Vietnam Business Tax Guide for Foreign Companies (2026) — CIT, VAT, FCT & Global Minimum Tax
Tax is where many foreign businesses in Vietnam get caught out — not by the headline corporate rate, but by withholding taxes on cross-border payments and fast-moving reform. This guide covers the taxes that matter in 2026: CIT, VAT, foreign contractor tax, the new global minimum tax, and expat personal income tax. It's an orientation, not tax advice.
⚖️ Recently changed. A new Law on Corporate Income Tax (No. 67/2025/QH15) took effect 1 October 2025, and the global minimum tax applies from 2024. Figures below reflect rules as of October 2026 — confirm current rates with a licensed tax adviser.
The taxes at a glance
| Tax | Rate | What to know |
|---|---|---|
| Corporate Income Tax (CIT) | Standard 20%; SMEs 15–17%; incentives 10% / 17% | New Law on CIT (No. 67/2025/QH15) in force from 1 Oct 2025. Lower tiered rates for qualifying small firms; preferential rates and holidays for encouraged sectors/locations. |
| Value-Added Tax (VAT) | 0%, 5%, 8% (temporary) or 10% | Most goods/services 10%, temporarily 8% until 31 Dec 2026 for many of them (Resolution 204/2025/QH15; reported exclusions include finance, banking, securities, insurance, real estate, metals, mining and goods under special consumption tax, so check your category); essentials 5%; exports 0%. Foreign digital suppliers without a PE charge 10% on e-commerce/digital services. |
| Foreign Contractor Tax (FCT) | CIT portion 0.1–10% + VAT portion 2–5% | Withheld by the Vietnamese payer on payments to foreign organizations earning Vietnam-sourced income without a local entity. Circular 20/2026/TT-BTC (12 March 2026) changed how withholding CIT is calculated for new contracts. |
| Global Minimum Tax (GMT) | Top-up to a 15% effective rate | Applies to multinational groups with ≥ €750m consolidated revenue (OECD Pillar Two). Resolution 107/2023, effective 1 Jan 2024; Decree 236/2025 implementing. |
| Personal Income Tax (PIT) | Residents 5–35% (progressive); non-residents 20% flat | Tax residents (183+ days, or a permanent residence) are taxed on worldwide income; non-residents on Vietnam-sourced income only. Five tax bands for the 2026 tax year (5%, 10%, 20%, 30%, 35%; Law 109/2025/QH15, in force 1 July 2026); personal deduction VND 15.5 million a month and VND 6.2 million per dependant. |
The one most foreigners miss: FCT
When a Vietnamese company pays a foreign supplier for services, software, royalties, or interest, it usually must withhold Foreign Contractor Tax (FCT) — a blend of a CIT element (often 0.1–10%) and a VAT element (often 2–5%). FCT is easy to forget when drafting a cross-border contract, and grossing-up for it after the fact erodes margins. Price it in from the start.
Incentives — and the global-minimum-tax ceiling
Vietnam offers generous CIT incentives (rates of 10% or 17% and multi-year holidays) for high-tech, large-scale manufacturing, R&D, and disadvantaged locations. But for large multinationals, the global minimum tax now sets a floor: if incentives drop the effective rate below 15%, a top-up brings it back to 15%. The interaction means incentive planning and Pillar Two exposure have to be modeled together.
Corporate income tax: which rate applies
The 2025 law replaced the single headline rate with a tiered structure for smaller companies, decided by the previous year's revenue rather than by ownership. Companies above the revenue thresholds pay the standard 20%; the lower tiers apply only to qualifying small and mid-size firms.
One practitioner summary gives a different band for the 17% tier; treat the thresholds as indicative and confirm them in the law text and with an adviser.
