Which Businesses Are Eligible for 4-Year or 2-Year Corporate Income Tax Exemption Starting October 1, 2025?

 Starting October 1, 2025, enterprises with new investment projects or those operating in socialized sectors located in disadvantaged areas may qualify for up to 4 years of corporate income tax (CIT) exemption, followed by a 50% tax reduction for the next 9 years—pursuant to the 2025 Corporate Income Tax Law and the 2017 SME Support Law.

1. Cases Eligible for 4-Year CIT Exemption

According to Articles 12 and 14 of the 2025 CIT Law, the following businesses may receive a CIT exemption for up to 4 years and a 50% tax reduction for up to the following 9 years, if they meet all qualifying conditions:

(a) Income from New Investment Projects in Preferential Fields or Locations

Eligible businesses are defined under Points a, b, c, d, đ, e, and g, Clause 1, Article 12 of the 2025 CIT Law. These include:

By Priority Investment Sector:

– Point a: Projects in high-tech industries, supporting industries, renewable energy, and environmental protection.

– Point b: Software production, digital products, scientific research, technology development, and innovation.

– Point c: Investment in incubators for start-ups or technical facilities supporting SMEs.

– Point đ: Projects in high-tech agriculture.

– Point g: Certified science and technology enterprises.

By Priority Investment Location:

– Point d: Projects in areas with particularly difficult socioeconomic conditions.

– Point e: Projects located in high-tech zones, economic zones, high-tech agricultural parks, or centralized digital technology zones established by the Prime Minister.

Important Notes:

– If a project spans both preferential and non-preferential zones, the government will provide specific rules to determine applicable incentives for each segment.

– SMEs may enjoy additional incentives under the 2017 SME Support Law, especially if utilizing state-supported incubators or technical facilities.

(b) Income from Socialized Activities

Under Point h, Clause 1, Article 12 of the 2025 CIT Law, entities engaged in socialized activities are also entitled to tax incentives if they meet the legal criteria.

Eligible Social Sectors:

– Education, vocational training

– Healthcare, sports, culture

– Environmental protection, judicial expertise

By Location:

– If operating in disadvantaged or specially disadvantaged areas: 4 years of exemption + 50% reduction for 9 years.

– If not in such areas: Still eligible for 4 years of exemption but only 50% reduction for 5 years.

Note: Enterprises must obtain certification from a competent authority affirming their status as a socialized organization. Preferential areas are determined according to the government’s official list.

2. Cases Eligible for 2-Year CIT Exemption

As per Point i, Clause 1, Article 12 of the 2025 CIT Law, businesses with income from the transfer of prioritized technologies will enjoy:

– 2 years of CIT exemption

– 50% tax reduction for the following 4 years

Qualifying Technologies:

– High-tech, clean technologies

– Digital transformation technologies, agricultural and new energy technologies

– Advanced manufacturing technologies, etc.

A specific list of eligible technologies will be issued by the Government from time to time.

This policy aims to encourage tech transfer from large firms and research institutes to SMEs—especially in foundational and innovative industries.

3. Timeline for Tax Incentive Application

There are two main scenarios for determining when the CIT incentives take effect:

a) Enterprises Without a Certificate of Tax Incentive

If the business generates taxable income: incentives apply from the first year of taxable income.

If no income is earned within 3 years from the year of first revenue: incentives apply from the 4th year.

b) Enterprises Granted a Certificate After Earning Income

If taxable income exists when the certificate is granted: incentives apply from the year of issuance.

If there’s no income in the year the certificate is granted:

– If income is earned within 3 years: apply from the first year income arises.

– If no income is earned within 3 years: apply from the 4th year from issuance.

4. Legal Basis

– Corporate Income Tax Law 2025 (Law No. 67/2025/QH15)

– Law on Support for Small and Medium Enterprises 2017 (Law No. 04/2017/QH14)

– Policy update as of July 30, 2025, from ThuVienPhapLuat.vn

5. Important Notes & Support from LTS LAW

Determining eligibility for CIT incentives requires careful evaluation of several factors:

– Actual business activities and sector

– Project location

– Investment scale and capital

– Business type (SME, high-tech, socialized entity, etc.)

LTS LAW offers professional support from investment planning, tax incentive assessment, to representing your business before tax authorities—ensuring your enterprise receives the full entitlements it qualifies for.

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