CORPORATE INCOME TAX (CIT) EXEMPTION FOR SMALL AND MEDIUM-SIZED ENTERPRISES

CORPORATE INCOME TAX (CIT) EXEMPTION FOR SMALL AND MEDIUM-SIZED ENTERPRISES

UNDER DECREE 20/2026/ND-CP

1. Three-Year CIT Exemption for Newly Established Enterprises

Pursuant to Clause 3, Article 7 of the Decree guiding the CIT exemption for small and medium-sized enterprises (SMEs) registering their business for the first time:

Enterprises are exempt from Corporate Income Tax for three (3) years, counted from the date of issuance of the Enterprise Registration Certificate for the first time.

• The exemption period is calculated continuously, starting from the year in which the Enterprise Registration Certificate is first issued.
• The exemption applies regardless of whether the enterprise generates taxable profits, provided that it qualifies for the incentive.

Case where the enterprise was established before 17 May 2025

Where the Enterprise Registration Certificate was issued before 17 May 2025 and the enterprise still has remaining incentive time as of that date, the enterprise shall continue to enjoy the CIT exemption for the remaining period in accordance with this provision.

Example (Assumption)

• The Enterprise Registration Certificate was first issued in June 2024.
• The enterprise qualifies for a three-year CIT exemption under the regulation.

As of 17 May 2025, the enterprise is in the second year of its exemption period.

Accordingly, the enterprise shall continue to enjoy the CIT exemption for the remaining period (2025–2026) in accordance with the regulation.

Important Notes – Cases Not Eligible for the Incentive

(i) Enterprises newly established as a result of:

• Merger, consolidation, division or separation;
• Change of ownership;
• Conversion of enterprise type.

(ii) Newly established enterprises where:

• The legal representative (except where such person is not a capital-contributing member).
• or a general partner.
• or the person holding the highest capital contribution ratio.

Has previously held the same position in another enterprise.

Has held or is currently holding one of the above positions in another enterprise that is:

Still operating; or

Has been dissolved for less than 12 months (counted from the date of dissolution of the former enterprise to the date of establishment of the new enterprise).

(iii) 

2. Criteria for Determining Small and Medium-Sized Enterprises

Pursuant to Article 5 of Decree 80/2021/ND-CP, detailed criteria for determining small and medium-sized enterprises eligible for the three-year CIT exemption include: