Vietnam Corporate Tax Guide: New 15% and 17% Rates for SMEs

What is the regulatory framework for banking and finance in Vietnam?

Vietnam's banking and finance sector is regulated mainly by the State Bank of Vietnam (SBV) under the Law on Credit Institutions, the Law on the State Bank, the Civil Code, and related tax and foreign exchange regulations. Any financing, security, or cross-border money flow must fit within this framework or it will be difficult to enforce and may attract sanctions.

Main regulators and their roles

• State Bank of Vietnam (SBV) - Central bank and key regulator for:
  • Licensing banks and foreign bank branches
  • Approving and registering foreign loans
  • Overseeing foreign exchange controls and capital flows
  • Setting prudential ratios and banking safety rules
• Ministry of Finance (MOF) and General Department of Taxation - Regulate tax on banking and finance transactions, including the new Corporate Income Tax Law from October 2025.
• State Securities Commission (SSC) - Regulates securities, bond issues, and public offers under the Law on Securities 2019.
• Business registration and land agencies - Issue enterprise registration certificates and land use right certificates, which are essential for security packages.

Core legislation affecting banking & finance

• Law on Credit Institutions (current law and 2024 amendments): governs banks, foreign bank branches, and non-bank credit institutions.
• Law on the State Bank of Vietnam: sets out the role and powers of the SBV.
• Civil Code 2015: provides contract, interest rate, and security rules (mortgage, pledge, guarantee).
• Law on Enterprises 2020: governs corporate capacity to borrow, give guarantees, and provide security.
• Law on Investment 2020: regulates foreign investment forms and investment capital flows.
• Law on Securities 2019: covers public offerings, bonds, and derivative products.
• Foreign Exchange Ordinance and guiding decrees: control currency, cross-border loans, and repatriation.
• Corporate Income Tax Law (new law effective October 2025): introduces tiered corporate tax rates and special rules for smaller businesses and MNC groups.

Licensing of financial institutions

Only licensed credit institutions may conduct banking business such as deposit-taking and lending in Vietnam. Foreign investors may enter through:

• Joint-stock commercial banks
• 100% foreign-owned banks or joint venture banks
• Foreign bank branches
• Finance companies and leasing companies

Licensing is a multi-stage SBV process that can take 9-18 months, and SBV conducts a detailed review of ownership, capital adequacy, and business plans.

How can companies open and operate bank accounts in Vietnam?

Companies open bank accounts in Vietnam by selecting an SBV-licensed bank, providing corporate and KYC documents, and, for foreign-invested entities, using designated capital accounts for investment funds. Timelines are typically 3-10 working days if documents are complete and translated into Vietnamese where required.

Types of bank accounts for businesses

• Payment (current) accounts in VND - used for domestic operations, payroll, and routine payments.
• Foreign currency accounts (usually USD, EUR, JPY) - used for receiving offshore payments and making cross-border transfers, subject to FX rules.
• Capital accounts - required for foreign-invested enterprises (FIEs) and foreign shareholders to:
  • Receive equity capital injections
  • Record charter capital contributions
  • Process profit repatriation and capital withdrawal

Key steps to open a corporate bank account

1. Choose a bank Consider:
   • Experience with foreign investors and cross-border transactions
   • Online banking capabilities and English support
   • Fee schedule and FX spreads
2. Prepare documents Typical requirements:
   • Enterprise Registration Certificate / Investment Registration Certificate
   • Company charter and board resolution approving account opening and signatories
   • ID or passport of legal representative and authorized signatories
   • Tax registration information
3. Submit documents and sign forms Most banks require in-person signature by the legal representative or an authorized attorney-in-fact.
4. Initial deposit and activation Many banks have low or zero minimum balance (commonly VND 1,000,000 to VND 5,000,000 as a practical minimum).

Operating rules that affect corporate finance

• Foreign-invested companies must route capital contributions and profit repatriation through their registered direct investment capital account.
• Loan disbursements and repayments in foreign currency must go through properly designated loan accounts that match SBV-registered loan details.
• Banks will strictly enforce KYC and anti-money laundering checks for high-value or cross-border transactions, which can delay disbursements if planning is weak.

How are corporate loans and financing transactions structured in Vietnam?

Corporate financing in Vietnam is commonly structured as VND or foreign currency loans from local banks, or cross-border loans from offshore lenders, with security over key assets. Medium and long term foreign loans must be registered with SBV, and both lenders and borrowers must comply with interest, FX, and security rules.

