In the context of an increasingly sophisticated and stringent tax legal system, accurate determination is crucial. Deductible and non-deductible expenses when calculating corporate income tax. (TNDN) 2025 is a mandatory requirement for all businesses. This not only provides a basis for ensuring transparency and compliance with legal regulations but also helps businesses proactively manage costs and mitigate tax risks.
This article will systematically analyze the current regulations in detail to help businesses fully understand and apply them correctly in practice.
I. Deductible expenses when calculating corporate income tax.
1. Legal basis
According to the Clause 1 Article 9 Corporate Income Tax Law 2025 No. 67/2025/QH15Businesses are allowed to deduct expenses when determining taxable corporate income in 2025 if they meet all of the following conditions:
- Not included in the list of non-deductible expenses as stipulated in Clause 2 of the same Article;
- These expenses arise from actual business operations. This includes additional costs deductible as a percentage of actual expenses incurred during the period for research and development of the enterprise.
- There are sufficient invoices and non-cash payment documents as required by law, except for specific cases as stipulated by the Government;
- Included in other actual expenses incurred as stipulated in Point b, Clause 1 of the same Article.
2. Some specific cases
a) Material costs
Material costs are understood as expenses that businesses proactively manage based on established consumption and loss norms during the production process. These norms are usually established at the beginning of the year or production period and are kept and managed internally within the business.
Costs related to raw materials may include, but are not limited to:
- Costs of purchasing main raw materials, auxiliary materials, and finished goods;
- Costs include renting assets, packaging services, storage, transportation, loading and unloading, and processing.
- Other incidental costs related to raw materials (cargo insurance, commissions, customs, etc.)
b) Costs of goods purchased without invoices
According to the Clause 2.4 Article 4 According to Circular 96/2015/TT-BTC, the cost of purchasing goods without invoices is still deductible for corporate income tax purposes in 2025 if it falls under one of the following cases:
- Purchase goods directly from individuals who exploit, produce, catch, and sell them.
- Purchasing assets and services from households and individuals who do not directly engage in business activities.
- Purchase goods and services from individuals and household businesses (excluding the cases mentioned above) with annual revenue under 100 million VND.
For expenses without invoices, businesses must create and retain alternative documentation to prove the legality and reasonableness of the expense. This alternative documentation includes:
- Statement of goods and services purchased according to Form 01/TNDN Issued together with Circular No. 78/2014/TT-BTC; 📥 Download form 01/TNDN here.
- Sales contract;
- Payment documents: Payment request form, payment voucher, or debit note;
- Goods handover record.
Note:
➤ The list of purchased goods and services must be signed by the legal representative or authorized person of the enterprise, who is legally responsible for its accuracy and truthfulness.
➤ These expenses do not require non-cash payment documentation.
c) Renting costs for houses and properties
The cost of renting warehouses, factories, and assets used in production and business operations is deductible for corporate income tax purposes in 2025, provided that all legal regulations are fully complied with. Specifically at Clause 2.5 Article 4 Circular 96/2015/TT-BTC:
- In cases where a business leases assets from an individual, the documentation required to determine deductible expenses includes the asset lease contract and proof of payment for the lease.
- In cases where the contract stipulates that the business will pay the property rental tax on behalf of the individual, the valid documents include: the rental contract, payment receipts, and tax payment receipts.
- If the contract stipulates that the rent excludes taxes (VAT and personal income tax) and the business pays the taxes on behalf of the individual, then the taxes paid on their behalf are also deductible expenses.
- In the case of asset repairs during the lease period, if the lease contract clearly stipulates that the lessee is responsible for maintaining the value of the leased asset, the repair costs shall be accounted for as deductible expenses or amortized gradually, but not exceeding 03 years (Clause 2.16 in the same Article).
d) Costs of electricity and water for renting the company's office.
These are expenses related to electricity and water usage at the company's headquarters, rented offices, or business premises.
