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OFFICIAL LETTER NO. 3896/CT-CS AND OFFICIAL LETTER NO. 3897/CT-CS CLARIFYING CORPORATE INCOME TAX INCENTIVE POLICIES FOR FDI ENTERPRISES UNDER DECREE NO. 20/2026/ND-CP

On June 11, 2026, the Tax Department issued Official Letter No. 3896/CT-CS to provide uniform guidance on the application of corporate income tax (“CIT”) incentives under Decree No. 20/2026/ND-CP on certain special mechanisms and policies for private economic development. Concurrently, in Official Letter No. 3897/CT-CS, the Tax Department requested the suspension of the previous guidance issued by the Ho Chi Minh City Tax Department regarding FDI enterprises being ineligible for CIT incentives.

Notable point: The Tax Department confirmed that foreign-invested enterprises (FDI) are not excluded from the scope of application for CIT exemption incentives, provided that they fully meet the conditions for newly established small and medium-sized enterprises (“SMEs”) as prescribed.

Accordingly, enterprises shall be exempt from CIT for 03 consecutive years from the date of initial issuance of the Enterprise Registration Certificate, subject to the following conditions:

– Being a small and medium-sized enterprise in accordance with the law on support for SMEs:

  • The average annual number of employees participating in social insurance does not exceed 200 people.
  • The total capital fund does not exceed 100 billion VND, or the total revenue of the preceding year does not exceed 300 billion VND.

– Not falling into the cases that are NOT eligible for incentives:

  • Newly established enterprises resulting from a merger, consolidation, division, separation, ownership transfer, or conversion of enterprise type.
  • Newly established enterprises whose legal representative (except where they are not a capital-contributing member) is the legal representative, a partner, or the highest capital-contributing member in enterprises currently operating or dissolved for less than 12 months.

-> The tax exemption shall not apply to the incomes stipulated in Clause 3, Article 18 of the Law on Corporate Income Tax No. 67/2025/QH15.

The new guidance has clarified the previous interpretation regarding the scope of incentive application, whereby FDI enterprises established in Vietnam can still enjoy the 03-year CIT exemption if they meet the conditions of an SME, rather than being excluded solely due to the foreign ownership factor. Newly established FDI enterprises should review their scale, history of establishment, and ownership structure to assess their eligibility for this incentive.