What changed in 2025–26
| Date | Change | Effect on a foreign business |
|---|---|---|
| 1 Jul 2025 | VAT Law 48/2024 in force; temporary 8% rate begins (Resolution 204/2025/QH15) | Many goods and services are taxed at 8% instead of 10% until 31 Dec 2026. |
| 1 Oct 2025 | Corporate Income Tax Law 67/2025/QH15 | Tiered rates for small firms; new rules on deductions and incentives. |
| 15 Oct 2025 | Decree 236/2025/ND-CP on the global minimum tax | Top-up tax rules apply from fiscal year 2024 for groups with consolidated revenue of at least EUR 750 million in two of the four preceding years. |
| 1 Jan 2026 | PIT parameters: VND 15.5 million personal and VND 6.2 million dependant deductions | Lower withholding on salaries for resident employees from the 2026 tax period. |
| 12 Mar 2026 | Circular 20/2026/TT-BTC guiding the CIT law and Decree 320/2025/ND-CP | Withholding CIT for foreign contractors is calculated on VAT-inclusive revenue for new contracts; contracts signed before 12 March 2026 keep the earlier method. |
| 1 Jul 2026 | Personal Income Tax Law 109/2025/QH15 (some sources date parts from 1 Jan 2026) | Five tax bands replace seven; the top rate of 35% applies above VND 100 million a month. |
| 31 Dec 2026 | Temporary 8% VAT rate ends unless extended | Reverts to 10% from 1 Jan 2027 unless the National Assembly extends it; one source found no proposal as of early October 2026. |
Dates come from adviser summaries and sometimes disagree (notably for the PIT law). Check the effective date of each provision for your tax period.
Tax readiness checklist for a foreign business
Set-up
- CIT tier confirmed from last year's revenue
- Incentive eligibility assessed, with the 15% global minimum tax modelled if the group is in scope
- Tax registration, e-invoicing and accounting set up before the first sale
Cross-border payments
- FCT priced into every cross-border contract (and who bears it stated)
- Contracts signed before 12 March 2026 identified; new ones follow Circular 20/2026
- VAT treatment of digital or cross-border supplies confirmed
People
- Tax residency (183 days) tracked for each expat
- PIT withholding updated for the 2026 deductions and bands
- Compulsory insurance reflected in the package
Frequently Asked Questions
What is the corporate income tax rate in Vietnam?
The standard corporate income tax (CIT) rate is 20%. Under the new Law on Corporate Income Tax (No. 67/2025/QH15), in force from 1 October 2025, qualifying small and medium enterprises pay tiered rates of 15–17%, and encouraged projects can access preferential rates of 10% or 17% plus tax holidays. Oil, gas, and certain natural-resource activities are taxed at higher rates.
What is foreign contractor tax (FCT)?
FCT is a withholding tax on payments to foreign organizations that earn income in Vietnam without setting up a local entity — for example a foreign company providing services, software, or interest/royalties to a Vietnamese business. It bundles a CIT element (commonly 0.1–10% depending on the activity) and a VAT element (commonly 2–5%), withheld by the Vietnamese payer. It is one of the most commonly overlooked costs in cross-border contracts.
Does the global minimum tax apply in Vietnam?
Yes. Vietnam adopted the OECD Pillar Two global minimum tax via Resolution 107/2023/QH15 (effective 1 January 2024), with Decree 236/2025 implementing it. Multinational groups with consolidated revenue of €750 million or more must ensure their Vietnam profits are taxed at an effective rate of at least 15%; where incentives push the effective rate below 15%, a top-up applies. It mainly affects large multinationals, not typical SMEs.
How is VAT charged in Vietnam?
VAT has three positive rates — 0% (exports), 5% (essential goods and services), and 10% (the standard rate) — plus exempt categories. Foreign suppliers selling digital services or e-commerce into Vietnam without a permanent establishment register and charge VAT at 10%. Many goods and services currently carry a temporary 8% rate that runs to 31 December 2026; check whether your supply is in scope. Businesses generally use the credit method, offsetting input VAT against output VAT.
How are expatriate employees taxed in Vietnam?
Individuals who are Vietnam tax residents — present 183+ days in a 12-month period, or with a permanent/registered residence — are taxed on worldwide employment income at progressive rates from 5% to 35%. Non-residents are taxed at a flat 20% on Vietnam-sourced income. Many expat packages also need to account for compulsory insurance and tax-equalization arrangements.
Sources
- CIT law and tiers: Rödl & Partner (Feb 2026), PwC Tax Summaries, Conventus Law, practitioner summaries of Law 67/2025/QH15
- VAT: DFDL and Taxand on Resolution 204/2025/QH15 (8% to 31 Dec 2026); Vietnam Law Magazine; Bloomberg Tax
- PIT: Vietnam Briefing and China Briefing (Law 109/2025/QH15), Rödl & Partner, Ecovis (deductions under Resolution 110/2025/UBTVQH15)
- FCT: Baker McKenzie (Circular 20/2026/TT-BTC, March and April 2026); Circular 103/2014/TT-BTC still applies to earlier contracts
- Global minimum tax: PwC Vietnam, Baker McKenzie and Vietnam Briefing on Decree 236/2025/ND-CP
Adviser summaries, not the gazette text; rates and dates may be revised. Not tax advice.