Is an Enterprise in an Area with Especially Difficult Conditions Exempt from CIT?

Must an enterprise pay corporate income tax when established in an area with especially difficult socio-economic conditions?

1. Who is a corporate income tax payer?

Decree 320/2025/ND-CP guiding the CIT Law 2025 (No. 67/2025/QH15) provides on CIT payers:

1. Corporate income tax payers are organizations producing and trading goods and services with taxable income (hereinafter enterprises), including:

– Enterprises established and operating under the Law on Enterprises, the Law on Investment, the Law on Credit Institutions, the Law on Insurance Business, the Law on Securities, the Law on Petroleum, the Commercial Law and other legal documents in the forms of: joint stock companies; limited liability companies; partnerships; private enterprises; law offices, private notary offices; parties to business cooperation contracts; parties to petroleum product sharing contracts, petroleum joint venture enterprises, joint operating companies.

– Public and non-public non-business units producing and trading goods and services with taxable income in all fields.

– Organizations established and operating under the Law on Cooperatives.

– Enterprises established under foreign law (hereinafter foreign enterprises) with a permanent establishment in Vietnam.

A permanent establishment of a foreign enterprise is a production or business establishment through which the foreign enterprise conducts part or all of its production and business activities in Vietnam, including:

+ Branches, executive offices, factories, workshops, transport vehicles, mines, oil or gas mines or other natural resource exploitation sites in Vietnam;

+ Construction sites, construction, installation, assembly projects;

+ Service provision establishments, including consultancy services through employees or other organizations or individuals;

+ Agents for the foreign enterprise;

+ Representatives in Vietnam where the representative is authorized to sign contracts in the name of the foreign enterprise, or is not so authorized but regularly delivers goods or provides services in Vietnam.

Where a Double Taxation Avoidance Agreement signed by the Socialist Republic of Vietnam provides otherwise on permanent establishments, such Agreement applies.

– Other organizations besides those at points a, b, c and d of clause 1 of this Article with production and business activities in goods or services with taxable income.

2. Foreign organizations producing and trading in Vietnam not under the Law on Investment or the Law on Enterprises, or with income arising in Vietnam, pay corporate income tax under separate guidance of the Ministry of Finance. Such organizations, if transferring capital, pay corporate income tax under Article 14, Chapter IV of this Circular.

2. Is an enterprise established in an area with especially difficult conditions subject to CIT?

Under Article 4 of the CIT Law 2025 (No. 67/2025/QH15, effective from 01/10/2025) on tax-exempt income:

1. Income from cultivation, animal husbandry, aquaculture, processing of agricultural and aquatic products, and salt production of cooperatives; income of cooperatives operating in agriculture, forestry, fishery and salt production in areas with difficult or especially difficult socio-economic conditions; income of enterprises from cultivation, animal husbandry, aquaculture, and processing of agricultural and aquatic products in areas with especially difficult socio-economic conditions; income from offshore fishing activities.

2. Income from performing technical services directly serving agriculture.

3. Income from performing scientific research and technology development contracts, products in the trial production period, products made from new technology first applied in Vietnam.

4. Income from production and business of goods and services of enterprises with 30% or more of the average annual workforce being persons with disabilities, post-rehabilitation persons, or persons infected with HIV/AIDS, and with an average annual workforce of twenty or more persons, excluding enterprises operating in finance and real estate business.

5. Income from vocational training exclusively for ethnic minorities, persons with disabilities, children in especially difficult circumstances, and victims of social evils.

6. Income shared from capital contributions, joint ventures and associations with domestic enterprises after CIT has been paid under this Law.

7. Grants received for use in education, scientific research, culture, arts, charity, humanitarian and other social activities in Vietnam.

8. Income from transfer of certified emission reductions (CERs) by enterprises granted CER certificates.

9. Income from the Vietnam Development Bank performing State-assigned tasks in development investment credit and export credit; income from credit activities for the poor and other policy beneficiaries of the Vietnam Bank for Social Policies; income of state financial funds and other state funds operating not for profit as prescribed; income of organizations 100% state-owned established by the Government to handle bad debts of Vietnamese credit institutions.

10. Undistributed income of socialized establishments in education-training, healthcare and other socialized fields retained to invest in developing the establishment under specialized laws; undistributed asset-forming income of cooperatives established and operating under the Law on Cooperatives.

11. Income from transfer of technology in priority transfer fields to organizations and individuals in areas with especially difficult socio-economic conditions.

3. Where to pay corporate income tax

Decree 320/2025/ND-CP guiding the CIT Law 2025 (No. 67/2025/QH15) provides on the tax payment place:

– Enterprises pay tax where the head office is located. Where an enterprise has a production establishment (including processing and assembly establishments) with dependent accounting operating in a province or centrally-run city different from where the head office is located, the tax is calculated and paid at the head office location and at the production establishment location.

– The allocation of payable tax under this clause does not apply where the enterprise has construction works, work items or dependent-accounting construction establishments.

Accordingly, a company established and trading goods in a difficult area does not fall under the CIT-exempt cases listed above. Therefore, the company is not exempt from corporate income tax.

Notes on applying current legal provisions

This article belongs to the Enterprise Knowledge group and is presented for reference, helping readers understand the legal issue at an overview level before preparing dossiers or conducting transactions.

Legal provisions may change depending on timing, locality, dossier type and specific circumstances. Where it is necessary to determine the exact legal basis applicable to your dossier, you should contact an ANT Legal lawyer at 0966.475.966 for review and advice before proceeding.

Common risks to note

• Applying legal texts that have been amended, supplemented or replaced.
• Preparing incomplete dossiers, documents or evidence.
• Misunderstanding the applicable conditions, procedures, time limits or competent authority.
• Signing, filing or conducting transactions without fully assessing legal risks.

How can ANT Legal help?

ANT Legal assists in reviewing specific situations, checking dossiers, identifying the applicable legal basis, advising on handling plans, and representing you in working with individuals, organizations or competent authorities when necessary.

For quick advice, you may contact a lawyer at 0966.475.966.

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