Is CIT Reduced for Employing Ethnic Minority Workers?

How are companies established and operating in difficult areas entitled to CIT exemption and reduction periods?

Under Article 14 of the Law on Corporate Income Tax 2025 (No. 67/2025/QH15, effective from 01/10/2025) (, point b, Clause 4, Article 75 of the Law on Investment 2020 (as amended and supplemented by Law No. 57/2024/QH15, effective from 01/01/2025)) on tax exemption and reduction periods as follows:

– Income of enterprises from new investment projects as provided in Clause 1 and point a, Clause 2, Article 13 of this Law, and high-tech enterprises and high-tech agricultural enterprises are exempt from tax for a maximum of four years and receive a 50% reduction of the payable tax for a maximum of the next nine years.

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– For investment projects as provided in Clause 2, Article 20 of the Law on Investment (as amended and supplemented by Law No. 57/2024/QH15, effective from 01/01/2025), the Prime Minister decides to apply tax exemption for a maximum of 06 years and a 50% reduction of the payable tax for a maximum of the next 13 years.

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

– The tax exemption and reduction periods for income of enterprises from new investment projects as provided in Clauses 1 and 2 of this Article are counted from the first year with taxable income from the investment project; where there is no taxable income in the first three years from the first year with revenue from the project, the tax exemption and reduction periods are counted from the fourth year. The tax exemption and reduction periods for high-tech enterprises and high-tech agricultural enterprises as provided in point c, Clause 1, Article 13 of this Law are counted from the date of issuance of the certificate as a high-tech enterprise or high-tech agricultural enterprise.

– An enterprise with an investment project expanding the scale of production, increasing capacity or renovating production technology (expansion investment) of an operating investment project in CIT-preferential fields or areas under this Law, if satisfying one of the three criteria in this Clause, may choose to enjoy tax incentives under the operating project for the remaining period (if any) or receive tax exemption and reduction on the increased income from the expansion investment. The tax exemption and reduction periods for increased income from expansion investment under this Clause equal the tax exemption and reduction periods applicable to new investment projects in the same CIT-preferential area and field.

An expansion investment project entitled to the incentives in this Clause must satisfy one of the following criteria:

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

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

+ The increased designed capacity reaches a minimum of 20% of the designed capacity before the investment.

Where an operating enterprise has an expansion investment in CIT-preferential fields or areas under this Law but does not satisfy one of the three criteria in this Clause, the tax incentives under the operating project apply for the remaining period (if any).

Where an enterprise enjoys tax incentives as an expansion investment, the increased income from the expansion investment is separately accounted; where separate accounting is not possible, the income from the expansion investment is determined in proportion to 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 periods in this Clause are counted from the year the investment project is completed and put into production and business.

The tax incentives in this Clause do not apply to expansion investments resulting from merger, acquisition of an operating enterprise or investment project. The Government details and guides the implementation of this Article.

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

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 01/10/2025) on cases of CIT reduction as follows:

“1. Manufacturing, construction and transport enterprises employing many female workers are entitled to CIT reduction equal to the additional expenses for female workers.

2. Enterprises employing many ethnic minority workers are entitled to CIT reduction equal to the additional expenses for ethnic minority workers.

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

The Government details and guides the implementation of this Article.”

Accordingly, an enterprise employing ethnic minority workers is entitled to CIT reduction.

What are the conditions for applying CIT incentives?

Under Article 18 of the Law on Corporate Income Tax 2025 (No. 67/2025/QH15, effective from 01/10/2025) on conditions for applying CIT incentives as follows:

(1) The CIT incentives in Articles 13, 14, 15, 16 and 17 of this Law apply to enterprises implementing the accounting, invoice and voucher regime and paying tax by declaration.

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

(2) Enterprises must separately account income from incentivized production and business activities in Articles 13 and 14 of this Law from income from non-incentivized production and business activities; where separate accounting is not possible, the income from incentivized production and business activities is determined in proportion to the revenue of incentivized production and business activities over the total revenue of the enterprise.

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

– Income from capital transfers, transfers of capital contribution rights; income from real estate transfers, except social housing as provided in Article 13 of this Law; income from transfers of investment projects, transfers of the right to participate in investment projects, transfers of mineral exploration and exploitation rights; income from production and business activities outside Vietnam;

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

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

– Other cases as provided by the Government.

(4) In the same period, if an enterprise enjoys different tax incentive levels for the same income, the enterprise may choose to apply the most favorable tax incentive level.

Therefore, the conditions for applying CIT incentives include the conditions stated above.

Accordingly, an enterprise employing ethnic minority workers is entitled to CIT reduction.