How to calculate corporate income tax in Vietnam, with worked examples

How to calculate corporate income tax in Vietnam comes down to one line: tax payable equals taxable income multiplied by the tax rate (Article 11(1) of the Law on Corporate Income Tax 67/2025/QH15). Taxable income is assessable income less exempt income and carried-forward losses, and assessable income is revenue less deductible expenses plus other income (Article 7(1) and (2)). The standard rate is 20%. A company whose total revenue in the preceding year was up to VND 3 billion pays 15%, and one with revenue above VND 3 billion and up to VND 50 billion pays 17% (Article 10). A company with total annual revenue of VND 1 billion or less is exempt from 1 January 2026. The 15% and 17% rates and the exemption do not cover certain income, such as gains on capital transfers and real estate transfers (Article 18(3)).

Law 67/2025/QH15 took effect on 1 October 2025 and applies from the 2025 tax period; the 2008 Law on Corporate Income Tax ceased to be effective on that date (Article 19). Decree 320/2025/ND-CP implements the Law and replaces Decree 218/2013/ND-CP (Article 24(2)). Pages that still rank for this topic often describe the 2008 Law and Decree 218, so their figures may be out of date. This article uses Consolidated Text 113/VBHN-VPQH of Law 67 and Decree 320, which we checked against scanned originals. It covers an ordinary company, whether foreign-invested or a Vietnamese SME; tax incentives, foreign contractor tax and related-party rules are mentioned only where they change the calculation.

How to calculate corporate income tax in Vietnam: the four-step formula#

The formula for corporate income tax has four steps, each set by its own article, and it is the same for a foreign-invested company and a local SME. What differs is the rate, which expenses survive the deduction tests, and the paperwork.

1. Revenue: all proceeds from selling goods, processing and providing services, including subsidies, surcharges and extra charges, whether or not the money has been collected (Article 8).
2. Assessable income = revenue − deductible expenses + other income, including income received outside Vietnam (Article 7(2)).
3. Taxable income = assessable income − (exempt income + losses carried forward) (Article 7(1)).
4. Tax payable = taxable income × tax rate (Article 11(1)).

The first step is to fix revenue correctly. Under Article 8 of Decree 320, a company that files VAT under the credit method uses revenue excluding VAT, and one that files under the direct method uses revenue including VAT (Article 8(1)). Revenue from goods arises when ownership or the right to use the goods passes to the buyer; revenue from services arises when the service, or a stage of it, is completed (Article 8(2)(a) and (b)); the Minister of Finance sets the timing in other cases (point (c)). Do not follow the cash: a contract accepted in December but paid in January is still December revenue, and it also feeds the revenue test that fixes next year's rate.

The tax period is the calendar year or a financial year the company chooses; a company that picks a financial year different from the calendar year must notify its managing tax authority before doing so (Article 5(1)). A company with several lines of business adds up all the income and may choose to offset a loss in one line against income from another. A loss from transferring real estate, an investment project or a right to participate in a project cannot be offset against income of a business that enjoys tax incentives (Article 7(3)). Gains from transferring capital are "other income" with their own mechanics, covered in the article on corporate income tax on capital transfer.

Deductible expenses: the three conditions#

Deductible expenses for corporate income tax in Vietnam must meet three conditions (Article 9(1) of Law 67; Article 9(1) of Decree 320):

1. The expense was actually incurred and relates to the company's business (point a).
2. There are valid invoices and documents as the law requires (point b). For purchases from certain sellers, such as farmers selling their own produce, and households or individuals whose revenue is below the VAT threshold, the company needs a payment document for the seller and a purchase list signed by the legal representative or an authorised person.
3. There is a non-cash payment document for purchases of goods or services and other payments of VND 5 million or more per transaction (point c). This applies from 15 December 2025, when Decree 320 took effect (Article 24(1)(b)).

Decree 320 adds three specific cases around the third condition:

• Several purchases on one day. If purchases from one seller are each under VND 5 million but total VND 5 million or more on the same day, the cost is deductible only with a non-cash payment document (point c1).
• Employee buys on the company's behalf. An amount of VND 5 million or more paid by an employee through a non-cash method remains deductible if there are invoices and documents, and an internal financial policy or company decision authorises it and the company then reimburses the employee (point c2).
• Not yet paid when the cost is booked. A purchase of VND 5 million or more that is still unpaid when the cost is recorded may be deducted. If the company later pays without a non-cash document, it must declare an adjustment reducing the cost in the tax period when the cash payment is made, even if the tax authority has already opened an inspection of the period that included the cost (point c3).

The Ministry of Finance prescribes the supporting dossier for these expenses (Article 9(3) of Law 67). The Law also allows certain special expenses, such as vocational training for employees, scientific research, technology development and digital transformation, and qualifying sponsorship of education and healthcare (Article 9(1)(b)).