Domestic loans

• Lenders - Commercial banks, finance companies, and leasing companies licensed by SBV.
• Currencies - Primarily VND; foreign currency loans are more controlled and usually linked to foreign currency revenues.
• Interest rates - Commercially negotiated for licensed credit institutions. For non-credit institutions (e.g. shareholder loans between local companies), the Civil Code caps interest at 20% per year unless a specific law provides otherwise.
• Common structures:
  • Working capital revolving facilities
  • Term loans for capex
  • Project finance with special purpose vehicles
  • Finance leases for machinery and equipment

Foreign loans and intra-group financing

• Short-term foreign loans (up to 1 year) may be exempt from registration but must be reported to SBV under certain thresholds and follow FX rules.
• Medium and long term loans (over 1 year) must be:
  • Supported by a signed loan agreement
  • Registered with SBV before disbursement or within statutory deadlines
  • Disbursed and repaid through a designated foreign loan account
• Intra-group loans from parent or affiliates must also follow the foreign loan regime and may trigger transfer pricing review and thin-capitalization scrutiny.

Typical timeline for a foreign loan

1. Term sheet and borrower approvals - 2 to 4 weeks.
2. Due diligence and drafting (loan and security documents) - 4 to 8 weeks, depending on complexity and number of lenders.
3. SBV registration of medium/long term loan - 20 to 45 working days from submission, subject to SBV queries.
4. Security perfection and conditions precedent - often runs in parallel, 2 to 6 weeks.
5. First disbursement - after SBV registration confirmation and security perfection, usually within a few days.

Costs commonly seen in loan transactions

What security and guarantees do lenders commonly take in Vietnam?

Lenders in Vietnam typically take security over land use rights, buildings, machinery, receivables, and shares, along with corporate and sometimes personal guarantees. Proper registration with the relevant authorities is critical to create enforceable priority over other creditors.

Types of security interests

• Mortgage over land use rights and buildings - Registered with the Land Registration Office / Land Use Right Registration Office - Central for real estate, project finance, and manufacturing facilities
• Pledge of movable assets - Machinery, equipment, inventory, receivables - Registered with the National Registration Agency for Secured Transactions (NRAST)
• Share pledge - Over shares or capital contributions in the borrower - Registration with NRAST and sometimes notation on the company member register
• Assignment of receivables - Used in trade finance and project finance with offtake contracts
• Bank account pledges - Controlled accounts securing repayment or reserves

Guarantees

• Corporate guarantees from parent companies or group entities, often offshore.
• Personal guarantees from founders or key shareholders in smaller or closely held companies.
• Guarantees must comply with the Civil Code and the guarantor's charter; for Vietnamese companies, board or member approval is often required.

Enforcement considerations

• Out-of-court enforcement is permitted in some cases, but in practice lenders frequently rely on court judgments or asset auctions.
• Foreign judgments and arbitral awards are theoretically enforceable but may require recognition procedures in Vietnamese courts.
• Well-drafted security and careful perfection significantly improve a lender's position in any enforcement or restructuring.

How are corporate income tax and finance-related taxes applied in Vietnam from October 2025?

From October 2025, Vietnam applies tiered corporate income tax (CIT) rates of 15%, 17%, and 20% based on annual revenue, replacing the previous flat 20% rate, with special rules for subsidiaries of large multinational groups. Interest income, cross-border loan interest, and banking services also attract withholding tax and VAT consequences that financiers and borrowers must model into their deal economics.

What are the new tiered corporate income tax rates?

The new Corporate Income Tax Law introduces three standard rate bands tied to annual gross revenue earned in Vietnam (excluding VAT).

These rate bands apply per taxpayer per year, based on the revenue recorded in the statutory financial statements and tax return, subject to anti-fragmentation and related-party rules.

Who qualifies for the 15% and 17% rates?

To benefit from the 15% and 17% bands, a Vietnam company must both meet the revenue thresholds and qualify as an independent small or micro-enterprise.

• 15% rate (under VND 3 billion) generally requires:
  • Annual revenue under VND 3 billion
  • No requirement to consolidate with other Vietnam entities under common control for tax purposes
  • No significant related party service or procurement functions for a larger group
• 17% rate (VND 3 - 50 billion) generally requires:
  • Annual revenue between VND 3 and 50 billion
  • Headcount, total assets, and related-party metrics consistent with SME status (as set by MOF guidance)

Separate rules apply if the taxpayer also enjoys location-based or sectoral incentives (e.g. high-tech, economic zones). In those cases, the taxpayer usually applies the lowest applicable rate but cannot go below the minimum agreed in Vietnam's implementation of global minimum tax rules for qualifying MNCs.

