Vietnam Corporate Income Tax Loss Carry-Forward Guide Under Decree 320 (2025)

CIT loss carry-forward rules in Vietnam, 5-year limit, taxable income offsets, restructuring cases, audit risks, and practical examples

TL/DR - Vietnam CIT Loss Carry-Forward Rules at a Glance

1. Corporate income tax (CIT) losses in Vietnam can be carried forward for up to five consecutive years under Decree 320/2025/ND-CP.
2. Loss carry-forward starts from the year following the loss year and must be applied continuously.
3. CIT losses offset taxable income, not accounting profit or gross revenue.
4. Each tax loss is tracked by year of origin, with no reset when new losses arise.
5. Loss carry-forward generally survives company restructuring, mergers, or ownership changes, subject to proper tax finalization.
6. Certain income types, including real estate transfers and mineral projects, are restricted from loss offset.
7. Poor documentation and incorrect offsets are common reasons for loss disallowance during Vietnam tax inspections.

Introduction - Corporate Income Tax Loss Carry-Forward in Vietnam

Corporate income tax losses are common in Vietnam, especially for start-ups, capital-intensive businesses, and companies undergoing restructuring. However, whether these losses reduce future tax liabilities depends entirely on correct application of Vietnam CIT loss carry-forward rules.

Decree 320/2025/ND-CP provides the current legal framework governing how corporate income tax losses are calculated, carried forward, and offset against taxable income in Vietnam. Despite the clarity of the regulation, loss carry-forward remains one of the most frequently misunderstood and audited areas of Vietnam tax compliance.

This article serves as a comprehensive Vietnam CIT loss carry-forward guide, combining legal rules, practical interpretation, restructuring considerations, and worked examples to help businesses manage tax losses strategically.

What Is a Corporate Income Tax Loss Under Decree 320/2025/ND-CP

Definition of a CIT loss in Vietnam

Under Article 7 of Decree 320/2025/ND-CP, a corporate income tax loss is defined as:

1. The negative taxable income in a given tax year
2. Calculated before applying any prior-year CIT losses

For Vietnam corporate income tax purposes, this is calculated as:

Taxable revenue - minus deductible expenses + plus other taxable income - minus tax-exempt income = Taxable Income

Only losses determined through annual corporate income tax finalization in Vietnam are eligible for loss carry-forward.

How Vietnam Corporate Income Tax Loss Carry-Forward Works

Where CIT losses are applied

1. Once a Vietnam CIT loss is finalized the full loss must be carried forward to subsequent tax years.
2. Loss carry-forward must be continuous and applied without skipping profitable years
3. Loss carry-forward begins from the year immediately following the year the loss occurs.
4. Maximum carry-forward period is five consecutive tax years.
5. Loss expiry: any unused loss after five years is permanently disallowed.

Additionally:

• CIT losses in Vietnam offset taxable income, not accounting profit and not gross revenue.
• There are no extensions or renewals of the five-year CIT loss carry-forward period under Vietnamese tax law.

Multiple Year Quarterly vs Annual CIT Loss Treatment in Vietnam

Provisional quarterly CIT filings

1. During the fiscal year companies may temporarily offset losses between quarters when calculating provisional corporate income tax.
2. These offsets are provisional only.

Annual corporate income tax finalization

1. At year-end the company determines its final taxable income or loss.
2. Only the finalized annual CIT loss may be carried forward.
3. Quarterly offsets are reconciled during annual finalization.

Tracking losses by year of origin

1. Each Vietnam CIT loss must be tracked separately by the year it arises.
2. Each loss has its own five-year carry-forward period.

New losses during an existing carry-forward period

1. If a new loss occurs, it starts its own five-year timeline.
2. Existing losses are not extended or reset.

While Decree 320 emphasizes continuity, applying older losses first is standard tax practice in Vietnam. This approach minimizes loss expiry risk and aligns with Vietnam tax inspection expectations

Tax Authority Adjustments and CIT Loss Carry-Forward

1. If Vietnam tax authorities adjust a declared loss - the adjusted amount becomes the allowable carry-forward loss.
2. The loss retains its original year of origin and remains subject to the original five-year limit

During tax inspections, authorities commonly request:

1. CIT finalization returns
2. Loss carry-forward schedules by year
3. Supporting accounting and tax reconciliation documents

Corporate Income Tax Loss Carry-Forward During Company Restructuring

Restructuring cases covered under Decree 320

Loss carry-forward rules apply when a company undergoes:

1. Change of legal form
2. Change of ownership
3. Merger or consolidation
4. Division or separation

Key restructuring principles

1. Corporate income tax finalization must be completed before restructuring.
2. Losses must be tracked clearly by year.
3. Remaining losses may continue to be used by the successor entity within the original five-year carry-forward period.

Allocation of losses after company division

1. Remaining losses are allocated to successor entities based on equity ownership ratios transferred.
2. Incorrect allocation is a common restructuring-related tax risk in Vietnam.

Income Offset Rules for Vietnam Corporate Income Tax

General business income

Under Article 6 of Decree 320/2025/ND-CP:

1. Taxable income includes income from all business activities.
2. Losses from one activity may offset income from another.
3. The enterprise may choose the offset order unless restricted.

Restricted income categories

CIT losses cannot be offset against:

1. Income from real estate transfers or investment project transfers that benefit from tax incentives.
2. Income from mineral exploration, mining, and processing activities, which must be declared separately.

These restrictions are highly relevant for:

1. Real estate developers
2. Project-based investors
3. Diversified corporate groups

Example of Vietnam Corporate Income Tax Loss Carry-Forward

Scenario overview

1. CIT losses:
2. 1. 50 million VND in 2020
   2. 20 million VND in 2024
3. Profits:
4. 1. 10 million VND in 2021
   2. Zero taxable income in 2022
   3. 10 million VND in 2023
   4. 30 million VND in 2025

Year-by-year application

Common Vietnam CIT Loss Carry-Forward Risks

1. Not tracking losses by year of origin
2. Assuming CIT losses can be carried forward indefinitely
3. Incorrect offsets involving restricted income
4. Differences between provisional and finalized CIT filings
5. Insufficient documentation during tax inspections

FAQ - Vietnam Corporate Income Tax Loss Carry-Forward

How long can corporate income tax losses be carried forward in Vietnam?

Up to five consecutive years starting from the year after the loss occurs.

Can a company delay using a loss to save it for later years?

No. Vietnam tax law requires continuous application of losses.

Do CIT losses survive mergers or ownership changes?

Yes, provided tax finalization is completed and losses are tracked correctly by year.

Can CIT losses offset all types of income?

No. Certain income categories, such as real estate and mineral projects, are restricted.

Are quarterly losses automatically carried forward?

No. Only losses finalized at year-end are eligible for carry-forward.

Conclusion - Strategic Management of Vietnam CIT Loss Carry-Forward

Vietnam corporate income tax loss carry-forward is not just a compliance issue. When managed correctly, it is a strategic tax planning tool that can materially reduce future tax liabilities.

Decree 320 provides clarity, but effective application requires disciplined tracking, restructuring awareness, and audit readiness.

If your company has accumulated corporate income tax losses in Vietnam, is planning a restructuring, or wants to confirm loss expiry timelines and offset eligibility, professional review is strongly recommended.

Contact our Vietnam corporate tax advisory team to review your CIT loss carry-forward position, restructuring exposure, and compliance risks before issues arise.