Do Newly Established SMEs Qualify for the 3-Year CIT Exemption When the Legal Representative Previously Managed Another Enterprise?
RegHub explainer by New MarketerLast updated:
Based on:Nghị quyết số 198/2025/QH15; Nghị định số 20/2026/NĐ-CP - Ministry of Finance
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The Ho Chi Minh City Tax Department responded to SRT Vung Tau Trading and Investment Co., Ltd. (TIN 3502539672) regarding eligibility for the 3-year Corporate Income Tax (CIT) exemption for newly registered small and medium-sized enterprises (SMEs), under National Assembly Resolution 198/2025/QH15 and Decree 20/2026/NĐ-CP. Under clause 3, Article 7 of Decree 20/2026/NĐ-CP, a newly established company does **not qualify** for the exemption if its legal representative, general partner, or largest capital contributor has previously held the equivalent role in an enterprise that is currently operating or was dissolved less than 12 months before the new company was established. The Tax Department advised the company to self-assess its eligibility, paying particular attention to the business history of its legal representative.
CIT Q&A: 3-Year Tax Exemption Eligibility for Newly Established SMEs
Responding authority: Ho Chi Minh City Tax Department
Requesting entity: SRT Vung Tau Trading and Investment Co., Ltd. (TIN: 3502539672)
Date: 24 March 2026
Company Background
- Initial registration date: 7 March 2025
- Charter capital: VND 3,000,000,000
- 2025 revenue: VND 26.5 billion; 44 employees enrolled in social insurance
- Initial ownership: SRT Southern Co., Ltd. (60%) + Mr. Truong Minh Vuong (40%, legal representative)
- After 23 April 2025 change: Mr. Truong Minh Vuong (40%), Mr. Nguyen Ha Quang Duc (24%), Mr. Bui Dang Nghia (18%), Mr. Tran Thanh Hung (18%)
Legal Basis
National Assembly Resolution 198/2025/QH15: Newly registered SMEs are exempt from CIT for 3 years from the first year in which their business registration certificate is issued.
Clause 3, Article 7 of Decree 20/2026/NĐ-CP — Disqualifying Conditions:
A newly established company is not eligible for the 3-year CIT exemption if its legal representative (unless the representative is not a capital contributor), general partner, or largest capital contributor has previously participated in business activities in the role of:
- Legal representative
- General partner
- Largest capital contributor
in an enterprise currently in operation or one that was dissolved less than 12 months before the new enterprise was established.
Tax Authority Guidance
- The company qualifies as an SME under current regulations
- The Tax Department advised the company to self-assess against clause 3, Article 7 of Decree 20/2026/NĐ-CP to determine whether it meets the exemption criteria
- Key question: has Mr. Truong Minh Vuong served as legal representative, general partner, or largest capital contributor at another enterprise that is currently operating or was dissolved less than 12 months ago?
Practical Notes
- If eligible: CIT exemption for 3 years starting from 2025 (first year of registration)
- If not eligible (legal representative previously held qualifying role at another enterprise): exemption does not apply
- If uncertain: contact the Ho Chi Minh City Tax Department directly for a written ruling