Vietnam has taken another significant step in its drive to strengthen the domestic private sector and sustain ambitious economic growth.
On 24 August 2026, the National Assembly of Vietnam approved a Resolution reducing by 30% the personal income tax and corporate income tax payable by qualifying business taxpayers for the 2026 and 2027 tax periods. The Resolution was adopted with overwhelming support: 480 of the 481 National Assembly deputies participating in the vote voted in favour, representing 96% approval. It entered into force immediately on 24 August 2026. (Quochoi)
The headline is striking. But it is equally important to understand precisely what Vietnam has—and has not—done.
This is not a general 30% reduction of Vietnam’s personal income tax or corporate income tax rates. It is a targeted two-year reduction of the tax actually payable by qualifying business individuals and enterprises with annual revenue not exceeding VND 10 billion.
That distinction is fundamental for businesses, investors and employees seeking to understand the practical consequences of the new policy.
Who Actually Receives the 30% Tax Reduction?
The Resolution creates two principal categories of beneficiaries.
1. Personal Income Tax: Business Income of Resident Individuals
For the 2026 and 2027 tax periods, Vietnam will reduce by 30% the personal income tax payable on business income earned by resident individuals, provided that their annual business revenue in the respective year does not exceed:
VND 10 billion per year.
The decisive point is that the reduction concerns income from business activities.
It therefore should not be misunderstood as a 30% reduction in personal income tax for employees generally.
An employee earning a salary in Vietnam does not, merely by virtue of this Resolution, receive a 30% reduction of the PIT payable on his or her employment income.
Instead, the measure is specifically directed at qualifying resident individuals conducting business activities whose annual business revenue remains within the VND 10 billion threshold. (baochinhphu.vn)
This distinction is particularly important because international headlines referring simply to a “30% personal income tax reduction” could otherwise create a misleading impression.
2. Corporate Income Tax: Qualifying Enterprises and Organizations
The second element is a 30% reduction of corporate income tax payable for the 2026 and 2027 tax periods.
The benefit applies to enterprises and organizations established under Vietnamese law whose annual revenue in the respective year does not exceed:
VND 10 billion per year.
Again, this is not a reduction of Vietnam’s general corporate income tax regime by 30%.
Rather, a qualifying enterprise calculates the CIT otherwise payable and then receives the statutory 30% reduction of that tax liability. (baochinhphu.vn)
The revenue threshold is deliberately targeted toward the smaller end of Vietnam’s business community. According to information presented during the National Assembly deliberations, approximately 865,115 enterprises have revenue of up to VND 10 billion, representing around 81.1% of enterprises in the relevant data set. (Ministry of Finance)
The potentially broad numerical reach of the policy is therefore considerable, even though its application is restricted by the revenue ceiling.
The Rule in One Sentence
For businesses and investors, the new policy can be summarized very simply:
Vietnam is reducing by 30% the income tax payable for 2026 and 2027 by qualifying resident business individuals and Vietnamese-law enterprises with annual revenue not exceeding VND 10 billion—not cutting PIT and CIT by 30% across the economy.
That is the central point that must be understood.
What About Existing Corporate Tax Incentives?
The Resolution also addresses an important question for companies already benefiting from preferential tax treatment.
Where an enterprise already enjoys tax incentives under Vietnam’s Corporate Income Tax Law or under other laws or National Assembly resolutions, the new 30% reduction is calculated on the corporate income tax payable after the existing tax incentives have been deducted. (baochinhphu.vn)
This creates an important sequencing rule.
First, the existing applicable CIT incentives are taken into account. The 30% reduction is then applied to the remaining CIT payable, provided that the taxpayer satisfies the conditions under the new Resolution.
For qualifying businesses, the new measure can therefore operate alongside existing tax incentives rather than necessarily replacing them.
No Artificial Splitting of Companies to Obtain the Benefit
The National Assembly also addressed the obvious risk of tax planning around the VND 10 billion threshold.
The Resolution excludes enterprises created through the division or separation of an existing enterprise after the Resolution became effective where the combined revenue of the resulting enterprises in 2026 or 2027 exceeds the VND 10 billion threshold. (Quochoi)
The policy intention is clear.
