Recently, Mr. P.M. H (resident in Hanoi) said that the application of corporate income tax (CIT) incentive policies still raises many questions for him. According to his sharing, Mr. H used to be the owner and legal representative of a limited liability company from 2023 but divested all capital in April 2024. Currently, he no longer holds a key position or large capital contribution in any other unit.
I am planning to establish a new small business. According to the provisions of Decree 20/2026/ND-CP, small and medium-sized enterprises registered for the first time will be exempt from corporate income tax for 3 years. However, with the history of running the old business, I am not clear whether my new unit is eligible for exemption from incentives or not" - Mr. H expressed concern about the legality of this case.
Responding to this issue, the Hanoi City Tax Department based on Decree No. 20/2026/ND-CP and Resolution No. 198/2025/QH15 to provide specific guidance. Accordingly, the corporate income tax exemption policy for 03 consecutive years from the time of the first Business Registration Certificate is issued is only for truly "new" small and medium-sized enterprises.
The Tax authority emphasizes that this incentive does not apply to cases of newly established enterprises from mergers, divisions or type conversions. In particular, an important barrier that business owners need to pay attention to is the role of the legal representative or the highest contributing member.
If the legal representative of the new enterprise used to hold a similar position or is the largest contributing member to the operating enterprises (or has been dissolved for less than 12 months), then the new enterprise will not enjoy this tax exemption privilege.
To help readers easily visualize, it can be simply understood that the State wants to encourage "true startups". If you close this company to open another company in the same industry, with the same leadership apparatus in a short time, it is not considered "first business registration" to receive incentives.
Thus, in Mr. H's case, whether he is exempt from tax or not depends closely on the time frame when he left his old role and the operating status of related legal entities at the time of establishing the new unit.
