Conditions for Corporate Income Tax Exemption Incentives for the First 3 Years

Dear Sir/Madam,

Thank you for your interest in DB Legal's services.

Regarding your question, we would like to respond as follows:

On January 15, 2026, the Government issued Decree No. 20/2026/ND-CP detailing and guiding the implementation of a number of articles of Resolution No. 198/2025/QH15 dated May 17, 2025, of the National Assembly on certain special mechanisms and policies for the development of the private economy, in which, Clause 3, Article 7 stipulates:

"3. Small and medium-sized enterprises registering their business for the first time:

a) Shall be exempt from corporate income tax for 03 years from the date of the initial issuance of the Enterprise Registration Certificate. The tax exemption period shall be calculated continuously from the first year the initial Enterprise Registration Certificate is issued. In case the Enterprise Registration Certificate was issued before the effective date of Resolution No. 198/2025/QH15 and still has an applicable incentive period remaining, the enterprise shall enjoy the incentives specified in this Clause for the remaining duration;

b) The incentive regulations in this Clause shall not apply to:

b1) Newly established enterprises resulting from mergers, consolidations, divisions, separations, ownership transformations, or corporate type conversions;

b2) Newly established enterprises where the legal representative (except where the legal representative is not a capital contributing member), partnership member, or the person with the highest capital contribution has participated in business activities as the legal representative, partnership member, or the person with the highest capital contribution in enterprises that are currently operating or have been dissolved for less than 12 months from the time of dissolution of the old enterprise to the time of establishment of the new enterprise."

Thus, for cases of newly established enterprises that fall into the categories below, the 03-year tax exemption from the initial establishment will not apply:

• Mergers;

• Consolidations, divisions, separations;

• Ownership transformations, corporate type conversions;

• The legal representative (except where the legal representative is not a capital contributing member), partnership member, or the person with the highest capital contribution has participated in business activities as the legal representative, partnership member, or the person with the highest capital contribution in enterprises that are currently operating or have been dissolved for less than 12 months from the time of dissolution of the old enterprise to the time of establishment of the new enterprise.

Therefore, if you participate in establishing an enterprise in 2026 and do not fall under the aforementioned cases where the corporate income tax incentives are not applicable, your newly established enterprise will be exempt from corporate income tax for 03 years.

See more related content:

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

2) Key updates of the 2025 Special Consumption Tax Law for enterprises in Vietnam.