The year-end period is an appropriate time for businesses to review their tax obligations and assess the tax incentives available to them. However, determining the tax benefits a business may be entitled to involves more than identifying the applicable tax rate. It also requires reviewing eligibility conditions, the scope of qualifying income and the supporting documentation.
In 2026, businesses should also take note of changes to Vietnam’s tax administration framework and enterprise accounting regime. These include the Law on Tax Administration No. 108/2025/QH15, effective from 1 July 2026, and Circular No. 99/2025/TT-BTC, which has applied to the enterprise accounting regime since 1 January 2026. These developments should be considered when reviewing tax compliance and reconciling relevant records.
Which tax incentive policies should businesses review in 2026, and what should they check to avoid missing eligible benefits or applying tax treatments incorrectly?
1. Tax Incentives and Tax Obligations Businesses Should Review
Corporate Income Tax: Reviewing Tax Rates and the Scope of Incentivised Income
In 2026, businesses should distinguish between corporate income tax (CIT) rates determined by annual revenue and tax incentives available to qualifying industries, sectors, locations or investment projects.
In addition to the standard CIT rate of 20%, rates of 15% or 17% apply to businesses that meet the relevant revenue thresholds and other applicable conditions. These are revenue-based tax rates and should be distinguished from tax incentives available to qualifying taxpayers or activities.
Businesses should also review CIT exemption and reduction policies for small and medium-sized enterprises (SMEs), innovative start-ups and projects operating under special investment frameworks, such as the Vietnam International Financial Centre (VIFC), where relevant. Eligibility must be assessed against the specific requirements and conditions of each policy.
For foreign-invested enterprises (FIEs), the review should focus on the eligibility conditions applicable to each investment project, the scope of income qualifying for incentives, separate accounting requirements and the allocation of relevant expenses. Businesses should also consider transitional provisions to determine whether existing incentives may continue to apply under the applicable rules.
Multinational enterprise groups within the scope of the global minimum tax regime should further assess how top-up corporate income tax may affect the actual benefits of tax incentives available in Vietnam.
Businesses with related-party transactions should also review compliance with related-party transaction declaration and transfer pricing documentation requirements under Decree No. 255/2026/ND-CP. If documentation does not meet the applicable requirements or the arm’s length nature of related-party pricing cannot be substantiated, the business’s CIT liability may be adjusted, potentially affecting the actual benefits of tax incentives.
Value Added Tax: Identifying Goods and Services Eligible for VAT Reduction
The reduction of value added tax (VAT) from 10% to 8% continues to apply through 31 December 2026 to eligible goods and services, subject to the prescribed exclusions.
Businesses should review their product and service classifications and ensure that the correct VAT rates are applied on invoices. For businesses dealing with multiple product or service categories, or operating across importation, manufacturing and distribution activities, applying the correct rate to each transaction can directly affect tax liabilities and entitlements.
In addition to the VAT reduction policy, businesses should distinguish between supplies that are not subject to VAT and those subject to the 0%, 5% or 10% rates. Incorrect VAT treatment may affect both output VAT liabilities and the deductibility or refundability of input VAT.
Export and Import Duties: Reviewing Eligibility for Preferential Treatment
Importers and exporters should review HS codes, customs values, country of origin and the conditions for applying the relevant duty rates. Certain imported goods may qualify for duty exemptions or preferential tariff rates under applicable trade agreements, provided the relevant conditions are met.
Post-clearance customs audits may result in a reassessment of tax liabilities if the customs authorities identify declaration errors or determine that the conditions for preferential treatment have not been satisfied. Maintaining complete customs records and supporting documents helps businesses substantiate their tax treatment.
Foreign Contractor Tax: Assessing the Substance of Transactions
Payments to foreign suppliers, including service fees, group management fees, software-related payments, royalties and interest, should be reviewed to determine whether foreign contractor tax (FCT) obligations arise.
Businesses should not rely solely on the descriptions used in contracts. Instead, they should assess the substance of each transaction and the services or rights actually provided. For example, software-related arrangements may require clarification of the rights to use the software, any transfer of intellectual property rights and any accompanying services. Intra-group service fees should be supported by documentation demonstrating that the services were actually provided.
Incorrect classification may affect tax liabilities and, where applicable, the availability of relief under a double tax agreement, depending on the circumstances.
Personal Income Tax and Other Taxes Relevant to Business Activities
Businesses should review personal income tax (PIT) withholding, filing and finalisation obligations relating to salaries, wages and employee benefits. For foreign experts, their tax residency status and the corresponding filing obligations should also be assessed.
Depending on their business activities, companies may need to review other taxes, including special consumption tax, environmental protection tax and natural resources tax. Land rental payments and other land-related financial obligations should also be assessed separately where relevant to an investment project.
These matters should be reviewed based on each business’s actual activities; their inclusion does not mean that every business is subject to all such taxes or eligible for related incentives.
2. Why Might Businesses Miss Out on Tax Incentives?
Operating in an encouraged industry, sector or location does not automatically entitle a business to tax incentives. In practice, eligible benefits may be overlooked or applied incorrectly for several reasons:
- Failure to identify all potentially applicable policies: Businesses may focus solely on CIT incentives without reviewing relevant VAT, import and export duty provisions or tax obligations arising from transactions with foreign suppliers.
- Incorrect determination of qualifying income or transactions: Even where a business qualifies for CIT incentives, not all income is automatically eligible. Similarly, import duty preferences and VAT rates must be determined based on the specific goods, services and applicable conditions.
- Incorrect application of incentive commencement dates or periods: The start date, duration of tax exemptions or reductions and related eligibility requirements may vary depending on the policy, investment project and timing of income generation.
- Overlooking transitional provisions: Where tax policies change, businesses should review the relevant transitional rules to determine whether existing incentives may continue or whether another treatment may be available for the remaining period, subject to eligibility.
- Insufficient supporting evidence: Information in investment records, contracts, customs documents, accounting books, tax returns and other tax files should be consistent and adequately supported. Businesses with related-party transactions, multiple business activities or cross-border transactions should take particular care when determining their tax obligations and the scope of qualifying income.
An early review helps businesses identify matters that require clarification, additional documentation or adjustment before tax finalisation, rather than discovering potential issues only when the tax authorities request an explanation.
3. Review Your Tax Position with Russell Bedford KTC
Tax incentives can help reduce a business’s tax liabilities when all applicable conditions are met. However, determining the benefits available requires the relevant regulations to be assessed against the business’s actual operations, transactions and supporting records.
As part of its audit and tax compliance review work, Russell Bedford KTC examines tax treatment issues, including eligibility for tax incentives and the scope of qualifying income, depending on the agreed scope of work and the business’s circumstances.
Through its Tax Compliance Review and Tax Finalization Support services, KTC helps businesses review tax records, identify matters requiring further clarification and prepare supporting grounds for explanations where necessary.
Has your business reviewed all tax incentives that may be available for 2026?
Contact Russell Bedford KTC to discuss potential tax benefits and the areas that may require review based on your business’s circumstances.
