Corporate Income Tax Exemption 2026: 3-Year Tax Exemption for Newly Established SMEs and Businesses with Annual Revenue of VND 1 Billion or Less

Date: 2026.05.22

1. Legal Basis

The Corporate Income Tax exemption policy applicable in 2026 is governed by the following legal documents:

Resolution No. 198/2025/QH15 of the National Assembly on certain special mechanisms and policies for private sector development;
Decree No. 20/2026/ND-CP of the Government detailing the implementation of certain provisions of Resolution No. 198/2025/QH15;
Decree No. 141/2026/ND-CP amending and supplementing provisions related to tax policies applicable to household businesses, individual businesses, and Corporate Income Tax.

Under Resolution No. 198/2025/QH15, small and medium-sized enterprises are entitled to Corporate Income Tax exemption for 03 years from the date of issuance of the first Enterprise Registration Certificate.

Decree No. 20/2026/ND-CP takes effect from 15 January 2026 and serves as the implementing regulation for this policy.

2. Cases Eligible for CIT Exemption from 2026

From 2026 onwards, two separate Corporate Income Tax exemption policies should be distinguished as follows:

2.1. Newly Established SMEs with First-Time Business Registration

Small and medium-sized enterprises registering their business for the first time are entitled to CIT exemption for 03 years from the issuance date of the first Enterprise Registration Certificate.

The exemption period is calculated continuously from the first year in which the Enterprise Registration Certificate is granted.

The classification of micro, small, and medium-sized enterprises shall be determined in accordance with the Law on Support for Small and Medium-Sized Enterprises and its implementing regulations.

2.2. Enterprises and Organizations with Annual Revenue of VND 1 Billion or Below

Under Decree No. 141/2026/ND-CP, income derived by enterprises and organizations established under Vietnamese law with total annual revenue of VND 1 billion or below is eligible for Corporate Income Tax exemption.

This policy is separate from the 03-year CIT exemption applicable to newly established SMEs with first-time business registration.

3. CIT Exemption Period for Newly Established SMEs

For SMEs registering their business for the first time, the exemption period is:

👉 03 years from the date of issuance of the first Enterprise Registration Certificate.

The exemption period is calculated continuously from the first year in which the Enterprise Registration Certificate is issued, regardless of whether the enterprise has generated taxable profit.

In cases where, during the first tax period, the production and business operation period eligible for tax exemption is less than 12 months, the enterprise may choose either:

To enjoy the tax incentive immediately in the first tax period; or
To register with the tax authority to commence the exemption from the subsequent tax period.

4. Conditions for Eligibility for the 03-Year CIT Exemption

To qualify for the 03-year Corporate Income Tax exemption, an enterprise must simultaneously satisfy all of the following conditions:

– Be classified as a small or medium-sized enterprise in accordance with applicable laws;
– Conduct first-time business registration;
– Not fall within the excluded cases as prescribed under Decree No. 20/2026/ND-CP;
– Independently determine eligibility for tax incentives, applicable exemption period, and perform tax declaration and tax finalization in accordance with regulations.

According to guidance from the Ministry of Finance, enterprises are responsible for independently determining:

Eligibility for tax exemption and tax reduction; Applicable exemption period; and Deductible tax losses, for the purpose of tax declaration and tax finalization with the competent tax authority.

5. Cases Not Eligible for the 03-Year CIT Exemption

Not all newly established enterprises are entitled to the 03-year Corporate Income Tax exemption.

Pursuant to Decree No. 20/2026/ND-CP, this policy does not apply to the following cases:

5.1. Enterprises Established through Business Restructuring

Including enterprises formed through:

– Merger;
– Consolidation;
– Division or separation;
– Change of ownership;
– Conversion of enterprise type.

5.2. Newly Established Enterprises with Continuity Elements from Previous Businesses

A newly established enterprise shall also be ineligible for the tax incentive if:

The legal representative;
General partner; or
Person holding the highest capital contribution has previously held an equivalent position in:

An enterprise currently in operation; or
An enterprise that has been dissolved for less than 12 months prior to the establishment date of the new enterprise.

