Timing of revenue determination for Corporate Income Tax (CIT) under Circular 20/2026/TT-BTC

I. Timing of revenue determination for Corporate Income Tax

1. The timing of revenue determination for CIT in several cases for enterprises established under Vietnamese law is as follows:

a) For exported goods: The timing of revenue determination for CIT is the date of ownership transfer according to the goods export contract. If the timing of ownership transfer cannot be determined, the timing of revenue determination for CIT shall be based on the regulations on the basis for identifying exported goods under customs law;

b) For air transport activities: The timing of revenue determination for CIT is the time of completing the provision of transport services to the buyer;

c) For construction and installation activities (including shipbuilding): The timing of revenue determination for CIT is the time of acceptance of the work, work items, or construction and installation volume, regardless of whether money has been collected or not;

d) For electricity and water supply activities: The timing of revenue determination for CIT is the date of confirming the electricity or water meter readings recorded on the electricity or water bills.

2. The timing of revenue determination for CIT in several cases for foreign enterprises is as follows:

a) For capital transfer activities: The timing of revenue determination for CIT is the time the initial capital transfer contract takes effect according to regulations;

b) For the transfer of securities and certificates of deposit: The timing of revenue determination for CIT is the time of transfer;

c) For the transfer of derivative securities (futures contracts): The timing of revenue determination for CIT is the time of matching buy or sell orders of the futures contract by the investor on the Stock Exchange's trading system or the time the futures contract expires.

II. Corporate Income Tax for foreign enterprises doing business in Vietnam

1. The provisions in this Article apply to foreign enterprises specified in points b2, b3, and b4, Clause 1, Article 2 of Decree No. 320/2025/ND-CP (except for cases specified in Clause 2 of this Article) belonging to the following cases:

a) Foreign enterprises with or without a permanent establishment in Vietnam, including enterprises with e-commerce activities or business based on digital platforms (hereinafter collectively referred to as foreign contractors, foreign sub-contractors) doing business in Vietnam or having income arising in Vietnam on the basis of a contract, agreement, or commitment between the foreign contractor and a Vietnamese organization or individual, or between the foreign contractor and a foreign sub-contractor to perform part of the work of the contractor contract;

b) Foreign contractors and foreign sub-contractors providing services, services attached to goods, or supplying and distributing goods (including cases of authorizing or hiring Vietnamese organizations or individuals to perform part of the distribution services or other services related to the sale of goods in Vietnam) in the form of on-the-spot export/import or according to international commercial terms (Incoterms), except for the case of processing and returning goods to the foreign enterprise that hired the processing; providing goods and services in Vietnam under e-commerce or digital platform business forms.

The case of supplying and distributing goods in Vietnam specified in this point applies when the foreign contractor or foreign sub-contractor still owns the goods delivered to the Vietnamese organization or individual, or is responsible for distribution, advertising, marketing costs, service quality, quality of goods delivered to the Vietnamese organization or individual, or fixes the selling price of goods or service supply price;

c) Foreign contractors and foreign sub-contractors providing goods where the point of delivery is within the territory of Vietnam (except for cases specified in Clause 2 of this Article) or the provision of goods is accompanied by several services performed in Vietnam such as advertising, marketing, trade promotion, after-sales service, installation, trial run, warranty, maintenance, replacement, and other services accompanied with the provision of goods (including free-of-charge accompanying services), regardless of whether the provision of such services is included in the value of the goods supply contract;

d) Foreign contractors and foreign sub-contractors through Vietnamese organizations or individuals to perform negotiation and signing of contracts in the name of the foreign enterprise;

đ) Foreign contractors and foreign sub-contractors performing export rights, import rights, distribution in the Vietnamese market, purchasing goods for export, or selling goods to Vietnamese traders according to the law on commerce and foreign trade management.

2. The provisions of this Article do not apply to the following cases:

a) Foreign contractors and foreign sub-contractors providing goods to Vietnamese organizations or individuals without accompanying services performed in Vietnam in the form of delivery at a foreign border gate, where the seller bears all responsibilities, costs, and risks related to exporting and delivering goods at the foreign border gate; the buyer bears all responsibilities, costs, and risks related to receiving and transporting goods from the foreign border gate to Vietnam (including cases where delivery at a foreign border gate is accompanied by a warranty clause as the responsibility and obligation of the seller);

b) Foreign contractors and foreign sub-contractors providing goods to Vietnamese organizations or individuals without accompanying services performed in Vietnam in the form of delivery at a Vietnamese border gate, where the seller bears all responsibilities, costs, and risks related to the goods until the point of delivery at the Vietnamese border gate; the buyer bears all responsibilities, costs, and risks related to receiving and transporting goods from the Vietnamese border gate (including cases where delivery at the Vietnamese border gate is accompanied by a warranty clause as the responsibility and obligation of the seller);

c) Foreign contractors and foreign sub-contractors providing repair services (with or without replacement materials and equipment) for means of transport, machinery, and equipment (including undersea cables and transmission equipment) for Vietnamese organizations or individuals where these services are performed abroad;

d) Foreign contractors and foreign sub-contractors providing advertising and marketing services (except for advertising and marketing on the internet) for Vietnamese organizations or individuals where these services are performed abroad;

