CIT Reduction for Enterprises Employing Ethnic Minority Workers in Vietnam

Is corporate income tax reduced when an enterprise employs ethnic minority workers?

1. How does a company established and operating in a difficult area receive tax exemption and reduction incentives for corporate income tax?

Under Article 14 of the Law on Corporate Income Tax 2025 (No. 67/2025/QH15, effective from October 1, 2025) (, Point b, Clause 4, Article 75 of the Law on Investment 2020 (as amended and supplemented by Law No. 57/2024/QH15, effective from January 1, 2025)) on tax exemption and reduction incentives:

– Income of enterprises from implementing new investment projects specified in Clause 1, Point a, Clause 2 of Article 13 of this Law, and high-tech enterprises and agricultural enterprises applying high technology are exempt from tax for a maximum of four years and entitled to a 50% reduction of payable tax for a maximum of the next nine years.

– For investment projects specified in Clause 2 of Article 20 of the Law on Investment (as amended and supplemented by Law No. 57/2024/QH15, effective from January 1, 2025), the Prime Minister decides to apply tax exemption for a maximum of 06 years and a 50% reduction of payable tax for a maximum of the next 13 years.

– Income of enterprises from implementing new investment projects specified in Clause 3 of Article 13 of this Law, and income of enterprises from implementing new investment projects in industrial parks, except industrial parks in areas with favorable socio-economic conditions as prescribed by law, are exempt from tax for a maximum of two years and entitled to a 50% reduction of payable tax for a maximum of the next four years.

– The tax exemption and reduction period for income of enterprises from implementing new investment projects specified in Clauses 1 and 2 of this Article is counted from the first year the project generates taxable income; where there is no taxable income in the first three years, from the first year the project generates revenue, the tax exemption and reduction period is counted from the fourth year. The tax exemption and reduction period for high-tech enterprises and agricultural enterprises applying high technology specified at Point c, Clause 1, Article 13 of this Law is counted from the date of being certified as a high-tech enterprise or agricultural enterprise applying high technology.

– An enterprise with an investment project developing an operating investment project in a field or area entitled to corporate income tax incentives under this Law that expands production scale, increases capacity or innovates production technology (expansion investment), if meeting one of the three criteria specified in this clause, may choose to enjoy tax incentives for the operating project for the remaining period (if any) or be exempted from or granted a reduction of tax on the increased income arising from the expansion investment. The tax exemption and reduction period for the increased income arising from expansion investment under this clause is equal to the tax exemption and reduction period applicable to a new investment project in the same area and field entitled to corporate income tax incentives.

An expansion investment project entitled to the incentives specified in this clause must meet one of the following criteria:

+ The increased original cost of fixed assets when the investment project is completed and put into operation reaches a minimum of twenty billion dong for expansion investment projects in fields entitled to corporate income tax incentives under this Law, or from ten billion dong for expansion investment projects implemented in areas with difficult socio-economic conditions or areas with particularly difficult socio-economic conditions as prescribed by law;

+ The proportion of the increased original cost of fixed assets reaches a minimum of 20% compared to the total original cost of fixed assets before the investment;

+ The increased designed capacity is at least 20% compared to the designed capacity before the investment.

Where an operating enterprise has an expansion investment in a field or area entitled to tax incentives under this Law but does not meet one of the three criteria specified in this clause, tax incentives shall apply to the operating project for the remaining period (if any).

Where an enterprise enjoys tax incentives for expansion investment, the increased income arising from the expansion investment must be accounted separately; where separate accounting is not possible, income from the expansion investment is determined according to the ratio between the original cost of newly invested fixed assets put into use for production and business over the total original cost of fixed assets of the enterprise.

The tax exemption and reduction period specified in this clause is counted from the year the investment project is completed and put into production and business.

The tax incentives specified in this clause do not apply to expansion investments arising from the merger or acquisition of an enterprise or an operating investment project. The Government shall provide detailed regulations and guidance for the implementation of this Article.

Thus, a company established and operating in an area with difficult socio-economic conditions is exempt from tax for a maximum of two years and entitled to a 50% reduction of payable tax for a maximum of the next four years.

2. Is corporate income tax reduced when employing ethnic minority workers?

Under Article 15 of the Law on Corporate Income Tax 2025 (No. 67/2025/QH15, effective from October 1, 2025) on cases entitled to corporate income tax reduction:

“1. Production, construction and transport enterprises employing many female workers are entitled to a corporate income tax reduction equal to the additional expenses for female workers.

2. Enterprises employing many ethnic minority workers are entitled to a corporate income tax reduction equal to the additional expenses for ethnic minority workers.

3. Enterprises transferring technology in priority transfer fields to organizations and individuals in areas with difficult socio-economic conditions are entitled to a 50% reduction of corporate income tax calculated on income from technology transfer.

The Government shall provide detailed regulations and guidance for the implementation of this Article.”

Thus, an enterprise employing ethnic minority workers is entitled to a corporate income tax reduction.

3. What are the conditions for applying corporate income tax incentives?

Under Article 18 of the Law on Corporate Income Tax 2025 (No. 67/2025/QH15, effective from October 1, 2025) on conditions for applying corporate income tax incentives:

(1) Corporate income tax incentives specified in Articles 13, 14, 15, 16 and 17 of this Law apply to enterprises implementing accounting, invoicing and document regimes and paying tax by declaration.

Corporate income tax incentives for new investment projects specified in Articles 13 and 14 of this Law do not apply to cases of division, separation, merger, consolidation, conversion of enterprise form, conversion of ownership and other cases as prescribed by law.

(2) Enterprises must separately account for income from production and business activities entitled to tax incentives specified in Articles 13 and 14 of this Law from income from production and business activities not entitled to tax incentives; where separate accounting is not possible, income from production and business activities entitled to tax incentives is determined according to the ratio between the revenue of production and business activities entitled to tax incentives over the total revenue of the enterprise.

(3) The 20% tax rate specified in Clause 2 of Article 10 and the tax incentive provisions in Clause 1 and Clause 4 of Article 4, Articles 13 and 14 of this Law do not apply to:

– Income from capital transfer, transfer of capital contribution rights; income from real estate transfer, except social housing specified in Article 13 of this Law; income from transfer of investment projects, transfer of rights to participate in investment projects, transfer of rights to explore and exploit minerals; income from production and business activities outside Vietnam;

– Income from oil, gas, other rare resource search, exploration and exploitation activities, and income from mineral exploitation activities;

– Income from trading in services subject to special consumption tax under the Law on Special Consumption Tax;

– Other cases as prescribed by the Government.

(4) During the same period, if an enterprise enjoys different tax incentive rates for the same income, the enterprise may choose to apply the most favorable tax incentive rate.

Therefore, the conditions for applying corporate income tax incentives include the conditions stated above.

Thus, an enterprise employing ethnic minority workers is entitled to a corporate income tax reduction.