Non-deductible expenses: what gets disallowed#

Non-deductible expenses are those that fail the conditions above and those the Law excludes outright (Article 9(2) of Law 67). The ones companies meet most often:

• Administrative fines, including fines for tax, accounting, business registration and traffic offences, and late-payment interest on tax (Article 9(2)(b) of the Law; Article 10(2) of Decree 320).
• Expenses without a valid invoice, or without a non-cash payment document where VND 5 million or more is paid (Article 9(2)(a) of the Law; Article 10(1) of Decree 320). The same-day aggregation in point c1 is easy to overlook.
• Salaries and wages not actually paid or without proper documents; pay of the owner of a private enterprise or of an individual-owned single-member LLC; fees to founders who do not directly run the business (Article 9(2)(h) of the Law). Salaries, wages and bonuses are also disallowed where the conditions and amounts are not stated in the labour contract, the collective labour agreement, the financial regulations or the bonus regulations, and a salary reserve fund may not exceed 17% of the actual salary fund (Article 10(8)(b) and (c) of Decree 320). How to set these out is covered in salary scale in Vietnam.
• Employee welfare spending: only the part above one month of the average actual salary for the year is disallowed; one month is the actual salary fund for the year divided by 12 (Article 9(2)(d) of the Law; Article 10(4)(d) and (d1) of Decree 320). Holiday trips, weddings and funerals, medical support, travel at festivals and voluntary insurance all count towards the same limit, so add the whole year together rather than testing each item alone.
• Supplementary pension, life insurance and voluntary pension contributions for employees: the part above VND 5 million per month per person is disallowed; the entitlement and level must also be written into the labour contract, collective agreement or company policy, and the company must not owe compulsory insurance (Article 10(4)(dd) of Decree 320).
• Depreciation on a passenger car of up to 9 seats: depreciation on the original cost above VND 1.6 billion per car is disallowed, except for cars used in passenger transport, tourism, hotels, or as demonstration and test-drive vehicles (Article 10(6)(e1) of Decree 320). The "specialised" exception turns on the business lines registered on the enterprise registration certificate.
• Business management expenses allocated by a foreign enterprise to its permanent establishment in Vietnam: the part above the formula is not deductible. The ceiling is the permanent establishment's taxable revenue in Vietnam divided by the foreign company's total revenue (including the revenue of its permanent establishments in other countries), multiplied by the foreign company's total business management expenses for the tax period. The provision speaks only of a permanent establishment and does not mention a subsidiary incorporated in Vietnam (Article 9(2)(d) of the Law; Article 10(4)(a) of Decree 320).
• Interest: a company with related-party transactions may deduct total interest expense (net of deposit and lending interest) only up to 30% of net operating profit plus net interest expense plus depreciation for the period, and the excess carries forward for up to 5 years (Article 9(2)(d) of the Law; Article 10(4)(c) of Decree 320; Article 16(3) of Decree 255/2026/ND-CP). The cap applies to all interest of that company, including bank loans, not only to interest paid to related parties; see transfer pricing in Vietnam; interest on borrowing equal to unpaid registered charter capital is not deductible (Article 9(2)(i) of the Law).
• Other: input VAT already credited, and corporate income tax itself (point l); expenses not matched to taxable revenue, except the special items in Article 9(1)(b) (point m); expenses directly related to an increase or decrease in owners' equity (point o); and provisions, depreciation and accruals that do not follow the rules (points dd, e and g). All are in Article 9(2) of the Law.

The cap on input VAT for passenger cars sits in another legal document; Decree 320 only refers to it, so we do not state a figure. For a Vietnamese subsidiary borrowing from its parent, the 30% interest cap above is usually the item to compute separately before the return is finalised.

Vietnam corporate income tax rate: 20%, 17%, 15% or exempt#

The Vietnam corporate income tax rate depends on total revenue of the preceding tax period (Article 10(3) of Law 67). The wrong rate distorts the whole calculation for the year.

Total revenue of the preceding year	Corporate income tax	Basis
VND 1 billion or less	Exempt (from 1 January 2026)	Article 4(14a) of the Law; Article 4(15) of Decree 320, added by Decree 141/2026
Up to VND 3 billion	15%	Article 10(2) of the Law
Above VND 3 billion, up to VND 50 billion	17%	Article 10(3) of the Law
Above VND 50 billion	20%	Article 10(1) of the Law

The exemption in Article 4(14a) covers enterprises and organisations "established under Vietnamese law", which includes a foreign-invested company incorporated in Vietnam. Oil and gas exploration and extraction are taxed at 25% to 50%, and exploration of rare resources at 50% or 40% (Article 10(4)). Preferential rates and exemptions under Articles 13 to 15 of the Law are outside this article. A subsidiary of a multinational group with consolidated revenue of EUR 750 million or more that enjoys incentives may still owe top-up tax under the global minimum tax in Vietnam if its effective rate falls below 15%.

