CIT Exemption for Newly Registered Small and Medium Enterprises - Determining Eligibility Conditions
RegHub explainer by New MarketerLast updated:
Based on:Nghị định 196/2025/NĐ-CP; Nghị định 80/2021/NĐ-CP - Ministry of Finance
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The Hanoi Tax Department provided guidance on the corporate income tax (CIT) exemption conditions for newly registered small and medium-sized enterprises (SMEs). Under Article 3.3 of Decree 196/2025/ND-CP, newly established SMEs are exempt from CIT for two years from the first year they generate taxable income. Key conditions: the enterprise must qualify as an SME under Decree 80/2021/ND-CP, must not have been established through conversion, division, separation, merger or consolidation of another enterprise, and must not be a state-owned enterprise. Enterprise B (established 15/04/2024) needs to determine its size classification (micro, small, or medium) based on insured employee headcount and financial criteria at the time of registration to confirm eligibility for the exemption. The tax authority recommends the business consult further guidance on the Hanoi Tax website or contact its managing tax office directly.
CIT Exemption for Newly Registered SMEs
Responding authority: Hanoi Tax Department | Legal basis: Article 3.3 of Decree 196/2025/ND-CP; Decree 80/2021/ND-CP
Question
Enterprise B (single-member LLC, established 15/04/2024) seeks to determine whether it qualifies for the CIT exemption for newly registered SMEs.
Applicable Rules
- Article 3.3 of Decree 196/2025/ND-CP: Newly established SMEs are exempt from CIT for two consecutive years from the first year they have taxable income.
- Decree 80/2021/ND-CP: SME criteria by sector (agriculture; industry/construction; trade/services) based on average annual insured employees and either total revenue or total capital.
Conditions That Disqualify from the Exemption
- Enterprise established through type conversion, division, separation, merger, or consolidation.
- State-owned enterprise.
- Enterprise that does not meet the SME criteria under Decree 80/2021.
Recommended Steps
Enterprise B should: (1) identify its primary sector; (2) verify annual average insured employee count and financial indicators (revenue or capital) for each year; (3) compare against the applicable SME thresholds under Decree 80/2021 to confirm exemption eligibility; (4) contact the directly managing tax authority for official confirmation if needed.