Why might subsidiaries of large foreign MNCs be excluded from lower rates?

Subsidiaries of large foreign multinationals are often carved out of the 15% and 17% bands, even if their Vietnam revenue is small, to prevent artificial fragmentation of profits and to align with global minimum tax (Pillar Two) rules. The new law focuses on the size and nature of the global group, not only the local turnover.

Common exclusion triggers include:

• Group revenue threshold: If the foreign parent is part of a multinational group with consolidated global revenue above a threshold (likely aligned with EUR 750 million for Pillar Two), its Vietnam subsidiaries may be automatically pushed into the 20% standard band, or at least into a minimum 15% effective rate.
• Ownership and control: Vietnam entities that are 25% or more owned, directly or indirectly, by such a multinational group are typically not treated as independent SMEs, regardless of local revenue.
• Functional role: Captive service centers, procurement hubs, and limited-risk distributors serving mainly group companies may be required to apply the 20% rate, on the basis that they are integral parts of a larger global business.
• Anti-fragmentation rules: Where an MNC splits its Vietnam operations into several small entities to try to stay under the VND 3 billion or 50 billion bands, tax authorities can:
  • Aggregate revenue of related Vietnam entities, and
  • Re-characterize them as a single taxpayer for rate purposes.

For banking and finance planning, this means that small Vietnam subsidiaries in large groups should usually model their cash flows using at least the 20% rate (or the relevant effective minimum) and not rely on the 15% or 17% bands unless they clearly meet all SME conditions.

What simplified filing rules apply to micro-enterprises?

The new law offers simplified compliance for micro-enterprises, primarily those qualifying for the 15% rate. This can significantly reduce the administrative burden for small local borrowers or service providers engaged in finance-related activities.

• Annual-only CIT returns - No quarterly provisional CIT returns or prepayments. - A single annual CIT return filed, for example, by 31 March of the following year.
• Simplified accounting formats - Permission to use simplified profit-and-loss templates issued by MOF. - Cash-basis accounting allowed up to a specified threshold, helping very small firms match tax with cash flows.
• Lighter documentation - Exemption from detailed transfer pricing documentation if there are no significant cross-border related party transactions. - Reduced requirement for detailed schedules of deductible costs where standardized expense ratios are applied.
• Digital filing and payment - Mandatory e-filing but with streamlined forms. - Ability to pay CIT through commercial banks or online gateways with minimal supporting documents.

Micro-enterprises that grow and exceed the VND 3 billion revenue threshold must transition to standard filing rules and higher rates in the following tax year, so forecasting and monitoring revenue are important.

How are interest and finance costs treated for tax purposes?

Interest income and expense, and cross-border loans, carry specific tax implications that impact deal pricing.

• Interest expense deductibility:
  • Interest is generally deductible if linked to business operations, properly documented, and not exceeding thin-cap thresholds.
  • Vietnam has introduced EBITDA-based caps on net interest deductions for related-party debt; detailed ratios are set in MOF guidance.
• Withholding tax on cross-border loan interest:
  • Standard CIT withholding on interest paid to foreign lenders is typically around 5% of gross interest, unless reduced by a tax treaty.
  • No VAT applies to pure interest on loans from foreign lenders.
• VAT on financial services:
  • Core lending and deposit-taking are VAT exempt.
  • Some fee-based services (agency, advisory, guarantees) may attract 10% VAT, affecting the net return to foreign providers unless structured carefully.

How do foreign exchange controls impact banking and finance operations in Vietnam?

Vietnam maintains a controlled but progressively liberalizing foreign exchange regime, which tightly regulates how foreign currency enters and exits the country. All cross-border loans, equity injections, profit repatriations, and major payments must follow SBV rules, or banks will refuse to process them.

Key foreign exchange rules for businesses

• Currency of transactions - Domestic contracts must generally be in VND, except in limited cases (e.g. where payments relate to imported goods or services). - Onshore use of foreign currency in payments between residents is heavily restricted.
• Capital transactions vs current transactions - Equity injections, loans, and profit repatriations are treated as capital transactions and must go through designated accounts. - Trade payments for goods and services are current transactions and follow different, usually lighter, documentation requirements.
• Loan account control - Every medium or long term foreign loan must have a registered foreign loan account, and all disbursements and repayments must pass through it.

