Corporate income tax 2026: Key updates businesses should know

Overview of corporate income tax policies in 2026

The year 2026 marks the first period in which businesses fully implement the new provisions of the 2025 Corporate Income Tax (CIT) Law and its guiding regulations. These changes not only affect the determination of taxable income but also have a direct impact on tax incentives, deductible expenses, and tax filing obligations. The 2025 CIT Law was passed by the National Assembly and took effect on October 1, 2025, applying to tax periods from 2025 onward.

In an increasingly competitive business environment, keeping up to date with new tax regulations is essential for businesses to minimize legal risks, optimize costs, and develop effective financial plans.

Corporate income tax exemption policy for the first three years

One of the most notable tax changes attracting significant attention from businesses in 2026 is the Corporate Income Tax (CIT) exemption for the first three years for eligible entities that satisfy the conditions prescribed under Decree No. 20/2026/ND-CP.

This policy was introduced to support newly established businesses, innovative startups, and investment projects operating in prioritized sectors by reducing their financial burden during the early stages of operation. The tax exemption enables businesses to allocate more resources toward reinvestment, business expansion, and improving their competitiveness in the marketplace.

However, this incentive is not automatically available to all businesses. Companies must meet all statutory requirements regarding eligible beneficiaries, business sectors, the timing of taxable income recognition, and other legal criteria. In addition, businesses are required to fulfill their registration, tax declaration, and documentation obligations, while maintaining sufficient records to demonstrate their eligibility for the incentive in the event of tax audits or inspections.

A clear understanding of the eligibility requirements and application procedures for the three-year Corporate Income Tax exemption can help businesses maximize the benefits offered by the government while developing a sound financial strategy from the very beginning of their operations.

Addition and expansion of tax incentive policies

The new law continues to encourage investment in priority sectors such as:

• High technology.
• Innovation.
• Digital transformation.
• Research and Development (R&D).
• Supporting industries.
• Green projects and sustainable development initiatives.

Many tax incentive policies have been designed to encourage businesses to invest in high value-added industries, thereby enhancing the competitiveness of the economy. At the same time, the eligibility criteria for incentives have been clarified to reduce difficulties during implementation.

Changes to deductible expenses

One area that has attracted significant attention from the business community is the regulation of deductible expenses when determining taxable income.

The new guiding regulations continue to clarify the conditions for recognizing reasonable and valid expenses, particularly for:

• Advertising and marketing expenses.
• Research and development expenses.
• Digital transformation expenses.
• Non-cash payment transactions.
• Expenses arising from related-party transactions.

More detailed regulations provide businesses with a clearer legal basis for accounting and tax finalization while reducing the risk of expenses being disallowed during tax audits and inspections.

Strengthening the management of cross-border business activities

The growth of the digital economy has made cross-border transactions increasingly common. As a result, the new tax framework introduces additional regulations concerning the determination of revenue, income, and tax obligations of foreign organizations conducting business activities in Vietnam.

These regulations help limit profit shifting abroad, prevent tax revenue losses, and align Vietnam’s tax management practices with current international standards.

Improving electronic tax filing and administration mechanisms

Alongside the amendments to the CIT Law, regulatory authorities continue to promote digital transformation within the tax sector.

Businesses are encouraged to complete the entire process of:

• Tax registration.
• Tax declaration.
• Tax payment.
• Tax refund procedures.
• Tax information lookup.

through electronic platforms. This approach helps save time, reduce compliance costs, and improve transparency in tax administration.

What should businesses prepare for in 2026?

To adapt to the new regulations, businesses should proactively:

• Review their business structure and investment model.
• Update internal accounting and tax policies.
• Verify eligibility for existing tax incentives.
• Complete supporting documentation for deductible expenses.
• Assess risks related to related-party and cross-border transactions.
• Train accounting and tax personnel on the new regulations.

Early preparation will help businesses minimize filing errors and effectively take advantage of government support policies.

The changes introduced under the Corporate Income Tax Law applicable in 2026 reflect Vietnam’s commitment to modernizing its tax system, strengthening the management of emerging business activities, and promoting innovation. In addition to expanding the scope of tax administration, the law also introduces numerous incentive policies for key industries and high value-added investment projects.

Businesses should regularly monitor new decrees and implementing circulars while proactively reviewing their financial and accounting activities to ensure legal compliance and maximize opportunities arising from the new tax policies.

See also: Three-Year corporate income tax exemption under Decree No. 20/2026/ND-CP