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Essential Updates for the New Corporate Income Tax Regime in Vietnam
Vietnam has introduced important changes to its Corporate Income Tax (CIT) framework that may affect German companies operating in or generating income from Vietnam. The following points highlight the most relevant updates and their practical implications.
1. Capital Transfers
Vietnam now allows CIT on capital transfers to be calculated using a 2% rate on taxable revenue sourced in Vietnam. This may increase the tax burden for low‑margin transactions.
Internal group restructurings may be exempt from CIT if they do not change the ultimate parent company’s ownership and do not generate taxable income. Proper documentation will be essential for securing this exemption.
2. CIT Obligations for Digital Activities
Foreign enterprises providing e‑commerce or digital platform services to Vietnamese customers are subject to CIT even without a permanent establishment. German companies offering cross‑border digital services should assess whether registration or local tax agent support is required.
3. R&D‑Related Deductibility
CIT‑deductible expenses now include costs for research, technology development, innovation, and digital transformation.
Additionally, companies may allocate up to 20% of taxable income to the Science and Technology Development Fund, providing added flexibility for financing R&D initiatives.
Forex management: Vietnam’s Banking Regulations Unpacked
Forex management framework in Vietnam evolves with Circular No. 80/2025/TT-NHNN (“Circular 80”), amending Circular 12/2022/TT-NHNN to clarify offshore loan rules. Foreign currency accounts may now use funds purchased from authorized banks to repay principal, interest, and fees, with clarified borrower-guarantor repayment rules. For VND accounts, funding sources now explicitly include borrower transfers and foreign currency sales. Additionally, the Circular allows intermediary accounts in specific cases while tightening non-compliant loan requirements. It also mandates borrowers to submit monthly online reports by the 5th of the following month. Overall, Circular 80 enhances guidance and streamlines compliance for businesses.
Contributed by RÖDL Vietnam
