[Vietnam Biz – Part 8] CIT Law 2025 Amendments on preferential tax policies for the manufacturing sector: What are the changes and who is eligible? (Part 1)

In manufacturing facilities there is growing confusion and concern — “I heard the criteria for tax incentives are changing; will our factory still be eligible?”.  Previously, locating in an industrial park often meant automatic benefits, but the 2025 amendment to the Corporate Income Tax (CIT) Law will steer policy toward new rules that emphasize technological capability and investment scale.

For example, tax exemptions that used to be granted automatically when a factory was built in certain locations may soon require meeting industry classification, technology level, and investment-size thresholds. Companies are naturally anxious and unsure whether they will remain eligible for incentives and what preparations will be necessary.

This article explains, from a practical viewpoint, the main points of the CIT Law 2025 Amendment and the new eligibility criteria for tax incentives. We lay out differences from the previous regime, how existing and new projects will be treated, and the documents and preparations needed to obtain preferential treatment — providing concrete actions you can take. If you want guidance to make sound investment decisions and avoid risks, please read on.

Who should read this

• ・Executives and corporate administrators in manufacturing considering new investment or expansion
  
• ・Those wanting to stay updated on preferential tax policy related to factory location and capital investment
  

After reading this article you will…

• ・Clearly understand the post-2025 CIT Amendment’s application criteria and key changes to preferential tax measures
• ・Know the procedural and practical considerations for new and existing projects to prepare smoother responses
  

1. Background: Existing preferential tax regime for manufacturing and the CIT Law 2025 Amendment

Historically, corporate income tax incentives encouraging manufacturing investment were largely applied automatically simply by locating in an industrial park. For example, companies newly entering designated industrial parks typically received generous, easy-to-understand incentives such as a full tax exemption for the first 2 years and a 50% reduced tax rate for the subsequent 4 years.

However, the new CIT Law, which will come into force in October 2025, substantially revises these “location-based” benefits. Going forward, new criteria—industry classification, technological level, project scale, and regional conditions—will be emphasized. Mere location will no longer be enough to guarantee incentives.

Below we organize the concrete changes and background step by step.

Change	Previous regime	After CIT Law 2025 Amendment
Eligibility criteria	Location in an industrial park only	Industry, scale, technology, and regional requirements
incentive details	2 years tax-exempt + 4 years half rate	Varies by conditions (subject to case-by-case review)
Coverage	Broad application	Selective application

1.1. Overview of the location-based industrial park preferential system

Until now in Vietnam, manufacturing companies that newly invested and started operations in designated industrial parks or industrial zones could receive special corporate income tax incentives. Typically, tax incentives were automatically applied when operations began inside such parks.

The key point of this incentive was that companies could receive benefits solely based on the “location requirement” of being situated in an industrial park. There is no doubt that many companies made use of this system and treated it as an important factor in their investment decisions when entering the market.

At the same time, matters such as which industry, technological sophistication, or the socio-economic characteristics of the region were often treated as secondary.

• ・Automatic preferential treatment based only on industrial park location
  
• ・Broad application regardless of industry or scale
  
• ・Helped reduce initial burdens for entrants
  
• ・Made investment decisions simple and easy to understand
  

1.2. The 2-year tax exemption + 4-year half-rate mechanism

The core of the traditional incentive scheme was simple: the first two years were exempt from corporate income tax, and the following four years were taxed at half the standard rate. For example, if the standard CIT rate were 20%, the first 2 years would incur no tax, and the subsequent 4 years would be taxed at 10%.

This arrangement was broadly applied to companies moving into industrial parks or specific preferential regions, regardless of industry or scale. Therefore, it provided a highly attractive benefit for companies aiming to improve short-term cash flow or shorten payback periods.

• ・First 2 years: zero corporate tax
  
• ・Next 4 years: half the standard rate
  
• ・Directly improved cash flow for new entrants
  
• ・Widely available to many companies
  

1.3. Policy shift toward industry and scale considerations

Under the CIT Law 2025 amendment, the basis for granting incentives will change significantly. Rather than being judged solely on location, eligibility will increasingly depend on what industry the project belongs to and how large the investment is.

For example, preferential treatment will be targeted at certain industry classifications — such as high-tech, green sectors, and supporting industries — and at projects that meet minimum investment thresholds. As a result, projects that satisfy only simple location requirements are more likely to be excluded from incentives going forward.

New standard	Details
Industry classification	High-tech, green, supporting industries, etc.
Investment scale	Projects above certain investment amounts
Location conditions	Regional characteristics will also be considered

 

1.4. Increased importance of technology and regional requirements

Under the new system, technological level and the socio-economic characteristics of the region where the project is located will significantly affect incentive eligibility. Specifically, projects that apply advanced technologies or green technologies, or that are located in regions requiring socio-economic support, may receive stronger preferential treatment than before.

Conversely, projects lacking technological added value or regional specificity will find it harder to qualify. This change substantially raises the importance of pre-investment preparation and requirement confirmation.

• ・Higher valuation for advanced technology and green sectors
  
• ・Expanded incentives for projects in regions needing socio-economic support
  
• ・More limited preference for simple manufacturing in general regions
  
• ・Pre-confirmation of requirements is essential

1.5. How the law change affects investment decision criteria

With the CIT Law 2025 Amendment, manufacturing investment and market-entry decisions face a significant turning point. Previously, the simple rule—“locate in an industrial park and receive tax incentives”—sufficed. From now on, companies must meet a combination of criteria including industry classification, technology level, and regional characteristics.

Thus, from the earliest planning stages, it will be essential to consult specialists to verify which elements will qualify for incentives. Below we examine what new criteria will be applied in practice and what preparations will be necessary.

New investment judgment criteria	Required responses
Comprehensive evaluation of multiple factors	Consult specialists early
Confirm industry, technology, and regional features	Detailed investigation of individual requirements
Flexibility to respond to new criteria	Redesign expansion plans