3-Year Corporate Income Tax Exemption for Newly Registered SMEs Under Decree 20/2026/ND-CP
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The Ministry of Finance clarifies the conditions for a 3-year corporate income tax (CIT) exemption for small and medium enterprises (SMEs) registering for the first time under Decree 20/2026/ND-CP, implementing National Assembly Resolution 198/2025/QH15 on private sector development. The exemption period runs continuously from the first year of initial business registration. However, the benefit does not apply to enterprises formed through mergers, splits, or where the legal representative or largest shareholder previously held the same role at another enterprise that is still operating or was dissolved less than 12 months before the new enterprise was established. Enterprises self-determine their eligibility and file tax returns accordingly. If the tax-exempt operating period in the first tax year is less than 12 months, the enterprise may choose to apply the exemption that year or register to begin from the following tax year.
Decree 20/2026/ND-CP Content
3-Year CIT Exemption Conditions (Article 7, Clause 3)
SMEs registering for the first time receive a 3-year CIT exemption from the first year of initial business registration.
Note: Enterprises registered before the effective date of Resolution 198/2025/QH15 that still have remaining exemption time continue to enjoy the remaining period.
Cases Excluded from the Exemption
- Enterprises newly formed through merger, consolidation, split, spin-off, ownership transfer, or type conversion
- New enterprises where the legal representative (not a capital-contributing member), general partner, or largest capital contributor previously held the same role at an enterprise that is:
- Currently operating, OR
- Dissolved but less than 12 months before the new enterprise was established
First Tax Year Operating Less Than 12 Months (Article 7, Clause 5)
The enterprise may choose:
- To apply the exemption in the first tax year (even if less than 12 months of operation), OR
- Register with the tax authority to begin the exemption from the following tax year
Growth Beyond SME Size After Exemption Begins
The Ministry of Finance does not address this directly, but based on Decree 20/2026 and the self-determination principle: if in any tax year the enterprise does not meet eligibility conditions, it does not qualify for the exemption that year.
Filing and Settlement
Enterprises self-determine eligibility and file using standard tax management forms. No separate registration is required unless the enterprise wishes to defer the exemption start to the following tax year.
Legal basis:
- Decree 20/2026/ND-CP dated 15/01/2026
- Resolution 198/2025/QH15 dated 17/5/2025
- Circular 20/2026/TT-BTC dated 12/3/2026