Circular 20/2026/TT-BTC: New Guidance on Vietnam Corporate Income Tax (CIT)

On March 12, 2026, the Ministry of Finance issued Circular 20/2026/TT-BTC: new guidance on Vietnam corporate income tax (CIT), implementing the Law on CIT 2025 and Decree 320/2025/NĐ-CP. Effective immediately and applicable for the 2025 tax period onwards, this Circular introduces critical regulatory changes affecting both domestic and foreign enterprises operating in Vietnam or deriving income from the country. Below, Viet An Law provides a comprehensive summary of the key updates within the Vietnam CIT updates.

Documentation for non-cash payments over 5 million VND for CIT deductible expenses

Expenses deductible under points b and c, Clause 1, Article 9 of the Law on Corporate Income Tax must have sufficient invoices and supporting documents as prescribed and the required documentation as guided in Article 3 of Circular 20/2026/TT-BTC. Specifically, for expenses with sufficient invoices and non-cash payment documents, the following documents are required for deduction when determining taxable corporate income:

The cost of authorizing employees to purchase goods and services on their behalf is 5 million VND or more

For expenses related to production and business operations that the enterprise directly pays to employees using non-cash methods, the required documentation includes:

Unpaid expenses at the time of recording amount to 5 million VND or more

For invoices for goods and services purchased individually with a value of 5 million VND or more but not yet paid at the time of expense calculation, businesses are allowed to include them as deductible expenses if they meet the following conditions:

• Contract & Minutes: There must be a sales contract and minutes of goods and services delivery.
• Subsequent payment documents: At the time of actual payment, enterprises are required to have non-cash payment documents to ensure the validity of the expenditure.

Specifically, the documentation for expenses included in deductible costs must be the original, a certified copy, a copy bearing the company’s seal, or an electronic document as prescribed by law. Enterprises must retain complete documentation for inspection and auditing purposes.

New documentation forms for CIT deductible expenses

• Donations (education, healthcare, natural disasters, disadvantaged areas, science and technology, etc.): A confirmation record of the donation must be provided using Form No. 01/TNDN issued with Circular No. 20/2026/TT-BTC.
• Purchase of goods and services from individuals/small-scale households (agriculture, forestry, fisheries; handicrafts; scrap materials; household assets; business households with revenue below the VAT threshold, etc.): A list of purchased goods and services must be provided using Form No. 02/TNDN issued with Circular No. 20/2026/TT-BTC.

Please contact Viet An Law for the latest form updates.

Dossier and procedures for Vietnam corporate income tax incentives

The procedures and dossiers for tax exemptions, tax reductions, preferential tax rates, and tax exemption/reduction periods (stipulated in Articles 4, 13, 14, and 15 of the Law on Corporate Income Tax 2025) are implemented under a self-declaration and self-responsibility mechanism by enterprises, without the need for prior registration or assessment, but mainly through post-audit.

Circular No. 20/2026/TT-BTC provides guidance on the documentation for applying for corporate income tax incentives and continues to emphasize the self-determination mechanism for taxpayers; however, meeting the incentive conditions is still subject to review by the tax authorities during periodic inspections and audits. Specifically:

Dossier and procedures for Vietnam corporate income tax incentives

Procedures for receiving tax incentives

In accordance with the general provisions of the law on tax administration (Law on Tax Administration 2019 and guiding documents): Enterprises self-declare, pay taxes, and settle taxes annually using the declaration method.

There are no separate, complicated procedures (such as pre-registering for incentives with the tax authorities or obtaining confirmation of incentives before application, except in some special cases such as large projects requiring a Prime Minister’s decision).

Enterprises determine and declare the following:

• Conditions for enjoying preferential treatment (tax-exempt income according to Article 4; preferential tax rate according to Article 13; tax exemption/reduction according to Articles 14 and 15).
• Duration of tax exemption/reduction.
• Amount of losses deductible (if any) from taxable income.

