduction had also expanded to transportation, logistics, and most IT services. 
• Reclassification for Input Tax Credits: Previously “VAT-exempt” items like fertilizers, specialized agricultural machinery, and offshore fishing vessels have been moved to a 5% VAT rate.
• VAT for E-commerce: e-commerce platforms now act as tax agents. They are required to withhold 1% VAT for goods and 5% for services from the gross transaction value of individual/household sellers. 
• VAT for Foreign Digital Service Providers (Without PE): increased from 5% to 10%. These entities are now required to register for VAT and charge the standard rate to level the playing field with domestic providers.

How to Calculate VAT in Vietnam?

There are two ways you can calculate VAT in Vietnam: 

• The Deduction Method (Tax Credit Method): This is the standard method for companies with an annual revenue of VND 1 billion or more. You pay the difference between the VAT you collected from customers (Output VAT) and the VAT you paid to suppliers (Input VAT).
• The Direct Method: Generally used by smaller businesses or those without standard accounting systems. Tax is calculated as a fixed percentage of total revenue.

To put things into perspective, consider a distribution company operating at the standard 10% rate. Because the company has more than 1 billion revenues, we are going to use the Deduction method:

Item	Calculation	Amount (VND)
Total Sales (Excl. VAT)	Revenue from goods sold	5,000,000,000
Output VAT (10%)	Tax collected from customers	500,000,000
Input Purchases (Excl. VAT)	Cost of goods/services bought	3,200,000,000
Input VAT (10%)	Tax paid to suppliers (with E-invoices)	(320,000,000)
Net VAT Payable	Output VAT minus Input VAT	180,000,000

Withholding Tax for Companies in Vietnam

Personal Income Tax (PIT) Calculation for Employees

As a business, you are legally required to act as a withholding agent for all compensation paid to your employees. This responsibility includes several critical steps:

• Tax Registration: ensure all employees are registered for a unique Tax Identification Number (TIN) before the first salary payment or tax finalization.
• Monthly/Quarterly Withholding: calculate and withhold PIT based on the relevant rates:
  • Resident Employees: A progressive scale (5% to 35%) applied to “Taxable Income” after statutory deductions (SHUI) and family/personal reliefs.
  • Non-Resident Employees: A flat 20% rate on Vietnam-sourced income, without any deductions or reliefs.
• Filing & Payment Deadlines: Withheld taxes must be declared and remitted to the State Treasury by the 20th day of the following month (for monthly filers) or the 30th day of the month following the quarter (for quarterly filers).
• Annual Finalization: Even if you have zero tax to pay, you must still perform an annual PIT finalization for all employees on your payroll within 90 days of the year-end.

 If you fail to withhold the correct amount of PIT, the tax authorities will hold the business directly liable for the shortfall, plus late payment interest and administrative fines.

Foreign Contractor Tax (FCT)

If you pay a foreign company for services (including technical fees, royalties, consulting, software licenses, or digital advertising) you are legally mandated to withhold and remit Foreign Contractor Tax (FCT). Think of it as a hybrid of VAT and CIT. 

You need to pay and declare FCT by withholding the tax amount from the payment before it is remitted offshore. Failure to correctly withhold and remit FCT can result in liabilities  for the unpaid tax plus significant interest and fines.

However, you can reduce or be exempt from FCT if the foreign contractor is a tax resident of a country that has a Double Taxation Agreement (DTA) with Vietnam. This is to prevent the same income from being taxed in two jurisdictions. 

However, this relief is not granted automatically. You must submit a formal DTA application dossier to the local tax office to prove the contractor’s eligibility and obtain official approval for the exemption or reduction.

Business License Tax (BLT)

The Business License Tax (also known as the Licensing Fee) is an annual indirect tax imposed on all entities conducting business activities in Vietnam. It is essentially a “right to operate” fee that businesses must pay at the beginning of each year.

The fee amount is determined by the entity’s registered charter capital (as stated in the Business Registration Certificate) or investment capital. The current rates are structured as follows:

Level	Charter Capital	Rates per Year
1	For entities with charter capital over VND 10 billion	VND 3,000,000
2	For entities with charter capital of VND 10 billion or less	VND 2,000,000
3	For branches, representative offices, and business locations	VND 1,000,000

Administrative Compliance Calendar

Together with accurate calculations, you must also adhere to strict filing deadlines to avoid costly tax liabilities. Missing a deadline, even by a single day, can trigger automated fines and daily interest charges. 

Here are key dates you should take note of to maintain good standing with the GDT:

Period/Deadline	Requirement	Key Action/Note
Jan 30	Business License Tax (BLT)	Pay fixed fee based on registered charter capital.Newly established businesses must pay this within 30 days of receiving their business license
Quarterly	VAT & PIT Filings	Due on the 30th day of the month following the quarter.
Quarterly	Provisional CIT Payment	Pay tax based on current quarter profits (No return required).
Jan 30 (Post Q4)	The 80% CIT Rule	Cumulative 4-quarter payments must reach 80% of total tax.
90 Days Post Year-End	CIT & PIT Finalization	Submit formal annual reconciliation (typically by March 31).

Formal reconciliation reports for CIT and PIT must be submitted within 90 days from the end of the fiscal year (typically March 31 for those on a calendar year). Filing these tax reports on time is essential, as delays are frequently interpreted as “red flags” by authorities.

How Emerhub Supports Your Tax Compliance in Vietnam

With new CIT tiers and VAT changes, navigating Vietnam’s evolving tax landscape requires deep local expertise. Emerhub provides end-to-end tax and accounting solutions designed to protect your business from the operational and financial risks of non-compliance. 

Our team can help manage your monthly and quarterly VAT, PIT, and CIT provisional filings, ensuring the “80% payment rule” is met to avoid costly interest penalties. We make sure we follow Vietnam’s strict tax deadlines to minimize your tax liabilities and maintain good standing with the GDT.

Want to know more about tax compliance in Vietnam? Talk to our local experts by filling out the form below.

Disclaimer: This guide is for informational purposes and does not constitute legal or tax advice. We recommend consulting with a professional advisor for specific compliance matters.