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FDI ENTERPRISES ENTITLED TO A 3-YEAR CORPORATE INCOME TAX EXEMPTION FROM THE DATE OF ESTABLISHMENT
Official Letter No. 3897/CT-CS dated 11 June 2026 – Latest Guidance on the 3-Year CIT Exemption for FDI Enterprises
The Tax Department has confirmed that foreign-invested enterprises (FDI enterprises) are eligible for a Corporate Income Tax (CIT) exemption for three (3) years from the date of their first Enterprise Registration Certificate (ERC), provided that all prescribed conditions are satisfied.
1. Conditions for FDI Enterprises to Qualify for the 3-Year CIT Exemption
Condition 1: The FDI enterprise is established under Vietnamese law and meets the criteria of a small or medium-sized enterprise (SME)
| Enterprise Category / Criteria | Agriculture, Forestry, Fishery; Industry and Construction Sectors | Trade and Service Sectors |
|---|---|---|
| Small Enterprise | ||
| Annual Revenue | Annual revenue not exceeding VND 50 billion, or total capital not exceeding VND 20 billion | Annual revenue not exceeding VND 100 billion, or total capital not exceeding VND 50 billion |
| Employees | No more than 100 employees participating in compulsory social insurance on an annual average basis | No more than 50 employees participating in compulsory social insurance on an annual average basis |
| Medium-sized Enterprise | ||
| Annual Revenue | Annual revenue not exceeding VND 200 billion, or total capital not exceeding VND 100 billion | Annual revenue not exceeding VND 300 billion, or total capital not exceeding VND 100 billion |
| Employees | No more than 200 employees participating in compulsory social insurance on an annual average basis | No more than 100 employees participating in compulsory social insurance on an annual average basis |
| Micro Enterprise | ||
| Annual Revenue | Annual revenue not exceeding VND 3 billion, or total capital not exceeding VND 3 billion | Annual revenue not exceeding VND 10 billion, or total capital not exceeding VND 3 billion |
| Employees | No more than 10 employees participating in compulsory social insurance on an annual average basis | No more than 10 employees participating in compulsory social insurance on an annual average basis |
Condition 2: The enterprise does not fall within the excluded cases
The 3-year CIT exemption for SMEs does not apply to:
- Newly established enterprises formed through mergers, consolidations, divisions, demergers, changes of ownership, or changes in legal form.
- Newly established enterprises where the legal representative (except where the legal representative is not a capital contributor), general partner, or largest capital contributor has previously conducted business as a legal representative, general partner, or largest capital contributor in another enterprise that is still operating or has been dissolved for less than 12 months before the establishment date of the new enterprise.
- Income items specified in Clause 3, Article 18 of the 2025 Corporate Income Tax Law.
2. Which FDI Enterprises Are Eligible for the 3-Year CIT Exemption?
According to Point a, Clause 3, Article 7 of Decree No. 20/2026/ND-CP, newly established SMEs are exempt from CIT for three consecutive years from the date of issuance of the first Enterprise Registration Certificate.
The exemption period is calculated continuously from the first year in which the ERC is issued.
Where the ERC was issued before 17 May 2025 and the enterprise still has remaining time within the initial three-year period, the enterprise is entitled to enjoy the exemption for the remaining period.
This means that the exemption is not limited to enterprises established on or after 17 May 2025. The determining factor is whether the enterprise still falls within its first three years of establishment as of 17 May 2025.
Accordingly:
- If, by the 2026 tax period, the enterprise has not yet completed its first three years of operation, it is entitled to the CIT exemption for the remaining period.
- If the initial three-year period ended before 2026, the enterprise is not eligible for the CIT exemption under this policy.
Example: An FDI enterprise received its first ERC in 2024:
- Year 1: 2024
- Year 2: 2025
- Year 3: 2026
As the CIT exemption policy only takes effect from the 2025 tax period, the enterprise is eligible for the CIT exemption for 2025 and 2026 only.
The year 2024 is not covered because the policy was not yet effective.
