Vietnam proposes 3-year income tax exemption for SMEs

The Ministry of Finance has drafted a Law on Small and Medium-Sized Enterprise (SME) Development that proposes a three-year corporate income tax exemption for new SMEs. This exemption would begin from the date the enterprise is first issued its business registration certificate.

According to the Ministry of Finance, this period is critical as businesses often face high initial costs for machinery, factories, technology, and human resources while revenue and profits remain unstable. The policy aims to reduce cost burdens, allowing businesses to retain profits for reinvestment, production expansion, and increased competitiveness.

The draft law categorizes SMEs into micro, small, and medium enterprises based on annual average labor, total capital, or previous year revenue. In addition to the three-year exemption, the draft proposes applying lower corporate income tax rates for micro and small enterprises compared to standard rates.