The 15% and 17% rates and the Article 4 exemptions do not apply to the following income, however low the company's revenue (Article 18(3) of Law 67): transfers of capital or capital contribution rights; transfers of real estate (except investment in social housing); transfers of investment projects or rights to participate in them (except mineral processing projects); and business carried on outside Vietnam (point a); oil and gas, other rare resources, and mineral exploration and extraction (point b); online electronic games, and goods and services subject to special consumption tax, except certain projects such as manufacturing and assembling cars, aircraft, yachts and petrochemical refining (point c); and special cases set by the Government (point d). So a small company that sells an equity stake or real estate still pays 20% on that gain. For a capital transfer the tax is on the difference between the transfer price and the purchase price and transfer costs; see corporate income tax on capital transfer and, for an individual seller, capital transfer tax.

The revenue that fixes the 15% and 17% rates, and the VND 1 billion exemption, is not only sales revenue. Under Article 11(4) of Decree 320 it is the sum of revenue from selling goods and providing services (net of revenue deductions), financial income and other income, taken from the revenue appendix to the corporate income tax finalisation return of the preceding tax period. Three further rules apply:

• Preceding period shorter than 12 months. Actual revenue is divided by the number of months of actual operation and multiplied by 12; a newly established company, or one converted, merged, consolidated or split in any month of that period, is counted as operating for the full month (Article 11(4)(a)).
• Company newly established in the period. It estimates revenue and makes quarterly provisional payments at 15% or 17%; at year end, if actual revenue does not qualify, it pays the shortfall plus late-payment interest (Article 11(4)(b)). If its estimated revenue is not more than VND 1 billion it makes no provisional payments, and if actual revenue then exceeds VND 1 billion it finalises the tax with no late-payment interest (Article 4(15)(c) of Decree 320).
• Subsidiaries and affiliated companies. The 15%, 17% and the VND 1 billion exemption do not apply to a subsidiary or affiliate where the enterprise in the affiliation does not itself meet the conditions (Article 11(4)(c); Article 4(15)(d)). The wording is dense, so a group with several Vietnamese entities should review the whole structure with its tax adviser first.

As of 5 October 2026 we have found no instrument amending Decree 320 other than Decree 141/2026/ND-CP; thresholds and the revenue test should be rechecked when new guidance appears.

The 2025 tax year and transitional periods#

Law 67 applies from the 2025 tax period (Article 19(1)). For that period Decree 320 lets a company choose to apply its rules on revenue, expenses, incentives, exemptions, reductions and loss carry-forward from the start of the 2025 tax period, from the date the Law took effect, or from the date the Decree took effect. If the company's 2025 tax period began after the Law took effect, the rules apply from the date of the Law or of the Decree (Article 24(1)(a) of Decree 320). The non-cash payment rule alone applies only from 15 December 2025 (Article 24(1)(b)).

For the VND 1 billion exemption: if the 2025 tax period ends after 1 January 2026 and the company qualifies, it is exempt for the time from 1 January 2026 to the end of that period. The tax exempted equals the 2025 corporate income tax payable divided by 12 months (or by the months actually operated, for a company set up during 2025) and multiplied by the months of the period that fall in calendar year 2026; from the 2026 tax period the general rule applies (Article 4(3) of Decree 141/2026/ND-CP). This mainly matters to companies on a financial year that differs from the calendar year.

How to calculate corporate income tax in Vietnam: worked examples for an SME, a foreign-invested company and a loss#

The examples use assumed figures; amounts are in VND million.

Example 1: a trading SME, total revenue of the preceding year 20,000 (above VND 3 billion, not above VND 50 billion), so 17%. Sales revenue this year (excluding VAT) is 22,000. Expenses booked are 20,300, including an administrative fine of 60 and goods bought for 150 and paid in cash, each payment VND 5 million or more. Both are disallowed, so deductible expenses are 20,300 − 60 − 150 = 20,090. With other income (bank interest) of 50, assessable income is 22,000 − 20,090 + 50 = 1,960 and corporate income tax is 1,960 × 17% = 333.2. This first corporate income tax calculation example shows the formula for corporate income tax with two disallowed items: applying 20% by mistake would give 392, and leaving them in the deductions would show assessable income of 1,750 and understate tax by 35.7.