A larger enterprise should not be able simply to divide itself into several smaller legal entities in order to bring each individual entity below VND 10 billion and artificially obtain the 30% reduction.
This anti-avoidance provision is important because it demonstrates that Vietnam intends the measure to benefit its genuine target group: smaller businesses and entrepreneurs requiring additional resources for investment and growth.
Why Is Vietnam Doing This Now?
The wider policy context makes the Resolution considerably more significant than an isolated tax concession.
The Government has explained that surveys and tax administration data indicate that business households, individual entrepreneurs and micro-enterprises continue to face difficulties and possess limited capacity to accumulate capital for reinvestment.
The Government therefore concluded that further support was appropriate.
Importantly, the Minister of Finance expressly connected the proposal to the implementation of Politburo Resolution No. 68 on private-sector development, Resolution No. 19 of the Party Central Committee and Vietnam’s objective of achieving double-digit economic growth during the 2026–2030 period. (Quochoi)
This provides the real strategic context.
Vietnam is increasingly treating the private economy not merely as a supplementary component of national development, but as a central engine of investment, innovation, employment and economic growth.
Tax policy is becoming one of the instruments through which that strategic shift is being implemented.
From Tax Collection to Capital Formation
The economic philosophy underlying the Resolution is particularly noteworthy.
The Government estimates that the measure will reduce State budget revenue by approximately:
- VND 3.191 trillion in 2026; and
- VND 3.510 trillion in 2027.
This is a meaningful fiscal commitment.
But the Government does not view the measure simply as lost tax revenue.
Its reasoning is that the money not collected by the State remains available to qualifying businesses and entrepreneurs. That additional liquidity can be used for working capital, equipment, recruitment, expansion and reinvestment.
Successful reinvestment should in turn generate additional economic activity, income and ultimately future tax revenues.
The Government has therefore characterized the immediate revenue reduction as a means of leaving resources in the hands of businesses so that they can reinvest, expand production and increase income. (Quochoi)
This represents an important policy message: Vietnam is deliberately sacrificing a measure of short-term fiscal revenue in pursuit of longer-term private-sector growth.
Why the VND 10 Billion Threshold Matters
The VND 10 billion annual revenue threshold—approximately USD 380,000 at indicative current exchange rates—is essential to understanding the scope of the Resolution.
This is not primarily a tax incentive designed for major multinational corporations or Vietnam’s largest domestic enterprises.
A substantial foreign-invested manufacturing company, major energy developer, bank, technology platform or large Vietnamese conglomerate will ordinarily exceed the VND 10 billion annual revenue ceiling by a considerable margin.
The immediate beneficiaries are instead concentrated among smaller enterprises, micro-businesses, business households and individual entrepreneurs.
This targeted approach also explains why the Government believes that the measure can have a meaningful economic effect despite the relatively modest revenue ceiling.
For a large multinational corporation, several million Vietnamese dong in additional monthly liquidity may have little impact on investment decisions.
For a small Vietnamese enterprise, however, that amount can contribute directly to salaries, machinery, inventory, digitalization or expansion.
During the National Assembly discussions, the Minister of Finance illustrated the point by considering an enterprise with VND 10 billion of annual revenue. Assuming a profit margin of around 12%, the Government calculated that a 30% tax reduction could leave approximately VND 4–5 million or more per month available to the business. (Ministry of Finance)
At the micro-enterprise level, such amounts can make a practical difference.
Part of a Much Larger Private-Sector Reform Agenda
The Resolution should therefore be viewed together with Vietnam’s broader reforms rather than in isolation.
Earlier measures in 2026 already provided significant support for smaller businesses. The Government noted, among other measures, exemptions from certain taxes for business households and individuals below specified revenue levels, CIT relief for very small enterprises, tax-payment extensions and other fiscal support. (Quochoi)
The new 30% reduction extends this policy architecture further up the revenue scale.
Most importantly, it comes against the background of Resolution No. 68-NQ/TW, which has elevated private-sector development to a central position in Vietnam’s long-term economic strategy.
Vietnam faces an enormous challenge over the coming decade.
It seeks to move beyond its extraordinarily successful role as an export-oriented manufacturing destination and toward a more sophisticated economy driven by technology, innovation, infrastructure, domestic enterprise, higher productivity and greater Vietnamese participation in global value chains.
