Are vocational training courses for company employees considered deductible expenses for corporate income tax purposes?

My company offers advanced skills training for its employees. Are these expenses deductible when determining corporate income tax?

For an expense to be considered a deductible expense when determining corporate income tax, the business needs to comply with the basic principles stipulated in Article 4 of Circular 96/2015/TT-BTC Amend and supplement Article 6 of Circular 78/2014/TT-BTC (guiding Decree 218/2013/ND-CP):

• Actual expenses incurred: Businesses must actually pay for this item.

• Regarding production and business activities: Expenditures must directly or indirectly serve the business's revenue and profit-generating activities.

• We have all the necessary legal invoices and documents: All expenses must be supported by VAT invoices or other legally valid receipts as required by law.

• There is documentation for non-cash payments: For invoices for goods and services with a value of 20 million VND or more (including VAT), non-cash payment documentation is required.

Important Note Regarding Benefits Costs

Although training costs are often considered a business expense, businesses need to be aware of regulations regarding... employee benefits costs To avoid confusion and exclusions when calculating taxes.

Legal reference:

• Clause 2 Article 4 Circular 96 / 2015 / TT-BTC (Amendment and supplement to Clause 2, Article 6 of Circular 78/2014/TT-BTC) stipulates expenses that are not deductible, including: “…the portion of expenses exceeding one month's average actual salary incurred during the year by the enterprise for expenses of a direct welfare nature for employees…"

If the training course is for professional development and skill enhancement directly related to the job, it is usually considered a business expense. However, if the course is for entertainment or to improve mental well-being without directly related to work, or is categorized under other company welfare expenses, the business needs to carefully consider whether the total welfare expenditure does not exceed one month's average salary.

To make it clear:

• Costs of skills training: It should be incorporated into the annual training plan, linked to business objectives, improving production capacity, and adopting new technologies.

• Welfare costs: It is often related to healthcare, culture, sports, holidays, etc.

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