OFFSETTING LOSSES AND LOSS CARRYFORWARD UNDER DECREE 320/2025/ND-CP

OFFSETTING LOSSES AND LOSS CARRYFORWARD UNDER DECREE 320/2025/ND-CP

On December 15, 2025, the Government issued Decree No. 320/2025/ND-CP guiding a number of provisions of the Corporate Income Tax (CIT) Law.

This Decree takes effect from December 15, 2025 and applies to the 2025 CIT tax period. Enterprises may choose to apply the provisions on tax incentives, tax exemption, tax reduction, and loss carryforward under this Decree from the beginning of the 2025 tax period, or from the effective date of the CIT Law (October 1, 2025), or from the effective date of this Decree (December 15, 2025).

1. Offsetting losses

Article 6 of Decree 320/2025/ND-CP provides that where an enterprise has multiple production and business activities within the same tax period, taxable income shall be determined as the total income from all such activities.

If any activity incurs a loss, the enterprise is allowed to offset such loss against the taxable income of profitable activities, at the enterprise’s discretion, except for the following cases:

• Losses from real estate transfers, transfers of investment projects, or transfers of the right to participate in investment projects may not be offset against income from activities that are enjoying tax incentives.

Previously, enterprises were allowed to offset losses from the above activities against profits from other business activities, including those enjoying tax incentives. Under the new regulation, the mechanism is tightened: losses may no longer be offset against production and business activities that are enjoying CIT incentives.

• In addition, taxable income from the following activities must be determined separately for declaration and payment of tax, and may not be offset with profits or losses from other production and business activities in the same tax period.

            a. Transfer of investment projects for exploration, mining, and processing of minerals;

        b. Transfer of the right to participate in investment projects for exploration, mining, and processing of minerals;

            c. Transfer of exploration, mining, and mineral processing rights.

2. Loss carryforward

Under Article 7 of Decree 320/2025/ND-CP, after tax finalization, if an enterprise incurs a loss, it shall carry forward the entire and continuous amount of such loss to be offset against taxable income of subsequent years. The loss carryforward period shall be continuous and not exceed five (5) years, counting from the year following the year in which the loss arises.

Note: Losses from real estate transfers, transfers of investment projects, and transfers of the right to participate in investment projects may not be carried forward and offset against profits from production and business activities that are enjoying tax incentives.

• Losses incurred by an enterprise before conversion of business form, change of ownership, merger, consolidation, division, or split, and which are still within the allowable carryforward period, may be offset against income of the same year or continued to be carried forward to subsequent years, subject to the principle that the carryforward period shall not exceed five (5) years after the conversion, merger, or consolidation.

Losses of an enterprise incurred before division or split into other enterprises and still within the allowable carryforward period shall be allocated to the enterprises after division or split in proportion to the equity capital divided or split. Previous regulations were less detailed regarding the principles for allocating losses, methods of tracking, and recognition of remaining losses at each legal entity after division or split.

• Enterprises incurring losses from the transfer of mineral exploration and mining projects; transfer of the right to participate in mineral exploration, mining, and processing projects; or transfer of mineral exploration, mining, and processing rights may carry forward such losses to subsequent years to offset against taxable income from the same activities. The loss carryforward period shall be continuous and not exceed five (5) years, counting from the year following the year in which the loss arises.