đ) Foreign contractors and foreign sub-contractors providing investment and trade promotion services (except for investment and trade promotion on the internet) for Vietnamese organizations or individuals where these services are performed abroad;

e) Foreign contractors and foreign sub-contractors providing brokerage services (except for brokerage on the internet) for selling goods or providing services abroad for Vietnamese organizations or individuals where these services are performed abroad;

g) Foreign contractors and foreign sub-contractors providing training services (except for online training) for Vietnamese organizations or individuals where these services are performed abroad;

h) Foreign contractors and foreign sub-contractors sharing international telecommunications service charges (payment charges) between Vietnam and foreign countries or leasing foreign transmission lines and satellite bands according to the Law on Telecommunications and its amendments (if any), international telecommunications treaties to which Vietnam is a signatory, and these services are performed outside Vietnam;

i) Foreign contractors and foreign sub-contractors sharing international postal service charges (payment charges) between Vietnam and foreign countries according to the Law on Post and its amendments (if any), international postal treaties to which Vietnam is a signatory, and these services are performed outside Vietnam;

k) Foreign contractors and foreign sub-contractors using bonded warehouses or inland container depots (ICDs) as warehouses to support international transport, transit, transshipment, storage, or for other enterprises to process goods;

l) Foreign contractors and foreign sub-contractors providing services other than those mentioned in points c, d, đ, e, g, h, and i of this Clause for Vietnamese organizations or individuals where the provision of these services is performed abroad and not consumed in Vietnam;

m) Foreign enterprises transferring capital in the form of ownership restructuring transactions among companies within the same group that do not change the ultimate parent company of the participating parties having direct or indirect ownership of the enterprise in Vietnam after restructuring and do not generate income, including: company division, separation; consolidation; merger; share swap; capital contribution by shares; distribution of profits or dividends by shares within the group, and direct or indirect ownership movement transactions of enterprises in Vietnam.

Capital transfer in the form of ownership restructuring within a group that does not change the ultimate parent company is considered not to generate income when satisfying the following conditions: No change in the ultimate beneficial owner; the transfer value is not recorded higher than the book value or the initial capital contribution value; the transaction does not create a price difference, the value determined according to the restructuring dossier approved by the competent authority is not higher than the value recorded at the time of capital transfer; the transferee inherits all capital value, obligations, and interests related to the investment of the transferor;

n) Foreign enterprises selling goods as raw materials, supplies, and components at bonded warehouses or non-tariff zones to be imported into Vietnam for export production or export processing under contract; foreign enterprises designating an export processing enterprise to deliver goods as raw materials, supplies, and components to another export processing enterprise for export production or export processing under contract as specified in point b, Clause 3, Article 12 of Decree No. 320/2025/ND-CP.

3. Method for determining the amount of Corporate Income Tax payable:

The CIT amount payable by foreign contractors and foreign sub-contractors is determined based on taxable revenue and the percentage (%) on taxable CIT revenue. Specifically:

In which, taxable CIT revenue is the total revenue received by the foreign contractor or foreign sub-contractor, before deducting any taxes payable. Taxable CIT revenue includes expenses paid by the Vietnamese party on behalf of the foreign contractor or foreign sub-contractor (if any).

4. Taxable CIT revenue for specific cases is determined as follows:

a) If, according to the agreement in the contractor or sub-contractor contract, the revenue received by the foreign entity excludes CIT payable, the taxable CIT revenue is determined by the following formula:

b) In cases where the contract or annex stipulates that the foreign contractor assigns part of the work or work items to a sub-contractor, the taxable CIT revenue of the foreign contractor does not include the value of work or items performed by the sub-contractor based on the sub-contract signed between the foreign contractor and the sub-contractor. The sub-contractor in this point is identified according to the list of sub-contractors specified in the contract or annex signed between the foreign contractor and the Vietnamese party before the sub-contractor performs the assigned work.

