Vietnam Corporate Income Tax Updates in 2026: What Businesses Should Review

Decree No. 141/2026/ND-CP, issued by the Vietnamese Government on April 29, 2026, and effective from January 1, 2026, introduces amendments to Vietnam’s tax policy framework, including corporate income tax (CIT). One of the key changes is the addition of a CIT exemption for eligible enterprises and organizations established under Vietnamese law with annual revenue of VND 1 billion or less.

For businesses operating in Vietnam, the new rules make it important to review revenue calculations, eligibility conditions, related-party relationships, and tax payment arrangements. The effective date also raises transitional questions for businesses that have already made provisional CIT payments or operate on a fiscal year that does not coincide with the calendar year.

This article examines the corporate income tax provisions under Decree 141/2026/ND-CP and identifies practical steps businesses, including foreign-invested enterprises (FIEs), should consider when reviewing their tax compliance position.

1. Scope of Decree 141/2026/ND-CP

Decree 141/2026/ND-CP amends and supplements two existing government decrees:

• Decree 68/2026/ND-CP, which regulates tax policies applicable to household businesses and individual business operators.
• Decree 320/2025/ND-CP, which provides detailed regulations and implementation measures for the Law on Corporate Income Tax.

For companies, the principal provision to review is Article 2 of Decree 141/2026/ND-CP. This provision adds Clause 15 to Article 4 of Decree 320/2025/ND-CP, introducing an additional category of income eligible for CIT exemption.

The amendment concerning the VND 1 billion annual revenue threshold for CIT purposes should be distinguished from the separate changes concerning household businesses and individual business operators. Although both form part of the same decree, they concern different taxpayer categories and tax obligations.

Businesses should therefore focus on the provisions applicable to their legal status and operations rather than treating the decree as a single, uniform tax exemption framework.

Key consideration: The new CIT exemption is subject to specific eligibility rules. Revenue alone should not be treated as sufficient evidence that a company qualifies.

2. Key Corporate Income Tax Changes Under Decree 141/2026/ND-CP

2.1. CIT exemption for eligible businesses with annual revenue of up to VND 1 billion

Under Clause 15, Article 4 of Decree 320/2025/ND-CP, as added by Article 2 of Decree 141/2026/ND-CP, income earned by enterprises and organizations established under Vietnamese law is eligible for CIT exemption where their annual total revenue does not exceed VND 1 billion, subject to the prescribed conditions and exclusions.

The threshold is relevant to determining eligibility for the exemption. It should not be interpreted as a general exemption from all corporate tax obligations or other regulatory requirements.

Companies should assess the following before applying the exemption:

• Whether the entity falls within the scope of the provision.
• Whether its total revenue satisfies the prescribed threshold.
• Whether the revenue calculation has been prepared using the required tax records and methodology.
• Whether the company is affected by the exclusion relating to subsidiaries and related companies.

The assessment should be documented using accounting records, tax finalization schedules, and relevant corporate ownership information.

2.2. How is annual revenue calculated?

Decree 141/2026/ND-CP specifies that annual total revenue for determining eligibility is based on the relevant business performance appendix attached to the corporate income tax finalization return for the immediately preceding tax period.

The calculation includes:

• Revenue from sales of goods and provision of services, excluding revenue deductions.
• Revenue from financial activities.
• Other income.

This means that a company should not assess eligibility solely by looking at its principal operating revenue. Financial income and other income must also be considered within the scope of the prescribed calculation.

For example, assume a company reports VND 800 million in revenue from services but also earns financial revenue and other income during the relevant period. The company should calculate its total revenue using all applicable categories before concluding whether it meets the VND 1 billion threshold.

The practical approach is to reconcile the revenue figures in the accounting records with the relevant corporate income tax finalization appendix. Any differences should be identified and explained before the company determines its eligibility.

2.3. Revenue calculation for businesses operating for less than 12 months

A specific calculation applies when a company operated for fewer than 12 months during the immediately preceding tax period.

