Updated CIT Compliance in Vietnam: Key Provisions of Decree 320/2025

Decree No. 320/2025/ND-CP signifies a thorough overhaul of Vietnam’s corporate income tax system, clearly defining rules on the scope of taxpayers, withholding responsibilities, capital transfers, and incentives as the country updates its tax regime to match a more digital and interconnected economy.

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On December 15, 2025, the Vietnamese government officially issued Decree No. 320/2025/ND-CP (“Decree 320”), detailing a number of provisions and implementation measures of the 2025 Corporate Income Tax Law.

The decree, effective upon issuance, establishes a vital legal framework to ensure consistent implementation and guidance on applying corporate income tax (CIT) policies as Vietnam continues to deepen international integration and progress toward more sustainable economic growth.

This article outlines Decree 320’s key provisions, including its effectiveness, clarification for foreign enterprise taxpayers, capital transfer taxes, and expanded CIT incentives.

See also: 2025 Corporate Income Tax Law: Implications to Manufacturing Companies in Industrial Parks

Implementation guidance

Effectiveness and applications

Effective from December 15, 2025, Decree 320 applies to the 2025 CIT assessment period. Enterprises may choose to implement the provisions on revenue recognition, deductible expenses, tax incentives, tax exemptions and reductions, and loss carryforward at different times, including:

• The start of the 2025 tax year;
• The effective date of the 2025 CIT Law: October 1, 2025; and
• The effective date of Decree 320: December 15, 2025.

If an enterprise’s 2025 tax year begins after the effective date of the CIT Law, the provisions apply from either the law’s effective date or Decree 320’s – whichever is applicable.

Additionally, the requirements regarding supporting documents for non-cash payments and the rules for capital transfer must be followed starting December 15, 2025.

Annulled directives

The decree propels annullments of several decrees, incuding:

• Decree No. 218/2013/ND-CP;
• Decree No. 91/2014/ND-CP;
• Decree No. 12/2015/ND-CP; and
• Decree No. 57/2021/ND-CP.

Clarification for foreign enterprise taxpayers

Under Point b, Clause 1, Article 2 of Decree 320, companies established under foreign laws are subject to Vietnam’s CIT, regardless of having a permanent establishment (PE). The scope of application is detailed as follows:

• Foreign enterprises with a PE in Vietnam are subject to CIT on:
  • Taxable income earned both within and outside Vietnam that is attributable to the operations of the PE;
  • Taxable income generated in Vietnam that is not attributable to the activities of the PE; and
  • Taxable income arising in Vietnam from supplying goods or services in Vietnam through e-commerce or digital platform–based business models.
• Foreign enterprises without a permanent establishment in Vietnam are subject to CIT on taxable income arising in Vietnam.

These provisions aim to align tax obligations more closely with income-generating activities in Vietnam, particularly in the digital economy.

Expansion of withholding and substitute taxpayers

Clause 2, Article 2 of Decree 320 expands the scope of entities responsible for paying CIT on behalf of foreign enterprises.

Vietnamese entities in transactions with foreign enterprises

Entities established, registered, or operating under Vietnamese law are treated as taxpayers when they withhold and remit tax on behalf of foreign enterprises. This applies as follows:

• The Vietnamese party purchases services from foreign enterprises, including:
  • Services bundled with goods; or
  • Goods supplied or distributed under on-the-spot export and import arrangements or pursuant to international commercial terms (Incoterms).
• The Vietnamese party engages in e-commerce or digital platform–based business activities involving foreign enterprises.
• The Vietnamese party receives capital transfers under contracts with foreign enterprises, as specified in the decree.

This provision explicitly includes operators of e-commerce marketplaces and digital platforms.

Securities investment fund management companies

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Enhancing internal audit and risk management

A securities investment fund management company is responsible for withholding and remitting taxes on behalf of investors in the following circumstances: when profits are distributed to investors and when income arises from the transfer or lease of real estate by a real estate investment fund.

If the transferee of capital from a foreign enterprise is a foreign organization or individual, the taxpayer is the Vietnamese-registered enterprise in which the foreign entities have invested.

Capital transfer taxation and related exclusions

According to Point i, Clause 3, Article 12 of Decree 320, capital transfers are taxed at 2 percent. This provision excludes intra-group ownership restructuring transactions that meet these conditions:

• They do not change the ultimate parent company of the involved parties with direct or indirect ownership in a Vietnam-based enterprise after the restructuring; and
• They do not generate taxable income.

The updated regulations cover both direct share transfers in Vietnamese companies and indirect transfers through offshore entities owning Vietnamese subsidiaries.

