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.