Adding a new product without increasing capital or expanding the project

On 1 October 2026, the Ninh Binh Provincial Tax Authority issued Official Letter No. 12906/NBI-QLDN3 on corporate income tax, responding to LCFC (Vietnam) Co., Ltd. on corporate income tax (CIT) incentives for a new product, on the basis of Decree No. 320/2025/ND-CP dated 15 December 2025. Accordingly, if the addition of a product is not accompanied by an increase in capital, an expansion of scale, an increase in capacity or technological innovation, income from that product is not entitled to incentives for expansion investment.

This guidance is noteworthy for manufacturing enterprises that are enjoying tax incentives and plan to add products beyond the scope of their initial Investment Registration Certificate (IRC).

1. The enterprise's situation

According to Document No. 3/2026/CV-LCFC, the Company plans to manufacture a new electronic component product in 2026, with three characteristics:

• The product is not described in the initially issued IRC.
• Adding the product does not increase investment capital.
• The production process largely utilizes the Company's existing machinery and production lines.

As this is a future plan without specific dossiers and information, the Ninh Binh Provincial Tax Authority provides guidance in principle only.

2. What constitutes expansion investment

• Under Clause 5, Article 3 of the Law on Investment No. 143/2025/QH15 dated 11 December 2025, an expansion investment project is a project that develops an operating investment project by expanding scale, increasing capacity, innovating technology, reducing pollution or improving the environment.
• Under Point a, Clause 5, Article 20 of Decree No. 320/2025/ND-CP, where an operating project carries out the above activities and falls within the incentivized sectors, business lines or geographical areas under Article 18 of this Decree, the additional income is entitled to tax incentives applicable to the operating project for the remaining period. The enterprise is not required to separately account for this additional income.

3. Guidance of the Ninh Binh Provincial Tax Authority

On CIT incentives. Income from the new product is not entitled to incentives for expansion investment under Clause 5, Article 20 of Decree No. 320/2025/ND-CP if the addition of the product:

• does not increase investment capital; and
• does not expand scale, increase capacity, innovate technology, reduce pollution or improve the environment within the incentivized sectors, business lines or geographical areas of the operating project.

On tax rates. The Company shall comply with Article 11 of Decree No. 320/2025/ND-CP:

• 20% is the standard rate (Clause 1).
• 15% applies to enterprises with total annual revenue not exceeding VND 3 billion (Clause 2).
• 17% applies to enterprises with total annual revenue from over VND 3 billion to not exceeding VND 50 billion (Clause 3).

On separate accounting. The Company shall comply with Clause 1, Article 23 of Decree No. 320/2025/ND-CP:

• An enterprise enjoying incentives that conducts multiple production and business activities must separately account for incentivized income and non-incentivized income.
• Where separate accounting is not possible, incentivized income equals total taxable income multiplied by the ratio of revenue (or deductible expenses) of the incentivized activities to total revenue (or total deductible expenses) in the tax period (Point a).
• Revenue or expense items that cannot be separately accounted for are allocated using the same ratio (Point b).

4. Other provisions cited in the Official Letter

In addition to the above provisions, the Official Letter also cites Article 23 of Decree No. 320/2025/ND-CP as a basis:

• Scope of incentives tied to the initial IRC (Point c, Clause 8). For enterprises enjoying incentives as newly established enterprises from investment projects, incentives apply only to income from activities that satisfy the incentive conditions recorded in the initial Enterprise Registration Certificate or Investment Certificate. If the certificate is amended without changing the satisfaction of the incentive conditions, the enterprise continues to enjoy incentives for the remaining period, or enjoys incentives for expansion investment if eligible.
• Phased projects (Point d, Clause 8). Phases for which capital, investment phasing and implementation schedule were registered in the initial investment dossier, if implemented on schedule, are regarded as component projects and enjoy incentives for the remaining period of the initial project.
• Right to choose incentives (Clause 4). When the CIT law changes, enterprises satisfying the conditions under the new regulations may choose to enjoy incentives under the regulations at the time of licensing or under the new regulations, for the remaining period from the 2025 tax period.
• Location-based incentives (Point a, Clause 3). Manufacturing projects enjoying location-based incentives remain entitled to incentives on income from products manufactured by the project and supplied outside that area.
• Failure to satisfy conditions in a tax period (Clause 10). In any tax period in which the incentive conditions are not satisfied, tax is payable at the rate of 20%. For incentives based on sectors, business lines or geographical areas, that year still counts toward the incentive period.

💡 Recommendations for enterprises

• Review the list of products currently manufactured against the objectives and scale recorded in the initial IRC, particularly products added subsequently.
• Before adding a new product, assess whether the addition is accompanied by an increase in capital, an expansion of scale, an increase in capacity or technological innovation, and retain supporting documentation.
• Set up separate accounting for the revenue and expenses of the new product from the outset. If separation is not possible, prepare the basis for allocation under Clause 1, Article 23 of Decree No. 320/2025/ND-CP.
• Once specific dossiers are available, consider submitting a written inquiry to the directly managing tax authority, as this Official Letter provides guidance in principle only.

This newsletter is prepared by Crowe Vietnam for general information purposes only and does not constitute advice for any specific case. Enterprises should refer to the original legal instruments and consult professional advisors before applying the above to their particular circumstances.