Declare tax incentives directly on the corporate income tax return (form 03/TNDN) and the corporate income tax incentive appendix (an appendix attached to the return, clearly stating the income eligible for incentives, tax rate, exemption/reduction period, and the amount of tax exempted/reduced).

Tax incentive dossiers

Enterprises do not submit separate applications for preferential treatment in advance, but only prepare and retain documents to serve as proof when the tax authorities conduct inspections or audits (the documents must be complete and valid according to tax management regulations).

The main documents to prepare and store include:

• Enterprise registration certificate, Investment registration certificate (if it is an investment project).
• Certificate of high-tech enterprise, science and technology enterprise, high-tech application project, high-tech zone, economic zone… (if applicable).
• Documents proving eligibility for incentives.
• Tax declaration forms and appendices for tax incentives declared in the tax settlement for the years eligible for incentives.

Specific timing for revenue recognition for CIT Purposes in certain cases

The timing for determining taxable revenue for corporate income tax purposes in certain specific cases is guided in Article 5 of Circular No. 20/2026/TT-BTC as follows:

Specific timing for revenue recognition for CIT Purposes in certain cases

For Vietnamese enterprises

• Exported goods: Contractual transfer of ownership date; if undetermined, as per customs regulations.
• Air transport: Date of completion of transportation services to the buyer.
• Construction and installation (including shipbuilding): Date of acceptance of the project/item/volume (regardless of whether payment has been received).
• Electricity and water supply: Date of confirmation of meter readings on the electricity/water bill.

For foreign enterprises

• Capital transfer: The time when the initial capital transfer contract becomes effective.
• Securities and deposit certificate transfer: The time when the transfer is executed.
• Derivative securities transfer (futures contract): The time when buy/sell orders are matched on the stock exchange’s trading system or the contract expires.

Clarifying CIT Obligations for Foreign Enterprises Operating in Vietnam

Article 7 of Circular No. 20/2026/TT-BTC clarifies the tax obligations of foreign enterprises, focusing on modern business activities not previously covered in Circular 78/2014/TT-BTC. Specifically:

Applicable subjects

Foreign contractors (with or without a permanent establishment) doing business in Vietnam, including:

• E-commerce, digital platforms.
• Providing services, goods with services in Vietnam.
• Distribution and delivery of goods in Vietnam.
• Contracts signed in their name through a Vietnamese party.
• Import, export, and distribution rights.

Please note that the following are not subject to tax under this provision:

• Goods delivered at border crossings (outside/without accompanying services in Vietnam).
• Repair, advertising, training services, etc., performed outside Vietnam (not online).
• Sharing of international telecommunications/postal charges.
• Internal transfer of capital within the group (without changing the parent company, without generating income).
• Sale of raw materials from bonded warehouses for export.

Tax calculation method

How to calculate taxes for foreign enterprises

CIT = Taxable revenue × Percentage of revenue

In which:

• Revenue: The total income received (before tax), including expenses paid by the Vietnamese party.
• Percentage: As per Clause 3, Article 12 of Decree 320/2025/ND-CP, specifically:

Management of expansion investment capital and science & Technology development funds

Compared to Circular 78/2014/TT-BTC, Circular 20/2026/TT-BTC has added several new regulations on the management of expanded investment capital and the Science and Technology Fund as follows:

• Registration of capital for expansion projects: Enterprises must notify the tax authorities in writing of the registered capital for expansion projects at the same time as submitting the Corporate Income Tax Return (Clause 1, Article 8).
• Assets from the Science and Technology Fund: If fixed assets formed from the Science and Technology Fund have not yet been fully depreciated but are transferred to serve production and business activities, the remaining value must be included in other income, but at the same time the enterpise is allowed to depreciate this value as a deductible expense (Clause 1, Article 9).

The above is a summary of the Circular 20/2026/TT-BTC: New guidance on Vietnam Corporate Income Tax (CIT). If you have any related questions or require tax or accounting advice, please contact Viet An Law – Tax Agency for the best support and consultation!