The Ministry of Finance has proposed corporate income tax exemptions for 14 categories of income, focusing on key sectors such as scientific research, digital transformation, vocational education, and social welfare.

A draft decree guiding the implementation of Vietnam’s Corporate Income Tax Law is currently open for public feedback. The draft outlines specific income groups eligible for tax exemption, emphasizing priority areas like agriculture, innovation, education, and public benefit initiatives.

Tax-free income for research, digital innovation, and new technology

According to the draft, income generated from activities related to scientific research, technology development, innovation, and digital transformation may be exempted from corporate income tax for up to three years. This also includes income from the sale of products made using newly introduced technologies in Vietnam and from the sale of products during experimental production phases - both controlled and uncontrolled - under current legal regulations.

Specifically, income from contracts involving scientific research, technological innovation, and digital transformation - under laws governing science, technology, and digital industry - is eligible for tax exemption for the contract duration, capped at three years from the first taxable income generated.

To qualify for exemption, the following conditions must be met: registered certification of activities in research, innovation, and digital transformation; and the contract must be certified by an authorized agency as involving these specified activities.

Income from the sale of products manufactured using newly introduced technologies in Vietnam will also be exempt for up to three years, starting from the point at which income is generated. These technologies must be officially recognized by a competent authority as first-time applications within Vietnam.

Likewise, income from the sale of products produced during experimental production phases - both standard and controlled - is also eligible for up to three years of tax exemption, provided such experimental products are certified by relevant authorities.

Tax incentives for funding research, education, and social welfare

The draft also proposes tax exemptions for received sponsorships or grants that support education, culture, arts, charity, humanitarian efforts, and other social activities in Vietnam. This includes funding from unrelated domestic or foreign businesses, and from individuals, used for research, technological development, innovation, and digital transformation initiatives.

Grants received directly from the state budget or from investment support funds established by the government are also tax-exempt, as are compensations paid by the state in accordance with relevant legal regulations.

Eligible recipient organizations must be legally established and operate according to Vietnamese law. Affiliated enterprises must follow the regulations set forth in the Law on Tax Administration.

Grants for scientific research, innovation, and digital transformation must comply with applicable laws governing science and technology, innovation, and the digital industry. State budget support must be in accordance with Vietnam’s budgetary laws, and compensation by the state must follow the Law on State Compensation Liability.

Investment support funds referenced in the draft are those established and operated under Decree No. 182, issued on December 31, 2024.

If any enterprise misuses tax-exempt sponsorships or grants, they will be subject to retroactive tax collection and penalties as prescribed by law.

Thanh Hue