The Vietnamese tax legal system is undergoing its most significant reform in a decade. The issuance of the Law on Personal Income Tax 2025 (Law No. 109/2025/QH15) has created a new landscape for individual tax obligations. Simultaneously, Decree 320/2025/ND-CP and Decree 218/2013/ND-CP have redefined the incentive framework for enterprises. This article provides a detailed guide for businesses and financial experts to optimize year-end finances.
Table of Contents/Mục lục
1. Detailed Analysis of the Law on Personal Income Tax 2025 (Law No. 109/2025/QH15)
Law No. 109/2025/QH15 brings breakthrough changes regarding deduction levels and revenue thresholds. This is the most crucial law affecting individuals and household businesses starting from late 2025.
Adjustment of Family Deductions Based on Economic Fluctuations
Law 109/2025/QH15 raises family deduction levels to protect the real income of workers. Specifically, the personal deduction for the taxpayer increases to VND 15.5 million per month. For each dependent, the deduction level is adjusted to VND 6.2 million per month.
The new mechanism allows for automatic adjustments when the CPI fluctuates by more than 20%. This ensures that deductions remain aligned with actual living costs. Employees with incomes below VND 17.3 million per month (with no dependents) will not pay PIT.
Incentives for High-Level Talent in Technology Sectors
Law 109/2025/QH15 stipulates a 50% PIT reduction to attract talent. This policy applies to experts working in strategic fields:
-
Semiconductor integrated circuit design and electronic components.
-
Artificial Intelligence (AI) and Big Data.
-
Biotechnology for healthcare and agriculture.
Individuals in this category enjoy a 50% reduction in PIT arising from salaries. This policy attracts international talent and retains domestic experts. Enterprises must proactively register the list of eligible personnel with local tax authorities.
New Revenue Thresholds for Business Households
The new law raises the tax-exempt revenue threshold to VND 500 million per year. Previously, the 100-200 million threshold caused pressure on small households. This change reduces the administrative burden for millions of families.
For E-commerce activities, tax management will be stricter. E-commerce platforms are responsible for withholding tax at the source based on actual revenue. All transaction data is linked directly to the General Department of Taxation to ensure transparency.
2. Corporate Income Tax (CIT) Incentives under the New Framework
The current CIT incentive system is a coordination between Decree 218/2013/ND-CP and Decree 320/2025/ND-CP.
Fundamental Values from Decree 218/2013/ND-CP
Decree 218/2013/ND-CP still stipulates basic incentives regarding locations and sectors. Enterprises in industrial parks and high-tech zones continue to enjoy preferential rates. A tax rate of 10% for 15 years applies to projects in extremely difficult socio-economic areas.
Enterprises must pay special attention to separate accounting records. Income from incentivized activities must be tracked independently. If income is aggregated, tax authorities will apply the standard 20% rate.
Green Economy Breakthroughs under Decree 320/2025/ND-CP
Decree 320/2025/ND-CP, issued on December 15, 2025, opens a new era for sustainable development.
-
Green Production: Enterprises meeting emission reduction standards apply a 10% tax rate.
-
Tax Holidays: Tax exemption for up to 4 years and a 50% reduction for up to 9 years.
-
Accelerated Depreciation: Machinery for environmental protection can be depreciated twice as fast.
Accelerated depreciation helps businesses legally reduce taxable income. Enterprises will have more capital to reinvest in modern technology starting in 2026.
Flexible Loss Carry-Forward Mechanism
Decree 320/2025/ND-CP allows flexible loss offsetting between production and real estate activities. Previously, real estate losses had to be separated. The new regulation helps businesses reduce the total CIT payable. The continuous loss carry-forward period does not exceed 05 years.
3. Maintenance of the 2% Value Added Tax (VAT) Reduction Policy
The Government continues to maintain the 8% VAT rate to stimulate domestic consumption until the end of 2026.
Scope of Goods and Services Eligible for the 8% Rate
The VAT reduction applies to most groups of goods currently subject to a 10% rate. Excluded sectors include: telecommunications, banking, securities, and real estate. Businesses must look up industry codes according to Decree 320/2025/ND-CP.
Notes on Electronic Invoices
E-invoices must clearly show the reduced tax rate for each item. Issuing an 8% invoice for a 10% item will result in arrears and late payment penalties. Businesses should update their accounting software to avoid systematic errors.
4. Key Notes for Enterprises during the Transition Period
To ensure rights and legal compliance, businesses should note the following:
Reviewing Eligibility for CIT Incentives
Enterprises must determine if their projects qualify under Decree 320/2025/ND-CP. Pay close attention to digital transformation and innovation projects. If eligible, you must prepare dossiers proving technological capacity and environmental standards.
Noting the Effective Date of New Personal Deductions
The new deduction level (15.5 million) applies from the tax period of January 2026. For the 2025 tax finalization, you still apply the old level (11 million). However, the 500 million threshold for households is effective from late 2025. Businesses must separate these two periods for accurate declaration.
Completing Non-Cash Payment Documentation
All expenses from VND 5 million must have bank payment vouchers. For projects under Decree 320, payment documentation requirements are stricter. Invalid invoices or missing vouchers will lead to the exclusion of expenses and input VAT.
Managing Risks from Automated Tax Reconciliation Systems
Tax authorities now use AI to reconcile input and output invoices. Any abnormalities in revenue or VAT rates will trigger automatic alerts. Businesses must proactively verify the legal status of input suppliers. Using invoices from “runaway” businesses leads to high risks of expense disqualification.
Transitioning from Tax Incentives to Cost Support (BEPS)
Enterprises subject to Global Minimum Tax should note Decree 320/2025/ND-CP. The Government provides investment cost support mechanisms for high-tech firms instead of just tax reductions. You should work with authorities to convert incentive forms to ensure actual benefits.
