Decree 320/2025/ND-CP guiding the Law on Corporate Income Tax 2025: Necessary changes in tax administration

In the flow of Vietnam's tax policy reform to respond to the rapid movement of Vietnam's economy, Decree 320/2025/ND-CP (Decree 320) was born as an important "link" to complete the legal architecture of corporate income tax. Not only stopping at the role of guiding the implementation of the Law on Corporate Income Tax 2025, this Decree also marks an important step in tax administration activities, when replacing the old guiding frameworks such as Decree 218/2013/ND-CP and other guiding documents. Decree 320 was issued and takes effect from December 15, 2025.

In this article, we will review the key changes of Decree 320 and offer some discussions to clarify the innovations of this Decree.  

1. Clearly stipulating for taxpayers who are foreign enterprises

In order to complete the guidance for the recently promulgated Law on Corporate Income Tax 2025, Decree 320 has added details of cases that are considered "foreign enterprises", including:  

1. Foreign enterprises having permanent establishments in Vietnam shall pay tax on taxable incomes arising in Vietnam and taxable incomes arising outside Vietnam related to the operation of such permanent establishments;
2. Foreign enterprises with permanent establishments in Vietnam shall pay tax on taxable incomes arising in Vietnam which are not related to the operation of their permanent establishments;
3. Foreign enterprises that do not have permanent establishments in Vietnam and pay tax on taxable incomes arising in Vietnam;
4. Foreign enterprises with permanent establishments in Vietnam (excluding foreign enterprises specified at Points b1 and b2 of this Clause) that provide goods and services in Vietnam in the form of e-commerce business or business on the digital platform pay tax on taxable incomes arising in Vietnam.

The listed cases have estimated relevant factors such as the establishment of the enterprise, the scope of the territory where the income is generated, and the form of business as a basis for determining the tax payer. This approach helps to minimize the risk of budget revenue loss, thereby creating an equal competitive environment between domestic and foreign enterprises. 

2. Supplementing a number of taxable and exempt income categories

For taxable income, the new regulations supplement the case of income from business cooperation contracts (BBC).[1] Depending on the agreement and the form of division of business results, taxable revenue will have different determination bases.[2] For example, if a division agreement is based on the result of revenue by products, taxable revenue is determined as the revenue of the product divided to each party under the contract.

For tax-exempt income, a number of sectors related to technical services directly serving agriculture are supplemented according to Clause 3, Article 4 of Decree 320. Accordingly, this regulation, in addition to listing specific services such as flood drainage services, flood prevention, tidal prevention, salinity prevention, salinity washing, alum washing, and sweet retention, is also determined based on the level 1 economic sector code of the agriculture, forestry and fishery sector in Decision 36/2025/QD-TTg on Vietnam's economic sector system.

3. Encouraging digital transformation and cost transparency through bank transfers

According to the previous provisions at Point c, Clause 1, Article 9 of Decree No. 218/2013/ND-CP, the purchase of goods and services at each time is only considered an expense when the purchase invoice is valued at VND 20 million or more and is accompanied by non-cash payment documents. This allows businesses to make cash transactions of less than VND 20 million while still legalizing costs when there are no transfer documents or invoices. However, this regulation has been adjusted in Decree 320/2025 in a stricter direction.

Firstly, the value of invoices and documents as a basis for requesting transfer payment documents has decreased to 1/4 compared to before. Accordingly, the management agency will require enterprises to provide non-cash payment documents for expenses of VND 5 million or more (including VAT) for each payment to ensure accuracy when determining taxable income. In addition, in case the enterprise makes many payments with a value of less than 5 million VND/time but the total payment value on the same day is 5 million VND or more, it is still required to have non-cash payment vouchers.[3] In case the enterprise does not have supporting documents, it must declare and adjust the corresponding cost reduction for the non-cash payment. These regulations are designed to limit the situation that enterprises record legal expenses but do not present enough invoices and documents to prove it.

Secondly, the expenses incurred by employees authorized or directly assigned by the enterprise to purchase goods and services to serve business activities will be recorded if they meet the following 02 conditions:[4]

(i) Having invoices and documents in accordance with regulations on accounting, invoices, vouchers, financial regulations or internal regulations or decisions on authorizing or permitting employees to be paid for this purchase in service of production and business activities of the enterprise;

(ii) This expense is then repaid by the enterprise to the employee.

Finally, the new regulation has removed the exception of the requirement to provide documents in some cases such as performing national defense and security tasks, implementing HIV/AIDS prevention and control activities in the workplace or supporting the activities of party organizations and organizations.

Thus, with the new regulations, the cost control mechanism is significantly tightened, and at the same time promotes the digital transformation process in accounting and tax activities of enterprises. The reduction of the non-cash payment threshold contributes to transaction transparency, limiting the situation of taking advantage of legal gaps to cheat costs in business activities of enterprises.

4. Reducing the tax exemption period for income from the sale of new technology products

In the trend of national modernization, state management policies and tax regulations always have certain incentives for the technology sector to encourage and facilitate environmental development in Vietnam. However, according to Point b, Clause 4, Article 4 of Decree 320, the current tax exemption period for income from the sale of products made from new technologies applied for the first time in Vietnam is reduced to only 03 years, instead of 05 years as previously prescribed.[5] In addition, the regulation also states how to identify the phrase "Products made from new technologies applied for the first time in Vietnam". Specifically, this product is considered "Products made from new technology applied for the first time in Vietnam" when certified by the competent authority. Therefore, in cases where income from the sale of products does not satisfy the above-mentioned business object factors, organizations and enterprises are also not entitled to tax exemption incentives. The basis for implementing this regulation is to avoid confusion of enterprises trading in technology products when they all believe that the income from their activities satisfies the conditions for tax exemption, and at the same time makes it difficult for agencies and departments to determine the tax obligations arising from the enterprise in accordance with the law.

It can be seen that, in order to meet the context of economic development and management in the new context, Decree 320 continues the provisions of the Law on Corporate Income Tax 2025, creating a complete and clear legal corridor to bring the State management of corporate tax into the framework. At the same time, promoting fairness and transparency in tax administration between domestic enterprises and enterprises doing business in Vietnam. This is very necessary for Vietnam to be able to "take off" and develop in the current technological era.