In brief
Following the adoption of the new Corporate Income Tax (CIT) Law No. 67/2025/QH15 on 14 June 2025 ("CIT Law No. 67"), the government issued Decree No. 320/2025/ND-CP ("Decree 320") on 15 December 2025. Decree 320 provides guidelines for implementing CIT Law No. 67.
Decree 320 took effect on 15 December 2025 and applies to the 2025 tax year.
Key takeaways
- The scope of CIT for foreign e-commerce and digital businesses has been clarified.
- A 2% flat rate applies to capital transfers by foreign corporate sellers.
- Details of incomes exempt from CIT are provided.
- New guidance on deductible expenses is provided.
- Losses arising from certain activities will not be offset against profits from activities currently entitled to CIT incentives.
- The criteria for determining expanded investment projects have been revised.
- Taxpayers can choose the timing for applying certain provisions of Decree 320.
In more detail
Below is a summary of the key changes introduced by Decree 320.
1. Foreign e-commerce and digital businesses pay CIT on income derived in Vietnam
Decree 320 clarifies that foreign companies engaged in e-commerce and digital-based businesses pay Vietnamese CIT on income derived in Vietnam, regardless of whether they have a permanent establishment in the country.
2. New CIT rules on capital transfers for foreign corporate sellers
Foreign corporate sellers are subject to a 2% CIT on sale proceeds from direct and indirect capital transfers, rather than the previous 20% CIT on net gains (i.e., the transfer price minus the cost of the transferred capital minus other transfer expenses).
Exemptions are allowed for internal group restructures, provided the following requirements are met:
- The ultimate parent remains the same: the restructure doesn't change the top-level owner of the Vietnamese capital.
- No income is generated: the transaction itself must not result in gains.
This new rule applies to all transactions completed on or after 15 December 2025.
3. Clarification of certain incomes exempt from CIT
Decree 320 provides more clarification on determining the categories of income eligible for the CIT exemption.
- Expansion of CIT exemptions for innovation and digital transformation activities, including income derived from innovation and digital transformation contracts; income from sales of products created from technologies applied for the first time in Vietnam; and income from products generated during pilot production phases.
- Expansion of CIT exemptions for grants, financial support and investment funds, including grants provided for scientific research, innovation and digital transformation, as well as direct support from the state budget and the Investment Support Fund prescribed under Decree No. 182/2024/ND-CP.
- Introduction of CIT exemptions for income arising from green bonds and carbon-credit instruments, including income from the first transfer of certified emission reductions and carbon credits, interest income from green bonds, and income from the first transfer of green bonds after issuance.
4. Deductible expenses
- Decree 320 provides that the noncash payment threshold is VND 5 million, which has been decreased from VND 20 million under the previous CIT regulations. This new threshold has applied since 15 December 2025, the effective date of Decree 320.
- A Research and Development (R&D) expense super-deduction has been introduced under Decree 320. Qualified R&D-related expenses are deductible up to a maximum of 200% of the actual R&D expenses. R&D-related expenses are determined under laws on science, technology and innovation, and the taxpayer must not be in a loss position after applying this super-deduction policy.
- Decree 320 provides various new guidance on CIT deductible expenses, such as the following:
- The cap on deductible expenses has been increased for employer‑paid contributions to supplementary retirement insurance schemes, social‑security‑type welfare funds and voluntary retirement insurance programs.
- Certain expenses incurred for production and business activities but not yet associated with revenue in the relevant period can now qualify as deductible expenses (e.g., bid-participation costs, market and product research expenses, and land rental).
- Interest expenses on loans from lenders that are not credit institutions are capped in accordance with the interest rate limits prescribed under the Civil Code.
5. Offsetting losses from certain business activities
Losses arising from real estate transfers, transfers of investment projects or transfers of the right to participate in investment projects will not be offset against taxable income from production and business activities that are currently entitled to CIT incentives.
6. Revised criteria for expanded investment projects
Under Decree 320, a project is recognized as an expanded investment if the additional investment in fixed assets reaches at least the following:
- VND 40 billion for projects within sectors encouraged for investment
- VND 20 billion for projects located in encouraged geographical areas
Decree 320 maintains the alternative criteria from the previous regulations. Specifically, a project still qualifies as an expanded investment if it meets either of the following criteria:
- An increase in the historical cost of fixed assets of at least 20% compared to the total historical cost prior to expansion
- An increase in the designed capacity of at least 20% compared to the capacity prior to expansion
7. Effective date and transition rules
Decree 320 took effect on 15 December 2025. However, taxpayers can choose to apply Decree 320 to certain categories of revenue, expenses, tax incentives, tax exemptions, tax reductions, tax loss carryforwards from one of the following points in time:
- The beginning of the 2025 tax period
- 1 October 2025 (the effective date of CIT Law No. 67)
- 15 December 2025 (the effective date of Decree 320)
Notably, the new 2% flat rate rule and noncash payment threshold of VND 5 million have applied since 15 December 2025.
Thanh Vinh Nguyen, Partner, has contributed to this legal update.
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