News

DECREE NO. 320/2025/ND-CP (“DECREE 320”) PROVIDING DETAILED REGULATIONS ON A NUMBER OF ARTICLES AND MEASURES FOR THE IMPLEMENTATION AND GUIDANCE OF THE LAW ON CORPORATE INCOME TAX (“CIT”)

On December 15, 2025, Decree No. 320/2025/NĐ-CP was promulgated to provide detailed guidance on the implementation of the 2025 Corporate Income Tax Law, introducing several important new points:

1. Method of calculating corporate income tax payable by foreign enterprises in certain specific cases

Capital transfer transactions in Vietnam by foreign institutional investors

Capital transfer activities in Vietnam by foreign institutional investors are subject to corporate income tax at a fixed rate of 2% on the total transfer value, instead of the previous method of calculating tax on taxable income (transfer price minus cost price). This regulation does not apply to internal restructuring within the same group, where the ultimate parent company of the subsidiary in Vietnam remains unchanged and no profit arises.

The regulation takes effect from the effective date of the Decree (December 15, 2025).

Loan interest paid to foreign contractors

Loan interest paid to foreign contractors continues to be subject to corporate income tax at 5%, rather than the 10% rate proposed in the earlier draft of the Decree.

2. Changes in deductible and non‑deductible expenses

The Decree tightens control over many expense items but also introduces several positive new points, specifically:

Non‑cash payment expenses

Decree 320 sets a new ceiling of 5 million VND per transaction for non‑cash payments of expenses related to the purchase of goods, services, and other payments (including salary expenses) to be deductible. This replaces the previous threshold of 20 million VND, aligning with VAT regulations. The rule applies from the effective date of the Decree (December 15, 2025) and is not retroactive for the entire 2025 tax year.

Note on Salary and Wage Expenses

With respect to salary and wage expenses, several local tax authorities have expressed the view that payments of VND 5 million or more must be supported by non-cash payment evidence in order to be treated as deductible expenses. This position is reflected in the following sources:

  • Responses of the Tax Department at the 2025 Tax Dialogue Conference dated 26 December 2025;
  • Responses of Sub-department of Taxation No. 2 – Ho Chi Minh City published on the Ministry of Finance’s electronic portal;
  • Official Letter No. 01/TCS14-QLDN1 issued by Sub-department of Taxation No. 14 – Ho Chi Minh City.

As there is currently no unified guidance at the Circular level, enterprises are advised to adopt a prudent approach with respect to the requirement for non-cash payments for salaries and wages, and to seek professional tax advice or await official guidance in order to mitigate potential tax risks.

Other deductible and non‑deductible expenses

  • Damaged goods: In addition to goods damaged due to natural biochemical processes or expiration, goods that become obsolete or technically outdated are now deductible.
  • Voluntary pension/social welfare funds & insurance: The deductible limit for contributions to voluntary pension funds, social welfare funds, voluntary insurance, and life insurance is raised from 3 million VND/month/person to 5 million VND/month/person, provided the enterprise has fulfilled all mandatory insurance obligations.
  • Loan interest: Interest expenses from loans obtained from non credit institutions exceeding the Civil Code’s current cap of 20%/year are non deductible.
  • VAT on gifts: VAT on goods given away for business purposes will be deductible.
  • Overtime expenses: Overtime costs exceeding the legal limits under labor law will not be deductible.
  • Super incentive for R&D: Up to 200% of actual R&D expenses can be deducted. This is an exceptional incentive aimed at encouraging enterprises to develop their own technology.
  • Expenses not immediately linked to revenue: Reasonable expenses that do not generate immediate revenue are accepted, such as unsuccessful bidding costs, failed market research, or depreciation of fixed assets awaiting tenants

3. Corporate Income Tax Incentives

Several important changes likely to affect many enterprises include:

Special investment incentives and preferential locations

For projects entitled to “special” investment incentives under the Investment Law (such as innovation centers, research and development centers, etc.), the registered total investment capital must, in principle, be fully disbursed within 10 years from the date of issuance of the Investment Registration Certificate or the date of approval of the investment policy, in order to continue qualifying for incentives.

New projects in economic zones where more than 50% of the project area lies outside preferential locations may still be eligible for a 17% corporate income tax rate for 10 years, provided they meet the stipulated conditions.

Tax incentives for expansion investment projects

– Expansion projects are entitled to incentives when the increase in the original value of fixed assets (“FA”) reaches at least:

  • 40 billion VND for expansions in incentivized sectors/industries; or
  • 20 billion VND for expansions in incentivized locations.

– The tax exemption/reduction period begins once the registered capital of the expansion project has been fully disbursed and taxable income arises, but no later than the fourth year from the year in which capital disbursement is completed.

Overlap of incentives and scope of incentivized income

In cases where income simultaneously qualifies for multiple incentives, enterprises may choose the most favorable incentive scheme; however, they must deduct the incentive period already enjoyed (years of tax exemption, reduction, or preferential tax rates previously applied).

For production activities entitled to location‑based incentives, the incentive also applies to income from products consumed outside the preferential location.

For commercial and service projects, incentives apply only to income generated within the preferential location.

Once an enterprise has chosen a form of incentive for a specific income, that choice applies for the entire remaining incentive period and cannot be switched to another incentive criterion.

The Decree also sets out transitional provisions to shift from the current regime to the Corporate Income Tax Law 2025 and its implementing Decree, specifically:

  • New or expansion projects that had already enjoyed incentives before the effective date of the 2025 Corporate Income Tax Law may:
  • Continue applying the existing incentive regime until the end of its term; or
  • Opt to apply the more favorable incentives under the new Decree starting from the 2025 tax year.
  • Profits previously eligible for incentives but no longer meeting the conditions under the 2025 Corporate Income Tax Law and this Decree will cease to enjoy incentives from the effective date of the new Law, except where preservation is allowed under separate transitional provisions.

4. Effective date of implementation

The Corporate Income Tax Law No. 67/2025/QH15 takes effect from October 1, 2025 and applies starting from the 2025 corporate income tax year.

Decree 320/2025/NĐ‑CP takes effect from December 15, 2025 and also applies from the 2025 corporate income tax year. The determination of the application period in certain specific cases is as follows:

  • Enterprises may choose to apply the provisions on revenue, expenses, tax incentives, tax exemption, tax reduction, and loss carry forward either from the beginning of the 2025 tax year, or from October 1, 2025, or from December 15, 2025.

If an enterprise’s 2025 tax year begins after October 1, 2025, then the application starts from either October 1, 2025 or December 15, 2025.

  • The provisions on non-cash payment vouchers and capital transfer transactions apply from December 15, 2025, as previously outlined.