Vietnam's standard Corporate Income Tax (CIT) rate is 20 percent of taxable profit; companies in special economic zones and high-tech sectors can qualify for a reduced 10 percent rate for up to 15 years. Value Added Tax (VAT) is 0, 5, or 10 percent depending on the goods or service. Personal Income Tax for residents is progressive with a top rate of 35 percent, while non-resident foreign employees pay a flat 20 percent.
Why the Vietnam Tax System is Important for Foreign Investors
Vietnam has developed into an attractive investment destination in Southeast Asia in recent years. With stable economic growth, a young population, and an increasingly open trade policy, the country is attracting more and more foreign companies. However, anyone who wants to invest successfully in Vietnam must understand the local Vietnam tax law precisely – because mistakes can be costly.
This comprehensive guide explains the most important types of taxes, current regulations for 2026, and provides practical tips on how foreign investors can optimize their tax burden legally.
Corporate Income Tax Vietnam: Basics and Current Rates
The Corporate Income Tax Vietnam (Corporate Income Tax, CIT) is the most important tax for companies operating in Vietnam. The standard tax rate is 20 percent of taxable profit. However, higher rates of up to 50 percent may apply to certain industries, such as oil and gas extraction.
Tax Incentives for Foreign Investors
Vietnam offers attractive tax incentives to promote foreign direct investment. Companies operating in certain economic zones or preferred sectors can benefit from reduced tax rates:
- 10 percent CIT for up to 15 years in special economic zones and high-tech areas
- Special conditions for investments in socially disadvantaged regions or strategic industries It is essential to note that these incentives are subject to specific conditions and are regularly reviewed. Professional tax advice is therefore indispensable.
Value Added Tax Vietnam: What Companies Need to Know
The Value Added Tax Vietnam (Value Added Tax, VAT) is levied on most goods and services. There are three tax rates:
- 0 percent: Applies to exports, international transport services, and certain other services
- 5 percent: Applies to essential goods such as food, water, medical products, and educational services
- 10 percent: Standard rate for all other goods and services Foreign companies that provide VAT-liable services in Vietnam must register for VAT. The pre-registrations are usually made monthly or quarterly, depending on the company's turnover volume.
Special Features for Cross-Border Services
Since 2022, foreign providers of digital services – such as streaming platforms or software-as-a-service providers – must register and pay Value Added Tax Vietnam directly with the Ministry of Finance. This also applies to companies without a physical presence in the country.
Personal Income Tax Vietnam for Foreign Employees and Expatriates
The Personal Income Tax Vietnam (Personal Income Tax, PIT) affects both Vietnamese and foreign employees. The tax system distinguishes between resident and non-resident taxpayers:
Tax Residency in Vietnam
A person is considered a tax resident in Vietnam if they:
- stay in Vietnam for at least 183 days within a calendar year or a period of 12 consecutive months,
- have a permanent residence in Vietnam Tax residents are subject to progressive tax rates on their worldwide income. Since 1 July 2026, Law 109/2025/QH15 applies a schedule with five progressive brackets instead of the previous seven; the top rate remains 35 percent. The specific bracket thresholds should be checked for the individual case.
Non-resident foreign employees, on the other hand, pay a flat tax rate of 20 percent on their income earned in Vietnam – regardless of the income level.
Allowances and Deductions
Tax residents can claim the following allowances:
- Personal allowance: 15.5 million VND per month (since 1 July 2026, Law 109/2025/QH15)
- Allowance for dependents: 6.2 million VND per person and month (since 1 July 2026)
- Mandatory contributions to social insurance and health insurance
Other Relevant Taxes in Vietnam
In addition to the main types of taxes mentioned, there are other taxes in Vietnam that may be relevant to foreign investors:
Withholding Tax
A withholding tax is levied on payments to foreign companies without a permanent establishment in Vietnam. This so-called Foreign Contractor Tax (FCT) consists of a CIT component and a VAT component. The exact rates depend strongly on the type of service and should be reviewed on a case-by-case basis with a tax advisor.
Property Tax and Real Estate Transfer Tax
When an individual sells real estate in Vietnam, a tax of two percent of the contractual transfer price applies, which is generally owed by the seller; if the seller is a company, the gain is instead subject to the regular corporate income tax. In addition, annual property taxes are incurred, the amount of which depends on the type of use and location.
Import Duties and Special Consumption Tax
Import duties apply to imported goods, which vary depending on the product category and country of origin. Through Vietnam's membership in numerous free trade agreements – including the EVFTA with the EU and the CPTPP – many importers benefit from reduced or abolished duties.
Double Taxation Agreements: Protection for Foreign Investors
Vietnam has concluded double taxation agreements (DTA) with over 80 countries, including Germany, Austria, and Switzerland. These agreements prevent the same income from being fully taxed in both countries and provide foreign investors with important planning security.
Those who want to claim a DTA must usually provide a certificate of residence from their home country and comply with certain procedural rules. The application for treaty benefits should therefore be made early and with expert support.
Tax Compliance in Vietnam: Deadlines and Obligations
Compliance with tax reporting obligations is particularly important in Vietnam, as violations can be punished with severe fines and interest. The most important deadlines at a glance:
- Monthly VAT pre-registration: By the 20th of the following month (for companies with an annual turnover of over 50 billion VND)
- Quarterly VAT pre-registration: By the last day of the first month of the following quarter
- Annual CIT declaration: By March 31st of the following year
- Annual PIT declaration: By April 30th of the following year
Conclusion: Professional Tax Advice as the Key to Success
The Vietnam tax system offers foreign investors attractive incentives and benefits on the one hand, but on the other hand, it poses a real challenge due to its complexity and frequent changes. Anyone who wants to invest in Vietnam should familiarize themselves with the local tax laws early on and rely on experienced advisors.
At MaiVN Consulting, we support foreign companies and investors with all tax-related questions around Vietnam – from company formation to ongoing compliance to tax optimization. Contact us today for a non-binding initial consultation and start your Vietnam engagement on the safe side.