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Many investors assume incentives are "automatic" once the Investment Registration Certificate (IRC – Giấy chứng nhận đăng ký đầu tư) states that the project is eligible. In reality, corporate income tax incentives for investment projects are self-determined by the company at tax finalization and can be disallowed if the conditions cannot be proven. This guide explains how to self-check against four groups of conditions; it does not replace project-specific advice. Prepared by the accounting services team at ACCA Consulting Vietnam.
1. General principles of CIT incentives for investment projects
The standard corporate income tax (CIT/TNDN) rate is 20%. Under the 2025 Law on Corporate Income Tax (67/2025/QH15), enterprises with total annual revenue not exceeding VND 3 billion apply 15%, and those above VND 3 billion up to VND 50 billion apply 17%. Beyond these rates, investment projects may enjoy preferential rates and tax exemption/reduction periods if they meet the statutory conditions.
Three principles to remember:
- The company self-determines its eligibility and self-declares the incentive at finalization; the tax authority checks afterwards.
- Incentives attach to income from the qualifying project, and do not automatically apply to all of the company's income.
- The new law has transitional provisions: projects already enjoying incentives under the old rules need to check how those incentives continue.
2. Four groups of conditions to self-check
| Condition group | Check question | Supporting documents |
|---|---|---|
| Location | Was the project located in an incentivized area (industrial zone, economic zone, disadvantaged area, etc.) at the time of licensing? Do administrative boundary changes after the reorganization have any effect? | IRC, land lease contract, confirmation from the zone management board |
| Sector | Does the actual activity match the incentivized sector, industry code and product? | IRC, production process, sales invoices |
| Scale | Do investment capital, disbursement progress and headcount meet the thresholds (if the incentive is scale-based)? | Disbursement reports, capital contribution records via the DICA, payroll |
| Expansion project | Has the historical cost of fixed assets or capacity increased as required? Can the additional income be accounted for separately? | Expansion investment file, fixed asset register, capacity reports |
Specific thresholds (capital levels, headcount, lists of areas) may have changed under the new law, so check the current legislation before drawing conclusions. If the project is in an area where administrative units have just been reorganized, review the transitional rules on incentivized locations.
3. Tracking incentivized income separately
This is what decides whether the incentive "holds" under inspection. The company must account separately for income from incentivized activities and non-incentivized income. Certain other income (such as deposit interest, foreign exchange differences and asset disposals) is usually not eligible; check the specific rules.
- Income from incentivized manufacturing72%
- Income from non-incentivized trading18%
- Deposit interest, FX differences6%
- Asset disposals, other income4%
Illustrative example of a hypothetical FDI company; the percentages only show why income must be separated and are not actual data.
View as table
| Income from incentivized manufacturing | 72% |
| Income from non-incentivized trading | 18% |
| Deposit interest, FX differences | 6% |
| Asset disposals, other income | 4% |
- 1Code activities
Create department or project codes in the software for each incentivized / non-incentivized activity.
- 2Record revenue
Tag every sales invoice with an activity code when it is issued.
- 3Allocate common costs
Choose a reasonable allocation basis (revenue, machine hours, etc.) and apply it consistently.
- 4Prepare the finalization workpaper
Separate incentivized income in line with the detailed ledgers and keep it with the finalization file.
- 5Review annually
Check that the conditions are still met before the first quarterly provisional payment of the year.
4. Common mistakes that forfeit incentives at finalization
| Mistake | Possible consequence |
|---|---|
| Applying the incentive to all income, including other income | The incorrect incentive is disallowed and back taxes are assessed with late-payment interest of 0.03% per day |
| Unable to account separately for the expansion activity | Unable to prove the additional income eligible for the incentive |
| Actual activity differs from the business line registered on the IRC | Risk of being assessed as not meeting the sector condition |
| Disbursement progress or committed scale not met | May not qualify for scale-based incentives |
| Not tracking the exemption/reduction period | Incorrect start or end year of the incentive |
In addition, companies belonging to large multinational groups need to assess the impact of the global minimum tax, as incentives may be "clawed back" through a top-up tax. See the global minimum tax and FDI companies and the guide to CIT finalization.
5. Checklist before the finalization season
- Incentive conditions checked against current law and transitional provisions
- Detailed ledgers separating incentivized and non-incentivized income are in place
- Common cost allocation basis is consistent with the prior year
- Correctly identified which year of the exemption/reduction period applies
- Total provisional payments for the 4 quarters are not less than 80% of the tax payable per finalization
- Evidence of location, sector and scale is fully retained
FAQ
If the IRC states the project is incentivized, is the incentive guaranteed?
No. The company must still self-determine and prove the conditions under the CIT law at finalization; the tax authority may re-examine them.
Is bank deposit interest eligible for the incentive?
Usually not, because it is other income outside the project's activities. Check the current rules for each item.
Can an expansion project receive its own incentive?
Possibly, if it meets the conditions and the additional income can be accounted for separately. If it cannot be separated, the allocation method set out in the regulations may be used.
Does the 2025 CIT Law affect incentives already being enjoyed?
The new law contains transitional provisions for projects already enjoying incentives. Companies should review their position before the 2026 finalization.
Check your CIT incentives before finalization
ACCA Consulting Vietnam reviews incentive conditions and income-separation records for FDI projects. Contact our accounting services team in Ho Chi Minh City for advice.
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