Tiếng Việt
中文Enterprises enjoying corporate income tax (CIT) incentives as investment incentives — e.g., time-limited tax exemption, tax reduction, or preferential tax rates — often ask: is financial interest income such as bank deposit interest and lending interest also eligible for CIT incentives together with income from the investment project? The answer is no: CIT incentives apply only to income from production and business activities in investment-incentive sectors and localities.
Principles of CIT incentive application under the Law on Corporate Income Tax 2025
The Law on Corporate Income Tax 2025 (No. 67/2025/QH15) and Decree 320/2025/ND-CP guiding its implementation inherit the long-standing principle: CIT incentives (preferential tax rates, tax exemption, tax reduction) apply only to income of enterprises from implementing new investment projects in investment-incentive industries or in investment-incentive localities as prescribed by investment laws.
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Conversely, the law lists income not eligible for CIT incentives, including: income from capital transfer and transfer of capital contribution rights; income from real estate transfer (except certain special cases such as social housing); income from transfer of investment projects, transfer of rights to participate in investment projects, transfer of mineral exploration and exploitation rights; income from mineral exploitation; income from trading services subject to special consumption tax; and other income not linked to the incentivized investment project.
Is financial interest income eligible for incentives?
Interest from bank deposits, lending interest, and other financial income is income from financial activities of the enterprise, not income from implementing an incentivized investment project. Therefore, this income is not eligible for CIT incentives (no exemption, reduction, or preferential rate), and must be taxed at the current standard CIT rate.
Enterprises must separately account for income from the incentivized investment project and other income (including financial interest). Where separate accounting is not possible, income from the incentivized activity is determined by the ratio of revenue from the incentivized activity to the enterprise’s total revenue — the remaining income, including financial interest, is taxed at the standard rate.
Illustrative example
Enterprise A has an investment project in an industrial park enjoying a 2-year CIT exemption and 50% tax reduction for the next 4 years. In the fiscal year, besides project income, Enterprise A also earns VND 500 million in bank deposit interest. This VND 500 million interest is not exempted/reduced under the project’s incentives, but must be declared and taxed at the standard CIT rate.
What should enterprises note?
To avoid risks at tax finalization, enterprises enjoying investment incentives should: (1) organize separate accounting for incentivized income and other income from the beginning of the fiscal year; (2) keep complete vouchers proving the origin of each income item; (3) not apply incentives on their own to financial income, capital transfers, or real estate; (4) review incentive application when the CIT legal framework changes from the 2025 tax period.
Do you need to review CIT incentive eligibility conditions, separate income, or explain to the tax authority? Please contact ANT Legal’s lawyers via Hotline/Zalo 0966.475.966 for advice tailored to your specific case.
