3-Year Tax Exemption for Newly Established SMEs Upon Ownership Transfer
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Based on:Nghị quyết số 198/2025/QH15; Nghị định số 20/2026/NĐ-CP - Ministry of Finance
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The Ministry of Finance clarified the eligibility conditions for the 3-year corporate income tax (CIT) exemption for newly established small and medium enterprises (SMEs) under National Assembly Resolution 198/2025/QH15 and Government Decree 20/2026/ND-CP. The query concerned a single-member LLC established in early 2025 that changed ownership in September 2025 and hired a foreign director. To qualify for the 3-year CIT exemption, a newly established SME must meet conditions set out in Resolution 198/2025/QH15 and Decree 20/2026/ND-CP, including that the owner(s) must not have previously established or contributed capital to any other enterprise. The Ministry confirmed that if both the former and new owner had never established or invested in any other company, the enterprise may still be eligible for the exemption. Eligibility is assessed based on the actual circumstances at the time of establishment and throughout the company's operation. The enterprise should maintain supporting documentation to present to the tax authority upon request.
3-Year CIT Exemption for Newly Established SMEs Upon Ownership Transfer
Question Summary
A single-member LLC was established in early 2025. In September 2025, ownership was transferred and a foreign director was hired. Neither the former nor the new owner had previously established or invested in any other enterprise. The question: does the company qualify for the 3-year CIT exemption under Resolution 198/2025/QH15 and Decree 20/2026/ND-CP?
Legal Basis
- Resolution 198/2025/QH15 dated 17/05/2025 on SME support
- Decree 20/2026/ND-CP dated 15/01/2026 implementing the Resolution
Ministry of Finance Guidance
The Ministry confirmed that a newly established SME meeting the conditions under Resolution 198/2025/QH15 and Decree 20/2026/ND-CP is exempt from CIT for 3 years from the first year of taxable income. The ownership condition (owners must not have previously established or contributed capital to another enterprise) applies as specified in those instruments.
For the company in question: if both the former owner (at time of establishment) and the new owner (after the September 2025 transfer) had never established or invested in any other enterprise, the company may qualify for the 3-year exemption. Hiring a foreign director does not affect eligibility.
Practical Notes
- The company should retain supporting documentation (owner declarations of no prior enterprise establishment or investment)
- The exemption period begins from the first year of taxable CIT income
- Exemption: 100% CIT waiver for 3 consecutive years under Resolution 198/2025/QH15