Promoting private sector development in Vietnam - special policies from 2026

On 15 January 2026, the Government issued Decree 20/2026/ND‑CP providing guidance on Resolution 198/2025/QH15 regarding several special mechanisms and policies aimed at promoting the development of the private sector. There are several points to note as follows:

Three-year CIT exemption for newly registered small and medium enterprises

Under Article 7 of Decree 20/2026/ND‑CP, the CIT incentive regime provides that small and medium enterprises (SMEs) registering their business for the first time are entitled to a three‑year CIT exemption, specifically:

• SMEs are exempt from CIT for three consecutive years from the date of first issuance of their Enterprise Registration Certificate. If the Certificate was issued prior to the effective date of Resolution 198/2025/QH15 and the enterprise still has remaining entitlement under this policy, it may continue to enjoy the incentive for the remaining period.
• The above tax incentive does not apply to:
  • Enterprises newly established as a result of mergers, consolidations, demergers, splits, transformations of ownership, or conversions of legal form.
  • Enterprises where the legal representative (except where the representative is not a contributing member), general partner, or the individual holding the highest capital contribution has previously participated in business activities in the same roles in other enterprises that are still operating, or that have been dissolved within the preceding 12 months.
  • Income specified under Clause 3, Article 18 of the 2025 Law on CIT.

Additionally, if an SME has income that is eligible simultaneously for the tax exemption under this Decree and for other tax exemption or reduction incentives, the enterprise may select the most favourable regime and must consistently apply that choice throughout the applicable incentive period.

In cases where an SME’s first tax period is less than 12 months, it may choose to apply the tax exemption or reduction for that initial tax period or register with the tax authority to commence the incentive from the following tax period.

PIT exemptions and reductions

In addition to the tax exemption provisions for SMEs, Decree 20 also stimulates on PIT exemptions and reductions. In that case, according to Article 8:

1. Tax‑exempt share transfers in start‑ups

Individuals are exempt from personal income tax on income from transferring shares, capital contributions, or related rights in innovative start‑up enterprises. This does not apply to transfers involving public or listed companies. If the transfer includes selling an entire enterprise with real estate, tax must be declared under real‑estate transfer rules.

2. Tax incentives for specialists and scientists

Individuals who are specialists or scientists as defined under the Law on Science, Technology and Innovation and its guiding documents, and who receive employment income from innovative start‑up enterprises, research and development centres, or intermediary organisations supporting innovation and start‑ups, are exempt from PIT on such income for a period of two years (24 consecutive months) and receive a 50% tax reduction for the subsequent four years (48 consecutive months).

The period of tax exemption and reduction is counted consecutively from the month in which the exempt or reduced income first arises. If income arises during a month, that month is counted in full for the purposes of the exemption or reduction period.

Where an individual earns both tax‑exempt or tax‑reduced employment income as provided under this clause and other taxable employment income, the exempted or reduced portion of tax is calculated as follows:

Tax exempt in the tax period