Exemption of 3-Year Corporate Income Tax & Elimination of Business License Fee from 2026 – AACC

Exemption of 3-Year Corporate Income Tax & Elimination of Business License Fee from 2026 – AACC

Learn how to leverage the 3-year corporate income tax (CIT) exemption and full elimination of business license fee (BLF) from 01/01/2026 for newly established sole proprietorships & SMEs.

 

1. Context & Importance

On 17 May 2025, the National Assembly ratified Resolution No. 198/2025/QH15, inaugurating a suite of tax and fee relief measures designed to catalyze startup activity, corporate restructuring, and scale-up of enterprises in Vietnam. Amidst ongoing global economic volatility and cost pressures, these policies aim to:

• Alleviate recurring compliance burdens and operating expenses for business entities.

• Enhance attractiveness for new investment projects.

• Stimulate capital inflows back into the domestic economy.

In particular, newly established sole proprietorships and small and medium-sized enterprises (SMEs) stand to gain the most significant benefits, positioning them for accelerated growth and improved financial resilience.

2. Key Incentives under Resolution No. 198/2025/QH15

1. Elimination of Business License Fee (BLF)

   • Applies to all sole proprietorships, individual business households, and corporate entities.

   • Effective 1 January 2026, 100% exemption of annual BLF.

2. 100% Exemption of Corporate Income Tax (CIT) for the First 3 Years

   • Available to SMEs immediately upon issuance of their initial Enterprise Registration Certificate.

   • Standard CIT rate of 20% on taxable profit is fully waived for three consecutive fiscal years.

3. Unified Tax Calculation Methodology

   • Sole proprietorships and individual business households will no longer file under the presumptive (“lump sum”) method.

   • All entities must declare and remit tax in accordance with the updated tax schedules, annexes, and administrative guidelines issued by the General Department of Taxation.

3. Eligible Entities & Core Conditions

• Eligible Entities

  • Newly registered sole proprietorships (individual business households).

  • SMEs (limited liability companies, joint-stock companies) established for the first time.

• Core Eligibility Conditions

  1. Registration Date: Enterprise registration application submitted and approved after 17 May 2025.

  2. Business Scope: Operations must align with the registered industry codes on the Enterprise Registration Certificate or Business Household Registration.

  3. Compliance: Timely and accurate submission of all tax declarations, financial statements, and supporting documentation in accordance with statutory deadlines.

4. “Before vs. After” Comparison (Effective 01/01/2026)

5. Detailed Benefits of Leveraging These Incentives

• Reduced Operating Costs
  Immediate suspension of BLF and CIT obligations frees up working capital, enabling allocation to core business activities such as product development, marketing, and distribution expansion.

• Enhanced Reinvestment Capacity
  Tax savings can be redirected into technology upgrades, workforce training, or additional inventory—bolstering operational efficiency and competitive positioning.

• Improved Cash Flow & Liquidity
  Especially critical for startups and micro-businesses, these relief measures help smooth cash flow cycles, mitigating the risk of fund shortages when multiple fiscal dues coincide.

• Competitive Pricing Advantage
  Lower cost base allows SMEs to offer more attractive pricing or invest in value-added services, facilitating market penetration and customer retention.

• Streamlined & Transparent Compliance
  Transitioning from the presumptive method to formal schedule-based reporting enhances transparency, reduces audit risk, and aligns with international best practices for corporate governance.

6. Six-Step Guide to Capitalize on the Incentives

1. Incorporation Planning

   • Determine optimal legal structure (sole proprietorship vs. LLC vs. JSC).

   • Consult AACC to validate industry classification and financial model for full CIT eligibility.

2. Preparation of Registration Dossier

   • Draft and notarize Articles of Association or Business Household Registration Form.

   • Collect authenticated copies of personal identification (ID card, citizen ID, or passport).

   • Secure lease agreement for business premises, if applicable.

3. Submission & Certificate Issuance

   • File online via the National Business Registration Portal or submit in person at the Business Registration Office.

   • Monitor application status and promptly address any corrective requests from authorities.

4. Initial Tax Registration & Declaration

   • Establish a tax account on the e-Tax system; file the annual BLF declaration (even if fully exempt).

   • Engage AACC to prepare and submit all documentation within statutory deadlines.

5. CIT Exemption Registration

   • At first year-end tax finalization, formally apply for the 3-year CIT exemption.

   • Attach the Enterprise Registration Certificate scan and summary of operational results.

6. Ongoing Compliance & Reporting

   • Maintain accurate bookkeeping; submit quarterly/annual financial statements and tax returns.

   • Leverage AACC’s monitoring service to receive timely reminders and updates on any changes in tax law.

7. Why Partner with AACC?

• Highly Experienced Specialists:
  Our team comprises professionals with industry-recognized certifications, offering dedicated, expert support.

• End-to-End Support
  From entity formation and dossier preparation to submission, audit support, and tax optimization, AACC delivers comprehensive assistance.

• Integrated Financial Solutions
  We advise on corporate structuring, cost management strategies, cash flow forecasting, and long-term financial planning tailored to your growth objectives.

Timely adoption of the tax and fee reliefs under Resolution No. 198/2025/QH15 not only curtails immediate financial burdens but also lays a robust foundation for sustainable development of sole proprietorships and SMEs. Don’t let this “golden opportunity” slip away—ensure your business is structured to fully capture these significant incentives!

📩 Inbox us now to receive free, in-depth advisory support! AACC is committed to guiding you through every step of your entrepreneurial journey, from startup to scale-up.