A SME in Thanh Hoá Province. New small and medium-sized enterprises (SMEs) are exempted from corporate income tax (CIT) for their first three years of operation. — VNA/VNS Photo Tuấn Anh

HÀ NỘI — New small and medium-sized enterprises (SMEs) will be exempt from corporate income tax (CIT) for their first three years of operation under a new Government decree designed to accelerate private sector development.

The policy is outlined in Decree 20, which took effect on January 15 and details the implementation of the National Assembly’s Resolution 198 on private economic development.

Under the decree, completely new SMEs will receive a three-year CIT exemption from the date they are granted their first business registration certificate.

The incentive does not apply to enterprises formed through mergers and acquisitions, splits, ownership transfers or changes in business type.

Innovative startups and organisations that support startup activities will also benefit, with a two-year corporate income tax exemption followed by a 50 per cent reduction over the next four years.

Experts and scientists working at research and development centres, startups or intermediary organisations supporting innovation will be exempt from personal income tax on salaries and wages for the first two years and receive a 50 per cent reduction for the subsequent four years.

The decree further allows businesses to allocate up to 20 per cent of their taxable income to establish funds for science and technology, innovation and digital transformation.

In addition, the Government will provide free access to shared digital platforms and accounting software for small and micro-sized enterprises as well as household and individual businesses.

By the end of 2025, Việt Nam had nearly 1.1 million active enterprises.

Politburo Resolution 68 on private sector development sets the target of having 2 million enterprises by 2030, with the private economic sector expanding at an average rate of 10–12 per cent per year, outpacing overall GDP growth. — VNS