Out-of-Province Construction in Difficult Areas: Tax Incentives in Vietnam

Short answer: An enterprise building works in a province or city other than where its head office is located does not need to establish a branch merely for out-of-province construction, but must fully perform tax registration, declaration, and payment obligations in the locality where the works are located — notably out-of-province itinerant value-added tax (VAT) and corporate income tax (CIT) on construction activities in that locality. Note: from 01/7/2025, the whole country has only 34 provinces and centrally-run cities (after administrative unit rearrangement) and no district level.

Current legal framework

• Law on Construction 2014 (as amended and supplemented) — capacity conditions of contractors;
• Law on Tax Administration 2025 and guiding documents — tax registration and declaration obligations when operating out-of-province;
• Law on Corporate Income Tax 2025, Decree 320/2025/ND-CP — CIT incentives and obligations.

Obligations when constructing works out-of-province

1. Contractor capacity: the enterprise must hold a construction capacity certificate appropriate to the grade and type of works;
2. Tax registration in the locality of the works: register and declare out-of-province itinerant VAT as prescribed by tax administration laws;
3. CIT: declare and pay CIT on income from construction activities in the locality as prescribed;
4. Labor, social insurance: register and contribute social insurance for employees working at the works as prescribed.

CIT incentives in areas with difficult socio-economic conditions

If the works are performed in an area with difficult or exceptionally difficult socio-economic conditions, the enterprise may enjoy CIT incentives (preferential tax rates, time-limited tax exemption/reduction) under the Law on Corporate Income Tax 2025 and Decree 320/2025/ND-CP, provided it fully meets the criteria on locality, sector, and procedures. The list of investment incentive localities is determined under current regulations — the locality list after administrative unit rearrangement (34 provinces and cities from 01/7/2025) needs to be checked.

Key notes

• When consulting old documents and examples referring to “province A, district B” under pre-rearrangement boundaries, note the current administrative boundaries (34 provinces and cities from 01/7/2025, no district level) when determining incentive localities or tax obligations;
• Failure to perform out-of-province itinerant tax obligations may be subject to administrative tax sanctions.

How ANT Legal can assist

ANT Legal advises on tax obligations for out-of-province construction, conditions for CIT incentives, and construction law compliance. For advice on your specific case, please contact our lawyers at 0966.475.966.

Related articles

• Procedures for Applying CIT Incentives for Enterprises