Vietnam CIT Incentives for Software Production: What Investors Need to Know

Posted by Written by Vu Nguyen Hanh and Doan Thi Yen Luy Reading Time: 5 minutes

Vietnam’s CIT incentives for IT and software companies offer preferential tax rates and tax holidays. Learn about eligibility requirements, software production criteria, and compliance obligations in 2026.

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Vietnam’s software production sector continues to demonstrate a strong growth trajectory, serving as a critical driver of the nation’s economic development. To enhance the sector’s appeal to investors, the Government has implemented various corporate income tax (CIT) incentives to foster the growth of technology-driven enterprises.

Although advantageous, obtaining these CIT incentives may prove challenging owing to the complexity of various regulatory and criteria requirements.

Overview of CIT incentives in Vietnam

CIT incentives are among the most attractive features of Vietnam’s business environment and are among the most significant investment incentives for foreign investors. These incentives are available to both foreign and domestic investors to encourage investment in sectors and regions aligned with national development strategies.

The eligibility criteria and specific incentive schemes are stipulated in Vietnam’s 2025 Law on Investment and the 2025 Law on Corporate Income Tax, as well as their respective implementing decrees and circulars.

Vietnam offers two principal types of CIT incentives:

  • Preferential tax rates – reduced CIT rates applicable for a defined period or, in some cases, for the entire project duration.
  • Tax holidays – exemptions or reductions in CIT for a specified period.
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Legal framework for CIT incentives in Vietnam

Following the introduction of the 2025 CIT Law, Vietnam has overhauled its legal framework governing the CIT regime, promulgating a new set of directives. The current framework for CIT incentives applicable to software businesses includes:

These documents collectively form the cornerstone of the legal framework governing CIT incentives for software companies in Vietnam.

Vietnam’s CIT incentives for the software industry

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Vietnam offers significant CIT incentives to encourage the growth of the software industry. These incentives are designed to support software companies by reducing their tax burden, improving profitability, and enhancing their competitiveness in both domestic and international markets.

Companies undertaking investment projects in software production or software development may be eligible for preferential CIT treatment, subject to satisfying the relevant regulatory requirements. The available incentives generally include:

  • A preferential CIT rate of 10 percent for a period of 15 years; and
  • A tax holiday comprising a four-year exemption from CIT, followed by a 50 percent reduction of the CIT payable for the subsequent nine years.

These incentives can significantly reduce the effective tax rate during the initial years of operation and are among the most favorable tax benefits available to high-tech and knowledge-based industries in Vietnam.

How to determine if your software business is eligible for CIT incentives?

Eligibility criteria

To qualify for CIT incentives, software companies must meet specific criteria defined by Vietnamese law. Key eligibility requirements include:

  • Compliance with legal framework: Companies must adhere to the definitions and requirements set forth in Circular 13, which outlines the activities that qualify as software production must perform at least three stages (namely, “Requirement Determination” and “Analysis and Design” and “Coding”). Additionally, businesses should ensure that their products are listed in Circular 09, which specifies eligible software, hardware, and electronic products.
  • Investment in new projects: CIT incentives apply to companies undertaking new investment projects in software production. The incentives are specifically designed for enterprises that are establishing software production activities or expanding their existing operations.
  • Documentation: Companies must maintain thorough documentation of their software production processes. This documentation is crucial for demonstrating compliance with the required processes and for claiming CIT incentives.

Software production stages

As regulated, the manufacturing process of software products encompasses several critical stages, each essential for ensuring the development of high-quality, functional, and secure software. The process includes the following stages:

Key Stages of Software Production in Vietnam

Stage

Definition

Requirement determination

This initial stage involves identifying and clarifying the needs and expectations for the software product, including one or more of the following activities:

  • Generating and refining ideas for the software; 
  • Defining product characteristics and requirements;
  • Proposing, surveying, and validating requirements;
  • Analyzing operations and developing comprehensive requirement documents;
  • Consulting on procedural adjustments and consolidating requirements; and
  • Approving and controlling requirements to ensure they meet compliance standards.

Analysis and design

During this stage, the focus is on translating requirements into detailed design specifications. Key activities include one or more of the following activities:

  • Describing both functional and non-functional requirements;
  • Establishing development methodologies and selecting appropriate technologies;
  • Analyzing the feasibility and impact of the software on its operating environment;
  • Prioritizing requirements and updating them as necessary; 
  • Creating models for data, functions, and information channels; and
  • Designing the software architecture, including data structures, modules, security features, and user interfaces.

Programming and coding

This stage involves the actual creation of the software, including one or more of the following activities:

  • Writing code for software and its components;
  • Customizing and adjusting the software as required; and
  • Integrating various software modules and components to form a cohesive system.

Testing and quality assurance

Testing and evaluation are crucial for ensuring software quality, including one or more of the following activities:

  • Developing test scenarios;
  • Testing software units/modules;
  • System testing;
  • Functional testing;
  • Software quality validation;
  • Error risk assessment;
  • Security and information safety testing;
  • Verifying compliance with customer requirements; and
  • Software acceptance.

Software product completion and packaging

Finalizing and preparing the software for distribution, which involves:

  • Creating product documentation, including user manuals and installation guides;
  • Packaging the software and registering intellectual property rights; and
  • Preparing for the transfer of the software product to customers or distribution channels.

Installation, delivery, user guidance, maintenance, and warranty

This stage ensures the software is properly set up and supported, including one or more of the following activities:

  • Delivery (either as a packaged product or via licensing/lease);
  • Installation guidance (for packaged delivery);
  • Deployment on the customer’s system or service platform;
  • Training and user guidance; post-delivery testing;
  • Bug fixing;
  • Post-delivery support;
  • Warranty services; and
  • Software maintenance (on the customer’s system or service platform).

Publishing and distributing software products

The final stage involves bringing the software to the market, which may include selling, lending, distributing, and publishing the software to end-users or through distribution channels.

Key takeaways for software companies

While Vietnam’s CIT incentives for software production can offer significant tax savings, companies should note that eligibility is assessed on a product-by-product basis. As such, businesses should prepare and maintain separate supporting documentation for each software product rather than relying on a single set of records covering all software activities.

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Enhancing internal audit and risk management

During a tax audit, the tax authorities may review each software product independently to verify whether it satisfies the regulatory requirements for incentive eligibility.

Failure to maintain sufficient documentation or comply with prescribed procedures may result in challenges to the qualification of software production activities, potentially leading to the withdrawal of tax incentives, additional tax assessments, penalties, and late payment interest.

To reduce compliance risks, companies should consider the following actions:

  • Review whether each software product meets the applicable criteria for CIT incentives;
  • Maintain comprehensive documentation demonstrating compliance with software production requirements;
  • Establish clear processes for tracking and documenting qualifying activities on a product-specific basis; and
  • Seek clarification or confirmation from the relevant authorities where uncertainty exists regarding incentive eligibility.

Given the technical nature of Vietnam’s software incentive regime and the increasing focus on tax compliance, businesses should conduct periodic reviews of their incentive positions and seek professional advice where necessary to safeguard available tax benefits.

Luy Doan
DSA
quote

Managing tax in Vietnam is critical for FDI companies to stay compliant with local regulations, GST requirements, and global standards such as IFRS, navigate complex filings, and apply correct tax treatments. A well-structured tax process helps to avoid penalties and stay 100% compliant.

Luy Doan
Assistant Manager, Tax
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