Corporate income tax (CIT) in Vietnam: Tax rates, deadlines, and deductible costs

Corporate Income Tax (CIT) is one of the key financial obligations that all businesses operating in Vietnam must comply with. For both domestic companies and foreign-invested enterprises (FDIs), understanding the applicable tax rates, deadlines for declaration and payment, and deductible expenses is essential to ensure compliance and optimize financial performance.
This article will help you better understand the current CIT policies in Vietnam.

1. Current CIT rates in Vietnam

In Vietnam, the standard CIT rate applied to most businesses is: Standard rate: 20% on taxable income.
However, certain enterprises or sectors are eligible for preferential rates:

See also: Government tax incentives for tech companies in Da Nang.

2. CIT deadlines – What businesses need to know

2.1. Annually CIT prepayment

• Enterprises must make CIT prepayments annually, based on estimated yearly profits.
• Deadline: No later than the last day of January of the following year.  

Note: The total CIT prepayment for the year must be at least 80% of the final payable amount based on the annual tax return. Underpayment may result in late payment penalties.

2.2. Annual CIT finalization

• Deadline: No later than March 31 of the following year (for companies using the calendar year as their fiscal year).
• Required documents:
  • CIT finalization return
  • Audited financial statements (if applicable)
  • Detailed cost and revenue explanations
  • Supporting schedules on related-party transactions, tax incentives (if any)

3. Deductible and Non-Deductible expenses for CIT

Not all expenses are deductible when calculating CIT. Businesses must ensure costs meet the conditions under the CIT Law:

Deductible expenses include:

• Salaries, bonuses, allowances with valid contracts and documentation.
• Office and factory rental costs with valid invoices and contracts.
• Marketing, sales, logistics, travel expenses (with proper documentation).
• Depreciation of fixed assets (as per regulations).
• R&D and IT-related costs.
• Payments to foreign contractors (with proper documents and tax withheld if applicable).

Non-Deductible expenses include:

• Expenses exceeding statutory limits (e.g., hospitality, uniforms, incorrect depreciation).
• Expenses without valid invoices or with non-compliant invoices.
• Salaries paid to owners of private businesses, or amounts exceeding caps for micro-enterprises.
• Improperly established reserve or welfare funds.

4. Common mistakes to avoid

5. Tips for FDIs and startups

• Build a standardized internal accounting system from the start – avoid post-audit adjustments.
• Monitor incentive timelines closely – don't miss out on preferential treatments.
• Use professional accounting & tax consulting services if lacking an internal team.
• Implement e-invoicing and digitized documentation to streamline finalization processes.

Corporate Income Tax is not only a financial obligation but also a tool for managing and optimizing business cash flow. Understanding and complying with CIT regulations helps businesses operate transparently, save costs, and build a solid foundation for sustainable growth.
Are you a foreign investor, startup, or business planning to expand operations in Vietnam? Contact Zora Consulting – a professional accounting and tax advisory firm specializing in supporting FDIs in Vietnam.