It is widely accepted that as barriers to trade and investment are removed in free trade areas, developing member countries tend to compete in offering tax and tax-related incentives to attract investing multinational corporations. Despite the statutory tax rates, the realised corporate tax expenses can be revealed by their effective tax rates. Theoretical foundation has addressed the non-optimality of the current competitive tax policy packages offered by most developing countries. This paper calculates the effective corporate tax rates (ETRs) across sectors in Thailand and Vietnam during 2005-2008. Further analysis considers the value of inbound investments, the structure of their profits and their contributions to the country's fiscal revenue. For both countries, the domestic-specific sectors encounter the highest average ETRs with moderate to high profit rates and contributed the highest share to the fiscal revenue. The capital-intensive export-oriented sectors incur the lowest ETRs with low to average profit rate and contributed the least to the fiscal revenue. Panel regressions across industries suggest that, considering potential tax treaties within ASEAN Free Trade Area, the overall current competitive effective tax rates can still be raised without adverse effects on FDI inflows. © EuroJournals, Inc. 2011.