Furthermore, Point a, Clause 3, Article 3 of Decree 320 prescribes that certain income items are explicitly excluded from taxable income arising from capital transfers, securities transfers, or transfers of capital contribution rights. They include:

• Income directly related to:
  • Share issuance and dividends (excluding dividends on shares classified as liabilities); and
  • Sale of treasury shares or repurchased shares.
• Other income directly associated with increases or decreases in owners’ equity.

This marks a notable change from Decree 218/2013/ND-CP, which broadly defined capital transfer income without specifying exclusions.

Taxable income from business cooperation contracts

Point p, Clause 2, Article 3 of Decree 320/2025/ND-CP adds income derived from business cooperation contracts (BCCs) to taxable income from production and business activities.

Accordingly, taxable income under a BCC is determined as total revenue under the contract minus costs directly related to generating such revenue. Taxable revenue is calculated based on the agreed profit-sharing mechanism, including:

• Revenue-based sharing: Each party declares revenue according to its allocated share.
• Product-based sharing: Revenue is determined based on the value of products allocated to each party.
• Pre-tax profit sharing: A designated representative party issues invoices, records revenue and costs, and determines pre-tax profit for allocation. Each party independently fulfills its CIT obligations.
• Post-tax profit sharing: A designated representative party declares and pays CIT on behalf of all participating parties.

Expansion of CIT-exempt income

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Decree 320 expands CIT exemptions to include income derived from technical services directly supporting agricultural activities, including:

• Flood drainage and prevention;
• Tidal and salinity intrusion prevention; and
• Desalination, acid sulfate soil treatment, and freshwater retention services.

The decree also clarifies that qualifying services are identified based on Level-1 agricultural industry codes under Vietnam’s Standard Industrial Classification system.

Reduction in CIT exemption period for new technologies

Income from selling products made with a technology used for the first time in Vietnam qualifies for a three-year CIT exemption, starting from the first year of income generation. This represents a reduction from the previous maximum exemption period of up to five years under Decree 91/2014/ND-CP.

In addition, Decree 320 introduces a formal requirement that the “new technology” must be certified by a competent authority as being first applied in Vietnam.

Lower threshold for non-cash payments deductible for CIT purposes

Under Decree 320, expenses for goods and services with a value of VND 5 million or more per transaction are deductible for CIT purposes only if supported by non-cash payment documentation. This threshold is significantly reduced from the previous VND 20 million requirement under Decree 218.

The decree further clarifies that:

• Multiple purchases from the same supplier in a single day totaling VND 5 million or more require a non-cash payment will qualify as deductible expenses.
• Expenses incurred by employees on behalf of the enterprise, paid via non-cash methods and reimbursed by the enterprise, are deductible if supported by proper invoices and internal authorization.
• Expenses recorded before payment may be provisionally deducted. However, if later settled in cash, the enterprise must adjust and reduce deductible expenses in the tax period when cash payment occurs, even if the tax period has already been audited or inspected.

Transitional provisions

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Existing tax incentives for new and expanded investment projects approved before the effective date of the new CIT Law may continue for the remaining incentive period under the regulations in force at the time of approval. Where incentives under Decree 320 are more favorable, enterprises may apply the new incentives for the remaining period, counted from the 2025 tax year.

Income streams that previously benefited from CIT incentives but no longer qualify under the new CIT Law will cease to enjoy incentives from the Law’s effective date.

Tax losses incurred prior to the decree’s effective date may continue to be carried forward for the remaining allowable period, although losses from real estate and investment project transfers cannot be offset against incentivized business income.

How businesses can prepare

Businesses, particularly foreign-invested enterprises, digital platform operators, and groups involved in capital transfers, should promptly adopt strategic measures to identify opportunities to benefit from more favorable provisions under Decree 320. The initial steps must include:

• Review taxpayer and withholding positions: Reassess whether your entity may now be treated as a taxpayer or withholding agent under the expanded rules, particularly for cross-border services, e-commerce, digital platform activities, and capital transfers.
• Reevaluate capital transfer and restructuring plans: Examine ongoing or planned share transfers and group restructurings to determine exposure to the 2 percent capital transfer tax and whether any intra-group exemptions or income exclusions apply.
• Update payment and documentation controls: Adjust internal payment policies to comply with the lower VND 5 million non-cash payment threshold for deductible expenses and ensure supporting documentation is in place.
• Reassess tax incentives and loss positions: Confirm eligibility for existing or new CIT incentives under the transitional rules and review loss carryforward strategies to ensure continued compliance from the 2025 tax year onward.

See also: Vietnam Amends Personal Income Tax Law: Key Highlights

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