In cases where a foreign contractor signs contracts with suppliers in Vietnam to purchase materials, machinery, and equipment to perform the contractor contract and goods/services for internal consumption not belonging to the items or work performed under the contract, the value of these goods/services is not deductible when determining the taxable CIT revenue of the foreign contractor;

c) In cases where a foreign contractor signs a contract with a foreign sub-contractor, the Vietnamese party shall declare and pay CIT on behalf of the foreign contractor and foreign sub-contractor according to the percentage (%) on taxable CIT revenue corresponding to the business industry that the entities perform. The foreign sub-contractor is not required to declare and pay CIT on the part of the work value performed that the Vietnamese party has already declared and paid;

d) For machinery, equipment, and transport means leasing services, taxable CIT revenue is the total rental amount. In cases where the rental revenue includes costs directly paid by the lessor such as vehicle insurance, maintenance, registration certification, operators, and transport costs for machinery from abroad to Vietnam, taxable CIT revenue does not include these costs if there are actual supporting documents;

đ) For transport services of foreign airlines, taxable CIT revenue is the revenue from passenger ticket sales, airway bills, and other receipts (except for those collected on behalf of the State or organizations as prescribed by law) in Vietnam for the transport of passengers, goods, and other objects performed on the flights of the airline itself or code-share flights;

e) For transport services of foreign shipping lines, taxable CIT revenue is the total freight collected from the transport of passengers, goods, and other surcharges that the shipping line is entitled to from the loading port in Vietnam to the final unloading port (including freight of shipments transshipped through intermediate ports) and/or freight collected from transporting goods between Vietnamese ports.

Freight used as the basis for CIT calculation does not include freight for which CIT has been calculated at a Vietnamese port for the foreign ship owner and freight paid to Vietnamese transport enterprises for participating in transporting goods from a Vietnamese port to an intermediate port;

g) For international logistics and forwarding services from Vietnam to abroad (regardless of whether the sender or receiver pays), taxable CIT revenue is the total revenue received by the foreign contractor, excluding international freight charges payable to the carrier (air, sea);

h) For international express delivery services from Vietnam to abroad (regardless of whether the sender or receiver pays), taxable CIT revenue is the total revenue received by the foreign contractor;

i) For outward reinsurance activities, taxable CIT revenue is the amount of outward reinsurance premiums, reinsurance commissions, and other receipts arising from outward reinsurance activities received by the foreign contractor. For inward reinsurance from abroad, taxable CIT revenue is the inward reinsurance premium and other receipts arising from inward reinsurance according to the confirmed reinsurance statement received by the foreign contractor;

k) For the transfer of securities and certificates of deposit, taxable CIT revenue is the total revenue from selling securities or certificates of deposit. For the transfer of derivative securities (futures contracts), taxable CIT revenue is the transfer price of each futures contract. In which, the transfer price of each futures contract is determined by the settlement price of the futures contract at the time of determining taxable revenue multiplied by the contract multiplier multiplied by the number of contracts multiplied by the initial margin rate divided by 2 (the initial margin rate is announced by the Vietnam Securities Depository and Clearing Corporation according to regulations);

l) For loan interest, taxable CIT revenue is the entire amount the lender receives from loans in any form, whether the loan is secured by a mortgage or not, or whether the lender enjoys profits from the borrower; income from deposit interest (except for interest on deposits of foreign individuals and interest on deposits arising from accounts maintained for the activities of diplomatic missions, representative offices of international organizations, or NGOs in Vietnam), including bonuses attached to deposit interest (if any); income from late payment interest; income from bond interest, bond discounts (except for tax-exempt bonds), and treasury bills; income from certificates of deposit interest. Loan interest includes fees that the Vietnamese party must pay according to the contract.

5. Percentage (%) on taxable CIT revenue:

a) The percentage (%) on taxable CIT revenue applied to foreign enterprises doing business in Vietnam is implemented according to the provisions in Clause 3, Article 12 of Decree No. 320/2025/ND-CP;

b) In cases where a contractor or sub-contractor contract includes many different business activities, the application of the percentage (%) on taxable CIT revenue when determining the CIT payable is based on the taxable CIT revenue for each business activity performed. If the value of each activity cannot be separated, the highest percentage (%) for the industry/business lines involved shall be applied to the entire contract value.

Particularly for construction activities involving the supply of materials or machinery/equipment: If the contract separates the value of each activity, the respective percentage (%) applies. If not separated, the rate is 2% on the entire contract value. If the foreign contractor sub-contracts the entire material/machinery part and only performs the remaining services, the rate for services (5%) applies;

c) In cases of contracts for supplying machinery and equipment accompanied by services performed in Vietnam, if the value of machinery/equipment and services can be separated, tax is calculated based on the respective percentage for each part. If not separated, a rate of 2% applies.

III. Conclusion

Circular 20/2026/TT-BTC has created a more transparent legal corridor in determining CIT obligations, especially with the clear distinction between domestic enterprises and foreign contractors doing business on digital platforms. Mastering the milestones of acceptance, ownership transfer, or contract effective dates will help businesses proactively manage their financial plans and minimize legal errors.

However, for multi-industry contracts or complex restructuring transactions, enterprises need to pay special attention to separating the value of each activity to apply the most favorable tax rates.

• Full text of Decree No. 320/2025/ND-CP dated December 15, 2025, guiding the implementation of the Law on Corporate Income Tax here;

• Full text of Circular No. 20/2026/TT-BTC dated March 12, 2026 here.