Example 2: a foreign-invested company, total revenue of the preceding year 120,000, so 20%. In this second corporate income tax calculation example, revenue this year is 130,000 and expenses booked are 118,000, of which three items must come out:

• Employee welfare of 2,600. The actual salary fund is 24,000, so one month of average salary is 24,000 ÷ 12 = 2,000, and welfare above the limit is 2,600 − 2,000 = 600.
• Depreciation on a 9-seat car with original cost 2,400 and annual depreciation 240; the share relating to cost above 1,600 is 240 × 800 ÷ 2,400 = 80.
• An administrative fine of 25.

Deductible expenses are 118,000 − 600 − 80 − 25 = 117,295; assessable income is 130,000 − 117,295 = 12,705; corporate income tax is 12,705 × 20% = 2,541. The four quarterly prepayments must total at least 80% of the finalised tax, here 2,032.8 (Article 24(3)(a) of Decree 252/2026/ND-CP). The example leaves out interest on a loan from the parent company; if there is one, also test the 30% cap on total interest expense under Article 16(3) of Decree 255/2026/ND-CP.

Example 3: a loss carried forward. A company has taxable income of negative 3,000 for 2026, so no tax arises that year. A loss is carried forward continuously for up to five years starting the year after the loss arises, here 2027 to 2031 (Article 16(1) of the Law; Article 7(2) of Decree 320). In 2027 assessable income is 1,200: taxable income is 1,200 − 1,200 = 0, so no tax, and 1,800 of the loss remains. In 2028 assessable income is 2,500: taxable income is 2,500 − 1,800 = 700, and at 17% the tax is 119. A loss not used within five years lapses and cannot be set against later years (Article 7(2)(b2) of Decree 320). If the tax authority inspects and fixes a different loss, the carried-forward amount follows its conclusion, still within five years (point b1).

How to calculate corporate income tax in Vietnam as a percentage of revenue#

Two groups pay a percentage of revenue instead of tax on taxable income (Article 11(2) of Law 67):

• Foreign companies with no permanent establishment, or with a permanent establishment but receiving income unrelated to it, pay a percentage of revenue arising in Vietnam, with rates by type of income set in Article 12 of Decree 320. For a capital transfer the rate is 2%.
• Companies with total annual revenue of VND 3 billion or less that can establish revenue but not expenses and income pay on revenue at the rates below (Article 12(4) of Decree 320).

Activity	Rate on revenue
Distribution and supply of goods	0.3%
Production, transport, services tied to goods, construction with materials supplied	1.2%
Services (including deposit and loan interest), construction without materials	1.5%
Leasing of assets, insurance agency, lottery agency, multi-level selling agency	4%
Digital information content on entertainment, electronic games, digital film, photos, music and advertising	4%
Other activities	0.5%

Declaration, prepayment and finalisation deadlines#

Corporate income tax is prepaid quarterly and finalised annually (Article 24(1) of Decree 252/2026/ND-CP, effective 1 July 2026).

• Quarterly prepayment. Due by the last day of the first month of the following quarter: for the first quarter by 30 April, the second by 31 July, the third by 31 October and the fourth by 31 January of the next year (Article 24(2)). The four quarterly payments must total at least 80% of the finalised tax; a shortfall attracts late-payment interest on the amount short from the day after the fourth quarter's deadline (Article 24(3)(a) and (b)).
• Annual finalisation. Due by the last day of the third month after the end of the finalisation period (Article 10(5)(a)); that period follows the accounting year (Article 9(2)(dd)(1)). A company on the calendar year finalises by 31 March of the following year.
• Ceasing operations, dissolution, merger or split. The finalisation return is due within 45 days of the decision (Article 10(5)(b)).

We checked the filing and prepayment deadlines on the text version of Decree 252. The finalisation return form is prescribed by the Ministry of Finance and changes by circular, so confirm the current form before filing.

Checklist for how to calculate corporate income tax in Vietnam before you file#

1. Revenue of the preceding year, including financial income and other income: choose between exempt, 15%, 17% and 20%; check affiliation with other companies and income excluded from the lower rates.
2. Revenue recognised when goods pass or the service is completed, not when cash arrives.
3. Every expense of VND 5 million or more: valid invoice, non-cash payment, and the same-day aggregation rule applied.
4. Items with limits computed separately: welfare, supplementary pension and life insurance, and depreciation on cars costing more than VND 1.6 billion.
5. Fines and late-payment interest on tax removed; the 30% cap on total interest tested if there are related-party transactions, and interest on unpaid charter capital checked.
6. Other income added, exempt income and any loss still within the five-year window subtracted.
7. Tax compared with the amount prepaid (at least 80%), and expense files kept until finalisation.

Getting the figures right depends on contracts and documents that exist before the return is prepared. LexData advises on the legal side of contracts, documents and deal structure that affect deductible expenses, for example through legal due diligence and the capital contribution and share purchase service. Tax filing and finalisation are handled by the company or with its accountants and tax advisers.