Can a newly established foreign-invested company enjoy the policy of Corporate Income Tax exemption for the first 3 years like domestic enterprises? The answer is yes, if the enterprise fully meets the conditions under the provisions of law. The Tax Department has officially confirmed and clarified this policy in Official Letter No. 3896/CT-CS and Official Letter No. 3897/CT-CS issued on 11/6/2026.
The article below will provide detailed information on the eligibility conditions, the excluded cases, the method of determining the 3-year tax exemption period, and the declaration process when applying CIT exemption 2026.
1. What the CIT Exemption 2026 Is
Can a newly established foreign-invested company enjoy the policy of Corporate Income Tax exemption for the first 3 years like domestic enterprises? This policy is institutionalized in Resolution No. 198/2025/QH15 (effective from 17/5/2025) on private economic development and is guided in Clause 3, Article 7 of Decree No. 20/2026/ND-CP. The core content is a 100% exemption of Corporate Income Tax for 03 consecutive years from the date of issuance of the Enterprise Registration Certificate (ERC) for the first time.
The policy applies to newly established small and medium-sized enterprises for the first time. Whether FDI enterprises are eligible to apply, the specific conditions, and the excluded cases will be clarified by the article in the subsequent sections when applying for CIT exemption 2026.
It should be noted that this 3-year tax exemption policy is separate from the preferential tax rates of 15% or 17% calculated based on revenue prescribed in the Law on Corporate Income Tax No. 67/2025/QH15, and also does not overlap with the separate incentive mechanisms dedicated to innovative startups.
1. Can FDI Companies Claim the CIT Exemption in Vietnam?
After Decree No. 20/2026/ND-CP was issued, some local tax authorities issued inconsistent guidance related to the applicable subjects being foreign-invested enterprises (FDI). In order to resolve this obstacle, the Tax Department issued Official Letter No. 3896/CT-CS and Official Letter No. 3897/CT-CS dated 11/6/2026, affirming that FDI enterprises are eligible to apply the incentive policy if they fully meet the prescribed standards, and at the same time requiring the withdrawal of previous contradictory guiding documents.
Thus, the decisive factor for the enterprise to enjoy the tax incentive is meeting the criteria of a small and medium-sized enterprise (SME) together with the origin of establishment, instead of based on the nationality of the owner or investor.
2. Conditions for the 3-Year CIT Exemption
To be eligible for the 3-year Corporate Income Tax exemption policy, the enterprise must simultaneously meet all of the following mandatory conditions. Failure to satisfy any single condition will cause the enterprise to lose the right to enjoy the incentive.
2.1. Newly Established for the First Time
The enterprise must be registered for establishment for the first time. The incentive policy does not apply to enterprises formed from division, separation, merger, consolidation, conversion of enterprise type, or change of ownership as prescribed by law.
2.2. SME Thresholds for the CIT Exemption
The enterprise must determine its scale as belonging to the group of micro, small, or medium-sized enterprises based on the regulations in Decree No. 80/2021/ND-CP. The enterprise needs to meet the criteria on the average annual number of employees participating in social insurance (BHXH), combined with one of the two criteria on total revenue or total capital sources as follows:
|
Operating industry group |
Enterprise scale | Employees (participating in BHXH) |
Revenue or Capital sources |
| Agriculture – Forestry – Fishery, Industry, Construction | Micro | ≤ 10 people | Revenue ≤ 3 VND billion or Capital ≤ 3 VND billion |
| Small | ≤ 100 people | Revenue ≤ 50 VND billion or Capital ≤ 20 VND billion | |
| Medium | ≤ 200 people | Revenue ≤ 200 VND billion or Capital ≤ 100 VND billion | |
| Trade, Services | Micro | ≤ 10 people | Revenue ≤ 10 VND billion or Capital ≤ 3 VND billion |
| Small | ≤ 50 people | Revenue ≤ 100 VND billion or Capital ≤ 50 VND billion | |
| Medium | ≤ 100 people | Revenue ≤ 300 VND billion or Capital ≤ 100 VND billion |
Example: An FDI enterprise operating in the trade and services sector is determined to be a medium-sized enterprise if it uses no more than 100 employees participating in BHXH and has total revenue not exceeding 300 VND billion or total capital sources not exceeding 100 VND billion.
