METHOD OF CALCULATING CORPORATE INCOME TAX PAYABLE BY FOREIGN ENTERPRISES IN SPECIFIC CASES UNDER THE DRAFT DECREE GUIDING THE 2025 CORPORATE INCOME TAX LAW

1. Capital transfer transactions in Vietnam by foreign institutional investors

 Capital transfer activities in Vietnam by foreign institutional investors are subject to corporate income tax at a fixed rate on the total transfer value, replacing the previous method of calculating tax based on net income (transfer price minus cost). The draft Decree specifically stipulates a corporate income tax rate of 2%, provided that the owner does not directly manage the operations of the enterprise in Vietnam

2. Interest on loans paid to foreign contractors

The draft Decree proposes doubling the corporate income tax (“CIT”) rate on interest paid to foreign contractors (“FCs”) from 5% to 10%.

The 10% CIT on loan interest will apply to payments made to most foreign lenders starting from October 1, 2025, subject to transitional provisions and detailed implementation terms specified in the Decree or guiding Circular.