The 2026 tax legal framework acknowledges two key Corporate Income Tax (CIT) exemption policies designated for newly established enterprises under Decree No. 320/2025/ND-CP and Decree No. 20/2026/ND-CP. Below is a detailed analysis of the eligibility conditions and the incentive roadmap.
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1. Two-year CIT exemption incentive for enterprises converted from household businesses
According to Decree No. 320/2025/ND-CP, the model of enterprises newly established from household businesses or individual businesses is eligible for a tax exemption mechanism based on specific standards:
Applicable entities
- Revenue scale: The total annual revenue of the enterprise does not exceed VND 50 billion.
- Continuity of the household business: The household or individual business must have operated legally and continuously for a minimum of 12 months prior to the issuance of the first Enterprise Registration Certificate.
- Nature of establishment: Applicable only to enterprises registering for the first time. This does not apply to legal entities where the legal representative (except where the legal representative is not a capital-contributing member), general partner, or shareholder with the highest capital contribution has held a similar management role in active or dissolved enterprises within 12 months prior to the time of new establishment.
Tax exemption roadmap
- Duration: Exemption for 02 consecutive years.
- Activation time: Calculated from the first year taxable income is generated. In cases where the enterprise has no taxable income within the first 03 years from the generation of revenue, the tax exemption period shall be calculated from the 4th year.
- Handling of the first tax period: If the first tax period has an operating time of less than 12 months, the enterprise has the right to choose to enjoy the incentive immediately in that period or register to commence from the subsequent tax period.
2. CIT exemption for the first 03 years for Small and Medium-sized Enterprises (SMEs)
Based on Decree No. 20/2026/ND-CP guiding Resolution No. 198/2025/QH15, this policy focuses on supporting SMEs registering for business for the first time.
Subjects and scope of application
- Target groups: Including micro-enterprises, small enterprises, and medium-sized enterprises.
- Form of establishment: Must be an enterprise registering for the first time; excluding cases of establishment due to division, separation, merger, consolidation, transfer of ownership, or conversion of enterprise type.
- Governance conditions: Similar to the regulations for conversion from household businesses regarding restrictions on management personnel who have managed other enterprises within the preceding 12 months.
- Excluded income: Incentives do not apply to income specified in Clause 3, Article 18 of the Law on CIT 2025.
Tax exemption roadmap
- Duration: Tax exemption for 03 continuous years from the first year of being granted the first Enterprise Registration Certificate.
- Transitional handling:
- Enterprises licensed before May 17, 2025, but still within the first 03-year period as of the 2025 tax period, shall be entitled to the incentive for the remaining duration.
- Cases where the first 03-year period ended prior to 2025 shall not be eligible for application.
3. Principles of application in case of overlapping incentives
In cases where an enterprise simultaneously satisfies multiple conditions for CIT incentives under different legal documents, the priority rules are determined as follows:
- Priority of application: Implementation in accordance with the regulations of Decree No. 20/2026/ND-CP.
- Right to choose the beneficial option: If other legal normative documents stipulate incentive policies that are more favorable than Decree No. 20/2026/ND-CP, the enterprise has the right to choose to apply the most beneficial level of incentive.
Enterprises should carefully review their operational history and management structure to ensure compliance when declaring tax incentives in 2026.