Under the decree, the relevant revenue is annualized by dividing actual revenue for that tax period by the number of months of actual business operation and multiplying the result by 12.

Formula:

Annualized revenue = Actual revenue during the tax period ÷ Months of actual operation × 12

For example, a company operates for six months and generates VND 450 million in revenue during that period. Its annualized revenue would be VND 900 million.

The company may satisfy the revenue threshold based on this calculation. However, it must still assess the other eligibility conditions and applicable exclusions before claiming the exemption.

The decree also provides that, where a company is newly established or undergoes a change in enterprise type or ownership form, merger, consolidation, division, or separation in any month of the immediately preceding tax period, the relevant operating period is counted as a full month.

Businesses that have undergone restructuring or commenced operations partway through a tax period should therefore review their corporate records and revenue calculations carefully.

2.4. Newly established businesses and provisional CIT payments

Decree 141/2026/ND-CP also addresses newly established companies during the relevant tax period.

Where a newly established company expects its total revenue for the tax period not to exceed VND 1 billion, it is not required to make provisional CIT payments.

However, this treatment must be distinguished from the company’s final tax position at the end of the tax period.

If actual total revenue exceeds VND 1 billion, the company must declare and finalize CIT in accordance with applicable regulations. Under the decree, it is not required to calculate late-payment interest in this specified circumstance.

Newly established companies should maintain reasonable revenue forecasts, monitor actual performance, and retain supporting documentation for their estimates. If business performance changes materially, the company should reassess its position before completing its tax finalization.

3. Effective Date and Transitional Issues

Decree 141/2026/ND-CP was issued on April 29, 2026, but its effective date is January 1, 2026. This timing is important for companies reviewing their CIT obligations for 2026 and certain fiscal periods that extend across the effective date.

The decree includes transitional provisions addressing tax payments and tax periods that require separate consideration.

3.1. CIT provisionally paid for the first quarter of 2026

Where a company has already made a provisional CIT payment for the first quarter of 2026 but expects its total revenue for the tax period to be VND 1 billion or less, the decree provides that it is not required to make provisional CIT payments for subsequent quarters.

Any overpaid tax may be offset or refunded, including through a refund combined with offsetting against other state budget revenues, in accordance with tax administration regulations.

Companies should verify their revenue forecasts, tax payment records, and eligibility before determining how to handle any overpaid amount. A refund or offset should not be assumed to arise automatically without the applicable procedures.

3.2. Fiscal year 2025 ending after January 1, 2026

A separate transitional rule applies where the 2025 tax period ends after January 1, 2026.

If the company satisfies the prescribed conditions, it may qualify for CIT exemption for the portion of its 2025 tax period falling between January 1, 2026, and the end of that tax period.

The amount of CIT exempted for this period is calculated by dividing the total CIT payable for the 2025 tax period by 12 months—or by the actual operating months for a company newly established in 2025—and multiplying the result by the number of months of the 2025 tax period falling within calendar year 2026.

Companies using a non-calendar fiscal year should review this transitional mechanism separately rather than applying the calendar-year rules without adjustment.

3.3. Review previously filed tax records

The effective date and transitional provisions may affect how companies assess provisional payments and tax liabilities already recorded.

Before amending a tax return or requesting a refund, a company should establish:

• Which tax period is affected.
• Whether it meets the exemption conditions.
• Whether the transitional provisions apply.
• Whether an overpayment exists.
• Which tax administration procedures are required.

The appropriate treatment depends on the company’s facts and applicable procedural requirements. The decree should not be interpreted as requiring every company to revise all previously filed tax returns.

4. Practical Implications for Companies: Tax Policies, Records, and Filing Procedures

4.1. Review internal tax policies

Companies should update their internal tax review procedures to reflect the new exemption and its eligibility criteria.

The finance and accounting teams should agree on the revenue categories to be included, the relevant tax period, and the documents required to support the eligibility assessment.

This is particularly relevant to companies with fluctuating revenue, financial income, restructuring transactions, or recently commenced operations.