That transition requires more than foreign direct investment.
It requires stronger Vietnamese companies.
It requires entrepreneurs capable of accumulating capital.
It requires small companies capable of becoming medium-sized companies—and medium-sized companies capable of becoming regional champions.
And it requires a regulatory and fiscal environment that allows businesses to reinvest rather than consuming excessive resources through compliance costs and taxation during their formative years.
Seen from this perspective, the new tax Resolution is part of something considerably larger.
What Does This Mean for Foreign Investors?
The immediate tax benefit for major foreign investors will in many cases be limited because of the VND 10 billion revenue ceiling.
But foreign investors should not therefore dismiss the Resolution as irrelevant.
Its strategic significance lies elsewhere.
First, foreign investors increasingly depend upon Vietnamese suppliers, contractors, distributors, technology partners and service providers. Strengthening the financial position of smaller domestic enterprises can improve the depth and resilience of Vietnam’s supply chains.
Second, stronger Vietnamese SMEs can become more capable joint-venture partners and suppliers for international companies.
Third, the Resolution provides another indication of the direction of Vietnamese economic policy: private enterprise, entrepreneurship and reinvestment are increasingly being actively encouraged rather than merely permitted.
For investors evaluating Vietnam over a five-, ten- or twenty-year horizon, that direction matters.
Immediate Effect—Not a Promise for the Future
There is another remarkable feature of the Resolution.
It became effective on 24 August 2026—the very day on which the National Assembly adopted it—and applies to the 2026 and 2027 tax periods. (Quochoi)
The Government specifically sought adoption during the current extraordinary session so that the measure could already affect the 2026 tax period and provide businesses with resources for purchasing, reinvestment and the remainder of the year’s business cycle. (Quochoi)
That timing sends an important message.
Vietnam is not merely announcing long-term ambitions for private-sector development.
It is increasingly attempting to translate those ambitions into measures that have an immediate financial effect on businesses.
A Small-Business Tax Measure With a Much Bigger Message
It would be easy to describe the National Assembly’s decision simply as a “30% tax cut.”
That would both exaggerate and underestimate what Vietnam has done.
It would exaggerate the measure because Vietnam has not reduced PIT and CIT by 30% for everybody. Salary earners do not receive a general 30% PIT reduction, and large corporations do not receive a general 30% CIT reduction.
But it would also underestimate the measure because its importance extends beyond the amount of tax saved.
The Resolution demonstrates a changing philosophy of economic development.
Vietnam increasingly recognizes that creating a powerful private economy requires businesses to retain capital, reinvest profits, increase productivity, expand operations and ultimately become larger and more competitive.
The State is effectively saying that, for qualifying smaller businesses, a portion of today’s tax revenue may create greater economic value if it remains in the enterprise and finances tomorrow’s growth.
That is a sophisticated policy calculation.
Conclusion: Vietnam Is Investing in Its Entrepreneurs
The 30% income-tax reduction for 2026 and 2027 should therefore be understood for what it truly is: a targeted investment in Vietnam’s entrepreneurial base.
It applies specifically to qualifying business taxpayers with annual revenue not exceeding VND 10 billion. It does not constitute a general 30% tax reduction for employees, multinational corporations or the economy as a whole.
Yet its broader significance reaches much further.
Together with Resolution 68 and Vietnam’s wider private-sector reform agenda, the measure demonstrates an increasingly clear policy direction: Vietnam wants its private businesses not merely to survive, but to accumulate capital, invest, innovate and grow.
That is important not only for Vietnamese entrepreneurs.
It matters to multinational companies searching for stronger local supply chains. It matters to investors seeking credible domestic partners. It matters to technology companies looking for an increasingly sophisticated market. And it matters to international businesses evaluating whether Vietnam can move from being one of Asia’s leading manufacturing destinations toward becoming one of its major innovation and investment economies.
Vietnam has spent decades successfully attracting capital from abroad.
The next chapter is equally important: creating the conditions in which Vietnamese private capital can grow alongside it.
The National Assembly’s decision of 24 August 2026 is one more indication that this next chapter has already begun.
***
Please do not hesitate to contact Dr. Oliver Massmann (the architect of market access) under omassmann@duanemorris.com if you have any questions or require further information regarding the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.
