Decree 320/2025/ND-CP: Detailed Regulations and Implementation Measures for the Corporate Income Tax Law

Overview of Decree 320/2025/ND-CP

Decree 320/2025/ND-CP was issued by the Government on December 15, 2025, and takes effect from the date of signing. This document provides detailed regulations and implementation guidance for the Corporate Income Tax Law, aiming to specify provisions in the law and create a clear legal basis for businesses to fulfill their tax obligations.

Purpose and Significance

The Decree is issued with the following purposes:

• Specify Law provisions: Provide detailed guidance on determining taxable income, deductible expenses, and tax incentives
• Create transparency: Help businesses clearly understand their obligations and rights in fulfilling tax obligations
• Ensure consistent implementation: Ensure tax authorities and businesses have the same legal basis for application
• Support business compliance: Minimize confusion and errors in tax declaration and payment

Main Contents of the Decree

1. Taxpayers and Taxable Income

The Decree clarifies:

• Organizations and individuals producing and trading goods and services subject to corporate income tax
• Methods for determining income from production and business activities
• Income from capital transfer and real estate
• Other taxable income

2. Determination of Deductible Expenses

Deductible expenses when calculating taxable income include:

• Reasonable and legitimate expenses: With adequate invoices and documentation as prescribed
• Directly related expenses: Serving production and business activities
• Actually incurred expenses: Paid or recorded according to accounting principles
• Depreciation expenses: Fixed assets, investment properties as prescribed
• Provision expenses: Bad debts, inventory write-downs under specific conditions

3. Non-deductible Expenses

The Decree clearly specifies non-deductible expenses:

• Expenses without legal invoices and documentation
• Expenses unrelated to business activities
• Administrative violation penalties
• Interest expenses exceeding permitted levels
• Expenses from state budget sources

4. Tax Rates and Tax Incentives

Tax rate levels:

• Standard rate: 20% applicable to most businesses
• Preferential rates: 10%, 15%, 17% for incentivized sectors and areas
• Special rates: For small and micro enterprises as prescribed

Tax incentives include:

• Tax exemption and reduction for specific periods
• Tax exemption for income from new projects
• Incentives for investment in agriculture, high technology, education, healthcare
• Incentives for businesses in areas with socio-economic difficulties

5. Tax Declaration and Payment

Declaration procedures:

• Quarterly provisional payment: Businesses must make quarterly provisional CIT payments
• Annual finalization: Complete tax finalization within 90 days after the end of the fiscal year
• Declaration dossier: Including tax returns, financial statements, and related documents
• Electronic submission: Encouraged and mandatory for many subjects

6. Business Responsibilities

Businesses are responsible for:

• Registering for tax, declaring fully, accurately, and on time
• Paying tax fully and on time
• Maintaining books and documents as prescribed (minimum 10 years)
• Complying with tax inspection and audit decisions
• Providing information upon tax authority request

7. Violation Handling

Penalty forms:

• Late submission of tax declaration: Fine from VND 2-5 million
• Inaccurate declaration: Fine depending on the degree of discrepancy
• Tax evasion, tax fraud: Monetary fine, tax recovery, and possible criminal prosecution
• Late tax payment: Late payment interest of 0.03%/day

Significance for SMEs

Benefits

• Clarify tax obligations: Businesses know what to do and how much to pay
• Legal tax optimization: Utilize incentives, reduce tax costs
• Reduce violation risks: Understanding regulations helps avoid errors
• Better financial planning: Accurately forecast tax obligations

Challenges

• High compliance requirements: Need strict accounting and management systems
• Compliance costs: May need to hire consultants, upgrade systems
• Continuous updates: Monitor supplementary guidance documents

Recommendations for Businesses

1. Review internal processes: Ensure accounting and tax fully comply
2. Train personnel: Update tax knowledge for accountants
3. Use accounting software: Support accurate tax declaration and management
4. Professional consulting: Hire tax consulting services when necessary
5. Tax planning: Leverage incentives, legally optimize costs
6. Document archiving: Complete, systematic, easy to retrieve

Key Compliance Actions

Immediate Actions

• Study the Decree thoroughly to understand new requirements
• Assess current tax procedures against new regulations
• Identify gaps in documentation and record-keeping
• Review classification of expenses for deductibility

Medium-term Actions

• Upgrade accounting systems if necessary
• Establish internal controls for tax compliance
• Train accounting staff on new provisions
• Develop tax planning strategies utilizing available incentives

Ongoing Actions

• Monitor further implementing circulars and guidance
• Maintain updated knowledge of tax regulations
• Conduct periodic internal tax compliance reviews
• Engage professional advisors for complex transactions

Special Considerations for Different Business Types

Small and Micro Enterprises

• May qualify for special tax rates
• Simplified compliance procedures may apply
• Focus on maintaining proper documentation
• Consider cost-benefit of hiring external support

Foreign-Invested Enterprises

• Additional transfer pricing documentation requirements
• Related party transaction scrutiny
• Repatriation and withholding tax considerations
• Treaty benefits application procedures

E-commerce Businesses

• Digital transaction documentation
• Multi-jurisdiction income allocation
• Platform fee deductibility
• Electronic invoice compliance

Common Pitfalls to Avoid

1. Inadequate documentation: Ensure all expenses have proper invoices
2. Mixing personal and business expenses: Maintain clear separation
3. Late filing: Establish calendar reminders for deadlines
4. Ignoring provisional payments: Budget for quarterly obligations
5. Overlooking incentives: Research applicable preferential treatments
6. Poor record retention: Implement systematic archiving procedures

Conclusion

Decree 320/2025/ND-CP is an important document creating a solid legal foundation for implementing the Corporate Income Tax Law. Businesses need to study carefully and comply strictly to both ensure their rights and fully fulfill obligations to the state. Understanding and correctly applying these regulations will help businesses develop sustainably and avoid legal risks. The Decree represents Vietnam's continued efforts to modernize its tax system, improve transparency, and create a level playing field for all business entities. SMEs should view compliance not merely as an obligation but as an opportunity to strengthen financial management and build long-term business credibility.