Profit repatriation and debt service

• Foreign investors may repatriate profits annually after:
  • Filing audited financial statements
  • Settling CIT and other tax liabilities
  • Passing a resolution on profit distribution
• Debt service in foreign currency requires:
  • SBV-registered loan details aligning with actual repayment schedule
  • Submission of loan agreements, SBV approval, and tax clearance to the bank
• Non-compliance can result in:
  • Blocked outbound transfers
  • Administrative fines
  • Challenges in future SBV registrations or renewals

What are common pitfalls in Vietnam banking and finance transactions?

The main pitfalls in Vietnam banking and finance transactions arise from ignoring licensing limits, underestimating FX and tax requirements, and imperfect security or approvals. Many issues only surface at enforcement, refinancing, or repatriation stage, when options are limited and costs are high.

Frequent problem areas

• Unregistered or late-registered foreign loans - Leads to blocked disbursements or repayments. - Makes it difficult to justify interest expense as tax deductible.
• Security not properly perfected - Missing or incorrect NRAST or land registration. - Incomplete corporate approvals for guarantees and security, allowing later challenges.
• Interest and FX clauses that breach local rules - Usury issues for non-bank lenders. - Mismatch between VND revenue and foreign currency debt creating FX loss without hedging solutions.
• Assuming SME tax rates apply to MNC subsidiaries - Over-optimistic modeling using 15% or 17% rates where MNC exclusion rules actually force a 20% or higher effective rate. - Misalignment with global minimum tax obligations at group level.
• Weak documentation for intra-group loans - Thin-capitalization and transfer pricing adjustments increasing taxable income. - Difficulty defending interest rates or margins in tax audits.

When should you hire a Vietnam banking and finance lawyer or expert?

You should engage a Vietnam banking and finance lawyer or expert whenever you raise cross-border debt, structure security over key assets, or plan to rely on the new tiered CIT rates. Early advice saves time with SBV and tax authorities and prevents defects in security or compliance that are costly to fix later.

Situations where expert help is critical

• Cross-border financing - Drafting and localizing loan and security documents. - Registering medium and long term loans with SBV and setting up loan accounts.
• Project finance and asset-heavy deals - Structuring security over land, buildings, and key equipment. - Navigating sector-specific rules (energy, infrastructure, real estate).
• Group financing and treasury operations - Designing intra-group loans and guarantees that comply with thin-cap and transfer pricing rules. - Assessing whether group companies can benefit from 15% or 17% CIT or are excluded as MNC subsidiaries.
• M&A and refinancing - Reviewing existing facilities for change-of-control, covenant, and tax implications. - Cleaning up legacy security and registrations.
• Disputes and enforcement - Enforcing security, restructuring debt, and negotiating standstill or waiver arrangements. - Coordinating local court or arbitration proceedings with offshore actions.

What are the next steps for investors and businesses entering Vietnam's banking and finance market?

The next steps are to map your financing needs against Vietnam's regulatory and tax framework, select suitable banking partners, and design structures that comply with SBV and tax rules while meeting commercial goals. Building a local advisory team early will reduce execution risk and protect your returns.

Action plan for corporate borrowers and investors

1. Clarify your funding strategy - Determine the mix of equity, local bank debt, and cross-border loans. - Identify whether you are likely to qualify for 15%, 17%, or 20% CIT and model cash flows accordingly.
2. Select your banking partners - Shortlist 2-3 banks with strong corporate and FX capabilities. - Compare fee tables, FX spreads, and digital tools.
3. Set up compliant account structures - Open direct investment capital accounts for foreign investors. - Set up separate foreign loan accounts and operational accounts as needed.
4. Design loan and security structures - Work with counsel to prepare Vietnam-compliant loan, guarantee, and security documents. - Plan SBV registration and security perfection steps into your transaction timeline.
5. Optimize tax and compliance - Obtain a tax review on:
   • Eligibility for lower CIT bands and SME status
   • Interest deductibility, thin capitalization, and transfer pricing
   • Withholding tax on interest and guarantee fees
   - Set up systems to meet filing and payment deadlines, including simplified rules for micro-enterprises where applicable.
6. Build internal controls - Implement policies for FX risk management, drawdown and repayment approvals, and covenant monitoring. - Train finance and legal teams on SBV and tax authority expectations.

By approaching Vietnam banking and finance with a structured plan anchored in local law, you can access capital efficiently, protect lenders and investors with enforceable security, and capture the benefits of the new tax regime where your business qualifies.