Gov’t issues preferential tax policies for private sector

Specifically, Decree 20 regulates the policy of corporate income tax (CIT) exemption for three years for SMEs registering for the first time, specifically regulated in Clause 3, Article 7.

The fresh tax policy is expected to support small and medium-sized enterprises, especially startups, reduce financial pressure, have more resources to reinvest, expand production and business, and improve competitiveness in the early stages of operation.

Accordingly, SMEs registering for the first time will be exempt from corporate income tax for a period of three years, from the time of being granted the first Business Registration Certificate.

The tax exemption period is calculated continuously, starting from the first year the business is granted a registration certificate, regardless of whether the business generates revenue or profit in that year or not.

For cases where the Enterprise Registration Certificate is issued before Resolution 198/2025/QH15 takes effect, but there is still a time to enjoy incentives, businesses are still entitled to continue to enjoy corporate income tax exemption for the remaining time according to new regulations.

Decree 20 also clearly states cases that are not eligible for corporate income tax exemption, in order to prevent abuse of preferential policies.

Corporate income tax exemption incentive does not apply to (1) newly established enterprises but arising from mergers, consolidations, divisions, separations, ownership conversions or business type conversions; (2) a newly established enterprise where the legal representative, member of the partnership or the person with the highest capital contribution has participated in business activities with the above-mentioned roles in another operating enterprise, or the enterprise has been dissolved but not enough 12 months, calculated from the time of dissolution to the time of establishment of the new enterprise; (3) income items that are not eligible for tax incentives, as stipulated in Clause 3, Article 18 of the 2025 Enterprise Income Tax Law.

Decree 20 also regulates personal income tax exemption and reduction for those who transfer shares, capital contributions, or related rights in innovative startup enterprises. In addition, tax incentives will be given for experts and scientists working for innovative startups, R&D centers, or startup support organizations. They will receive a personal income tax exemption for two years, followed by a 50 percent tax reduction for the next four years on salary and wage income. 

The provisions on corporate income tax exemption and reduction and the above-mentioned provisions on personal income tax exemption and reduction take effect from May 17, 2025.

As of May 2025, the private economic sector in Viet Nam comprised over 940,000 registered enterprises and more than 5 million household and individual businesses. The sector contributes around 50–51 percent of GDP, over 30 percent of state budget revenue, and employs about 82 percent of the workforce.

Resolution No. 68-NQ/TW of the Politburo on private sector development identifies private sector as the key driver of the national economy, taking the lead in science and technology, innovation, and digital transformation. 

The Resolution sets out targets for 2030 and a vision to 2045, aiming for rapid, strong and sustainable development of the Vietnamese private sector with active participation in global production and supply chains, high regional and international competitiveness and a goal of having at least three million enterprises operating in the economy by 2045, contributing over 60 percent of GDP./.