3-Year Income Tax Exemption for Small and Medium Enterprises
Under Decree 20, which guides the National Assembly’s Resolution 198 on private sector economic development, the Government has detailed policies regarding Corporate Income Tax (CIT) and Personal Income Tax (PIT) exemptions and reductions. The Decree was signed and took effect on January 15.
Corporate Income Tax (CIT) Incentives:
- SMEs: Newly registered small and medium enterprises are exempt from CIT for the first 3 years.
- Innovative Startups: Startups and support organizations receive a 2-year tax exemption, followed by a 50% reduction for the next 4 years.
Capital Transfer Incentives: Both enterprises and individuals are exempt from tax on income derived from transferring shares or capital contributions into innovative startups. This does not apply to public/listed companies or transfers associated with real estate.
Personal Income Tax (PIT) Incentives: Experts and scientists working at R&D centers or startups are eligible for a PIT exemption on salaries for the first 2 years, followed by a 50% reduction for the next 4 years.
R&D and Digital Support: Enterprises may set aside up to 20% of taxable income to establish a Science, Technology, and Innovation Fund. Additionally, the State will provide free digital platforms and accounting software for small businesses and household businesses.
