Wishing to arouse the potential of businesses, support Vietnam's small and medium-sized enterprises to stabilize and develop in an increasingly fierce competitive environment, the National Assembly has promulgated the Law on Corporate Income Tax No. 67/2025/QH15 which will take effect from October 1, 2025, bringing a lot of benefits to businesses in the coming time with the aim of promoting development development of the private sector.
1. Better tax rate support for small and medium-sized enterprises
The Law on Corporate Income Tax 2025 ("the Law on CIT") applies a general tax rate of 20% but stipulates stratification according to the size of annual revenue. Specifically, for enterprises with a turnover of not more than 3 billion VND/year, a tax of 15%, a turnover of over 3 to not more than 50 billion VND is subject to a tax of 17%, and the remaining cases are subject to a tax of 20%. In other words, instead of imposing the same tax rate on all businesses, the law shifts to regulating according to the tolerance level of enterprises in order to retain cash flow for small businesses, which are most affected when market liquidity declines.
However, this is not the tax rate applied by default. The Law on CIT 2025 requires enterprises to prove revenue in the preceding year with valid accounting and tax records (audited financial statements, tax returns, revenue recording books). If the enterprise has transactions with related parties and is assessed to have the risk of profiteering, it is possible that the tax authority may consider excluding the enterprise from the preferential category and collecting the difference in arrears. Therefore, instead of adjusting revenue, businesses need to focus on transparent governance, control related-party transactions and standardize financial statements to maintain the conditions for applying tax rates based on revenue effectively.
2. There is no limit on the value of the enterprise's expenses for non-cash payment vouchers
An important new point of the Law on CIT 2025 in Article 9 on deductible expenses. Specifically, according to Point c, Clause 1 of this Article, enterprises are entitled to deduct valid expenses when determining taxable income, in which the enterprise's expenses must have sufficient invoices and non-cash payment documents, except for special cases as prescribed. That is, different from the previous provisions in the Law on CIT 2008 amended, supplemented, requiring invoices and non-cash payment vouchers only to apply to expenses of VND 20 million or more, now all expenses of enterprises, regardless of value, must meet the conditions on invoices and documents to be eligible for CIT deduction. This change comes from the requirement to increase transparency in tax administration, prevent revenue loss and limit cash transactions of businesses, which have many potential risks. This is also a synchronous step with the policy of promoting non-cash payments, contributing to controlling cash flow and limiting invoice fraud.
However, this regulation will have a significant impact on businesses. Many small expenses that could previously be paid in cash are now required to be paid via bank or the new non-cash method is recognized as a valid expense for deduction. In other words, the new regulation creates greater compliance pressure but is also an opportunity for businesses to professionalize their accounting systems, store business documents, reduce legal risks and increase transparency when working with tax authorities.
3. Stricter requirements on the time limit for carrying forward losses of enterprises
Article 16 of the Law on CIT 2025 continues to allow enterprises to carry forward losses to the following years, with a maximum term of 05 years. But the difference is that the loss carryover time will be calculated "continuously". This means that from the next year to the year of loss, businesses are forced to declare and deduct losses gradually year by year. If it is missed or not implemented in any year, that loss is considered a loss and is no longer carried forward to the remaining years of the 5-year cycle.
Previously, the amended and supplemented Law on CIT 2008 only stipulated "carrying forward losses for no more than 5 years" without requiring continuity, so that businesses can choose which year they need to optimize cash flow to deduct losses. This is a major change in tax administration. This change creates both opportunities and challenges for businesses. On the one hand, the regulation of continuity helps tax authorities easily monitor and limit the situation of loss-making enterprises to adjust tax obligations according to their own strategy each year. But on the other hand, businesses will lose flexibility in their operational plans, if in one year they need to record profits to serve the purpose of borrowing, they will also not be able to carry over one loss to another.
The small and medium-sized enterprise (SME) sector is affirming its pivotal role in job creation and in improving people’s livelihoods. Source: Vietnam government portal
4. New regulations on loss clearing but not applicable to all types of income of enterprises
The Law on CIT 2008 amended and supplemented stipulates that enterprises must separately determine income from real estate transfer activities, investment projects and the right to participate in investment projects to declare and pay tax. In this mechanism, enterprises are still allowed to offset losses from transfer activities (except minerals) with profits from other production and business activities in the tax period. However, having to prepare separate reports for each group of activities has created a procedural burden, especially when business results are often reflected in financial statements.
The Law on CIT 2025 has made notable adjustments. Regarding declaration procedures, the law continues to require separate identification for activities related to minerals. Meanwhile, income from real estate transfer and investment projects is no longer bound by separate declaration requirements if not subject to tax incentives, helping businesses reduce procedures and avoid double reporting. However, the right to offset losses between activities has been limited. Enterprises are only allowed to offset losses between normal production and business activities and are not allowed to use losses to compensate for the income that is enjoying tax incentives. Particularly for mineral exploration, exploitation and processing activities, the law clearly stipulates that it must be declared separately and absolutely must not be offset with any other activities.
The practical impact of this change is quite obvious. Real estate businesses and related sectors can benefit from administrative declaration procedures, and at the same time have more room to optimize tax obligations through a flexible clearing mechanism. On the contrary, enterprises operating in the mineral sector will have to prepare more carefully in terms of accounting and tax records, because they will no longer be offset with other profits. This direction of regulation means that tax risk management in the mineral industry will become stricter, requiring initiative from businesses.
In summary, the CIT Law 2025 brings many policy changes, both creating conditions for businesses to have the opportunity to better allocate cash flow through tax rate regulations, and promoting transparency through non-cash documentation requirements and continuous loss pass-through. Although some new regulations put higher compliance pressure, if businesses actively standardize the accounting and tax system, this will be an opportunity to operate more efficiently and optimize tax obligations for businesses. At the same time, businesses can unlock resources from deductible taxes to be able to develop their business in the new period.
Lawyer Cao Nguyen Bao Lien
HM&P Law Firm