4.2. Maintain consistent accounting and tax documentation

Companies should reconcile the following records where relevant:

• Accounting ledgers and financial statements.
• The business performance appendix attached to the CIT finalization return.
• Enterprise registration and restructuring documents.
• Ownership records and information concerning related-party relationships.
• Revenue forecasts and supporting documents for newly established companies.

Consistent records can help companies explain the basis of their tax treatment if the tax authorities request clarification or conduct a review.

4.3. Review provisional payments and finalization obligations

A CIT exemption does not automatically remove every accounting, filing, or record-retention obligation applicable to a company.

Businesses that have already made provisional payments or prepared tax finalization documents should determine whether any adjustment is required under the new rules.

This assessment should be based on the applicable legal provisions, the company’s actual tax position, and the relevant tax administration procedures—not merely on the fact that reported revenue is below VND 1 billion.

5. What Foreign-Invested Enterprises Should Review

Foreign-invested enterprises (FIEs) should pay particular attention to the scope of the exemption and the exclusion relating to subsidiaries and related companies.

The provision covers enterprises and organizations established under Vietnamese law. However, it excludes an enterprise established under Vietnamese law where it is a subsidiary or a related company and the other enterprise in that relationship does not satisfy the conditions for the exemption.

Accordingly, an FIE should not automatically assume that it qualifies merely because its annual revenue is below the threshold. Equally, the provision should not be interpreted to mean that every FIE is automatically excluded.

The outcome depends on the entity’s legal status, relevant ownership and related-party relationships, and the conditions applicable to the companies involved.

FIEs should prioritize three areas of review:

• First, legal status and eligibility. Confirm that the entity falls within the statutory scope and assess whether it satisfies the applicable conditions.
• Second, ownership and related-party relationships. Review the corporate structure, identify relevant subsidiaries and related companies, and assess whether the statutory exclusion applies.
• Third, tax and accounting documentation. Reconcile revenue figures with tax records and retain supporting information concerning the ownership structure and eligibility assessment.

For multinational groups operating through multiple Vietnamese entities, the review should be conducted at the individual legal-entity level while considering the group’s overall structure. A conclusion reached for one entity should not automatically be applied to every company in the group.

6. LTS LAW Perspective: A Practical Compliance Checklist

Decree 141/2026/ND-CP makes a documented review of revenue and eligibility conditions important for businesses seeking to apply the new CIT exemption.

LTS LAW recommends the following review process.

• Step 1: Confirm the applicable legal framework. Review Decree 141/2026/ND-CP, Decree 320/2025/ND-CP, and the relevant provisions governing the company’s tax position.
• Step 2: Reconcile total revenue. Verify sales and service revenue, financial revenue, and other income using the prescribed tax records. Annualize revenue where the applicable rule requires it.
• Step 3: Assess ownership and related-party relationships. Identify relevant subsidiaries and related companies and determine whether the statutory exclusion applies.
• Step 4: Review the 2026 tax position. Examine provisional CIT payments, relevant tax periods, and any potential overpayment or finalization adjustments.
• Step 5: Retain supporting documentation. Keep the revenue calculation, accounting records, corporate documents, ownership information, and the basis for applying the exemption.

This process helps businesses make decisions based on the applicable legal requirements and their actual circumstances rather than relying on the revenue threshold alone.

For companies with complex ownership structures, cross-border operations, or non-calendar fiscal years, an entity-specific review may be necessary before determining the appropriate tax treatment.

Disclaimer

Decree No. 141/2026/ND-CP, particularly Article 2, which supplements Clause 15 of Article 4 of Decree No. 320/2025/ND-CP. Businesses should consult the official Vietnamese text and applicable tax administration guidance when determining their specific tax treatment. Businesses should review the full legal text and any applicable sector-specific rules before making product-origin determinations.

For advice tailored to your specific circumstances, please contact LTS LAW FIRM for further consultation and legal assistance.

LTS LAW FIRM

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