Vietnam

Corporate - Income determination

Last reviewed - 26 March 2025

Inventory valuation

At present, there are no provisions for valuing inventories or determining inventory flows. There is a separate tax guidance for making provision for inventories and certain other provisions.

Asset revaluation

Gains from the revaluation of assets for the purposes of capital contribution or transfer upon division, de-merger, consolidation, merger, or conversion of business are subject to the standard CIT rate.

Capital gains

Gains derived from the sale of interest in a Vietnam company are in many cases subject to 20% CIT. This is generally referred to as capital gains tax (CGT) although it is not a separate tax as such. The taxable gain is determined as the excess of the sale proceeds less historical cost (or the initial value of contributed charter capital for the first transfer) less transfer expenses.

Recently there has been a move to tax not only the transfer of interest in a Vietnamese entity but also the transfer of interest in overseas parents (direct or indirect) of a Vietnamese company. 

Transfers of securities (bonds, shares of public joint stock companies, etc.) by a foreign entity are subject to CIT on a deemed basis at 0.1% of the total sales proceeds. Gains derived by a resident entity from the transfer of securities, however, are taxed at 20%.

According to the new CIT Law, effective from 1 October 2025, foreign companies (whether or not they have a permanent establishment in Vietnam) shall pay tax in Vietnam on the taxable revenue derived from Vietnam (inclusive of the sales proceeds from capital transfer) at a specified percentage. This indicates that for capital transfer, the 20% rate on gains will be replaced by a flat tax rate on the total sales proceeds, effective 1 October 2025.

While the new CIT Law does not specify the exact tax rate, it indicates that the rate will be detailed in the implementing Decree. Based on the draft decree, a flat rate of 2% on sales proceeds from capital transfers but there is certain unclear points in the draft guidance

Dividend income

Dividends received from investments in other companies in Vietnam are not subject to CIT if they have been subject to CIT at the investee companies.

Interest income

Interest income is taxed at the standard CIT rate.

Certain types of interest income are entitled to tax incentives granted to the investment project, depending on the conditions on which tax incentives are granted.

Royalty income

Currently, royalty income is subject to tax at the standard CIT rate.

Other significant items

There are some types of income (e.g. income from transfer of the right to make capital contribution, income from transfer of immovable property [except for income from investment in social houses], income from transfer of investment projects) that are subject to the standard CIT rate as prescribed under the CIT regulations.

Foreign income

Foreign income, under the domestic tax law, is subject to the standard CIT rate with tax credits available (see Foreign tax credit in the Tax credits and incentives section).

Foreign income shall be taxed when earned. There are no provisions for tax deferral or preferential tax rates for foreign income.