2.3. Rules on Legal Representatives and Major Owners
The enterprise will not be eligible for the tax exemption if:
The legal representative (unless they are not a capital-contributing member), general partner, or person holding the largest capital contribution has previously participated in another enterprise in the same corresponding capacity, where:
– The previous enterprise is still operating; or
– The previous enterprise has been dissolved less than 12 months before the establishment of the new enterprise.
3. Income Excluded From the Exemption
Under the provisions of Clause 3, Article 18 of the Law on Corporate Income Tax No. 67/2025/QH15, the tax exemption policy does not apply to the following incomes:
- Income from transfer of capital, transfer of real estate, or transfer of investment projects.
- Income from mineral exploitation and natural resource activities.
- Income from production and business activities outside the territory of Vietnam.
- Income from production and business of goods and services subject to special consumption tax (except for cases permitted by law).
- Income from prize-winning electronic game business.
In cases where the enterprise generates multiple business activities, it must separately account for the income from the activities eligible for the tax exemption incentive.
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4. How the Three Years Are Counted
The tax exemption period is calculated according to the tax year, lasting continuously for 03 years from the date the enterprise is issued the Enterprise Registration Certificate (ERC) for the first time. This period is calculated continuously even for the years in which the enterprise has not yet generated revenue or profit.
For enterprises issued the ERC before 17/5/2025 but still within the 03-year period calculated from the date of establishment, the enterprise will be eligible to apply the tax exemption policy for the remaining period of that 03-year term.
5. How to Claim the CIT Exemption and Keep Evidence
The process of applying the Corporate Income Tax exemption policy is performed under the self-declaration and self-responsibility mechanism:
- The enterprise does not need to perform the procedure of requesting prior approval from the tax authority, but self-determines the conditions and declares the exempted Corporate Income Tax amount directly on the annual Corporate Income Tax finalization return.
- The enterprise must proactively prepare and store the full dossier proving the conditions for enjoying the incentive, including: List of employees participating in BHXH, Financial Statements (to prove revenue and total capital sources), the first-issued ERC, together with the legal documents of the legal representative and owner.
- The tax authority will conduct post-inspection and examination. In cases where it is discovered that the enterprise declared the tax exemption incorrectly against the conditions, the tax authority will recover the Corporate Income Tax amount, calculate late payment interest at the rate of 0.03%/day, and impose administrative tax violation penalties.
- In cases where the enterprise fully meets the conditions but has not yet declared the application of the incentive in previous tax periods, it may consider performing supplementary declaration as prescribed.
(Refer to the detailed declaration process in the article Annual Tax Finalization in Vietnam.)
6. CIT Exemption Review at Vina TPT
For the enterprise to correctly apply the CIT exemption 2026 policy, Vina TPT performs the following review steps:
- Comprehensively appraise the establishment conditions, SME scale criteria, and legal documents of the legal representative and capital-contributing members in accordance with current regulations.
- Guide the allocation and separate accounting of tax-exempt income and excluded income; perform declaration on the Corporate Income Tax finalization return and standardize the storage dossier proving the conditions.
- Review data of previous tax periods in order to perform supplementary declaration of benefits for enterprises that missed the incentive.
- With more than 20 years of experience, more than 500 corporate clients, and a team holding CPA and ACCA certificates, Vina TPT accompanies the enterprise in the review and declaration.
Conclusion
When foreign investors newly establish an FDI enterprise in Vietnam, if they meet the prescribed standards on SME scale and do not fall under the excluded cases, they have the right to self-declare enjoyment of the Corporate Income Tax exemption incentive for the first 3 years. Accurately determining and applying the CIT exemption 2026 policy will help the enterprise reduce financial pressure and operate safely during the market entry stage.
Please send the ERC issuance date, number of employees, revenue, or total capital in order to receive a preliminary assessment of the conditions for enjoying the CIT exemption 2026 tax incentive.
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