6. Are FDI Enterprises Eligible for the 03-Year CIT Exemption?

Foreign-invested enterprises (FDI enterprises) established in accordance with Vietnamese law may still be eligible for the 03-year Corporate Income Tax exemption, provided that they fully satisfy all applicable conditions regarding:

Qualification as a small or medium-sized enterprise;
First-time business registration; and
Non-applicability of exclusion cases under current regulations.

The key requirement is that the enterprise must fully comply with all eligibility conditions under applicable Vietnamese laws and regulations.

7. Corporate Income Tax Exemption for Enterprises with Annual Revenue of VND 1 Billion or Below

Decree No. 141/2026/ND-CP supplements provisions on Corporate Income Tax exemption applicable to income derived by enterprises and organizations established under Vietnamese law with total annual revenue of VND 1 billion or below.

Total annual revenue used to determine tax exemption eligibility includes:

– Revenue from sales of goods and provision of services;
– Financial income; and
– Other income.

Such revenue shall be determined based on the appendix on business operation results attached to the Corporate Income Tax finalization return of the immediately preceding tax period.

For enterprises newly established during a tax period and expecting total revenue within that tax period not exceeding VND 1 billion, no provisional CIT payment is required.

If, at the end of the tax period, actual total revenue exceeds VND 1 billion, the enterprise must declare and finalize Corporate Income Tax in accordance with applicable regulations, without being subject to late payment interest.

8. Cases Not Eligible for Tax Exemption under the VND 1 Billion Revenue Threshold

The Corporate Income Tax exemption policy based on the annual revenue threshold of VND 1 billion does not apply to:

Subsidiaries; or Enterprises having affiliated relationships where the affiliated enterprise does not satisfy tax exemption conditions as prescribed by law.

Therefore, enterprises should carefully review:

Ownership structure; Affiliated relationships; and Total annual revenue before determining eligibility for tax exemption.

Important Note: Cases Simultaneously Meeting Conditions for 03-Year CIT Exemption and Revenue Below VND 1 Billion

– Where an enterprise simultaneously:

qualifies as a newly established SME eligible for the 03-year CIT exemption; and has total annual revenue of VND 1 billion or below, the enterprise must determine the applicable tax exemption policy in accordance with legal regulations.

– As a general principle:

These Corporate Income Tax exemption policies are not cumulative and shall not be interpreted as automatically extending the exemption period.

Where multiple tax incentive conditions are satisfied concurrently, the enterprise may choose the most beneficial policy and apply it consistently throughout the tax exemption or tax reduction period.

– Accordingly, enterprises should:

separately monitor conditions applicable to each policy; retain supporting documentation; and perform CIT declaration and tax finalization appropriate to each tax period to mitigate tax risks during inspections or audits by tax authorities.

9. What Should Enterprises Do to Properly Apply Tax Exemption Policies?

To minimize risks when applying Corporate Income Tax exemption policies, enterprises are advised to:

– Verify whether the enterprise qualifies as a small or medium-sized enterprise;
– Confirm whether the enterprise is registered for business for the first time;
– Check whether the enterprise falls within excluded cases involving merger, consolidation, division, separation, conversion, or continuity from a previous business;
– Accurately monitor the 03-year exemption period;
– Review total annual revenue to determine eligibility under the VND 1 billion revenue threshold;
– Maintain clear accounting records and proper classification of revenue and income; and
– Conduct tax declaration and tax finalization using the correct forms and within statutory deadlines.

10. Conclusion

From 2026 onwards, Vietnam’s Corporate Income Tax exemption policies introduce several noteworthy incentives.

Small and medium-sized enterprises registering their business for the first time are entitled to a 03-year Corporate Income Tax exemption under:

Resolution No. 198/2025/QH15; and
Decree No. 20/2026/ND-CP.

In addition, Decree No. 141/2026/ND-CP introduces a separate Corporate Income Tax exemption policy applicable to enterprises and organizations with total annual revenue of VND 1 billion or below.

However, enterprises should avoid applying these incentives mechanically. Tax exemption eligibility must be assessed based on:

Enterprise type; Date of establishment; Enterprise size; Affiliated relationships; Total annual revenue; and Actual tax declaration status.

For specific cases, enterprises are recommended to review their documentation against current legal regulations or consult directly with the competent tax authority to ensure tax incentives are applied properly and in full compliance with the law.