To be considered a deductible expense, the following expenses must be included:
- The lease agreement clearly states whether the responsibility for paying electricity and water bills rests with the tenant or the landlord;
- Legitimate electricity and water bills;
- There is complete and valid payment documentation.
Note:
If the business pays for electricity and water directly to the landlord, the amount must reflect the business's actual consumption at the leased location.
e) Depreciation expense of fixed assets
Depreciation of fixed assets is understood as the process of "dividing" the value of fixed assets (tangible and intangible) into smaller parts and allocating them appropriately to the operating costs of production and business activities throughout the useful life of those assets.
💡 For example, a business purchases a cargo truck for 1 billion VND, with an expected lifespan of 10 years. Each year, 100 million VND will be included in depreciation costs. This accurately reflects how the vehicle's value gradually decreases over time due to damage, wear and tear, etc.
According to the Clause 2.2 Article 4 According to Circular 96/2015/TT-BTC, businesses are only allowed to include depreciation expenses for fixed assets in deductible expenses when settling corporate income tax in 2025 if these expenses fall under one of the following cases:
- Assets used in production and business operations (machinery, vehicles, software, land use rights, etc.);
- Assets used to serve employees working at the enterprise (rest rooms, parking garages, medical facilities, etc.);
- The assets have documentation proving ownership by the business.
- Fixed assets acquired through financial leasing;
Assets are managed, monitored, and accounted for in the enterprise's accounting books and do not exceed the current regulations of the Ministry of Finance on the management, use, and depreciation of fixed assets (Circular 45/2013/TT-BTC).
Note: Some special cases:
➤ For fixed assets that are passenger cars, according to Article 1 of Circular 151/2014/TT-BTC:
- For businesses operating in the passenger transport, hotel, and tourism sectors: All depreciation costs of vehicles used for production and business purposes are deductible expenses when settling taxes, and are not limited to the original cost.
- For businesses outside the sectors mentioned above: For passenger cars with 09 seats or fewer, only the depreciation corresponding to the original cost up to a maximum of VND 1.6 billion is deductible as an expense.
➤ For cases where a business temporarily suspends operations for less than 9 months, according to Point e, Clause 2.2, Article 4 of Circular 96/2015/TT-BTC:
- If a fixed asset is owned by the business and continues to be used in production and business operations, but due to seasonal factors, maintenance, repairs, etc., it must be temporarily out of service for a period of time, the depreciation expense of this asset is still deductible when settling corporate income tax.
f) Costs of salaries, bonuses, and allowances for employees
According to the Article 4 According to Circular 96/2015/TT-BTC, expenses related to employees serving production and business activities may include, but are not limited to:
- Costs related to salaries, wages, and bonuses;
- Costs for mandatory social insurance contributions and voluntary social insurance contributions;
- Expenses include meal allowances, business travel, uniforms, overtime pay, etc.
- Expenses for rewarding innovative ideas and funding scientific research;
- Other employee benefits (holiday bonuses, Tet gifts, travel, etc.)
Note:
➤ Funding for scientific research must comply with the regulations on programs and policy beneficiaries of the State (Clause 2.26, Article 4) and be confirmed by a signed agreement between the funding provider and the funding recipient;
➤ The total of the aforementioned welfare-related expenses shall not exceed one month's average actual salary at the enterprise;
Expenses must be supported by payment documents (payroll statements, VAT invoices, travel service invoices, etc.) as required by law, and the entitlement amount and conditions must be specifically stipulated in one of these documents:
- Labor contract;
- Collective labor agreement;
- Financial regulations of the Company, Corporation, and Group;
- Salary and bonus regulations are determined by the Chairman of the Board of Directors, the General Director, and the Director in accordance with the financial regulations of the Company or Corporation.
g) Costs of purchasing goods for gifts or presents as a token of appreciation to customers.
These are business expenses incurred for giving, gifting, or donating goods or services to customers and partners as a way of showing appreciation and building relationships. These gifts and donations are not directly linked to commercial promotion activities aimed at stimulating or encouraging consumer behavior.
Note:
It is necessary to clearly distinguish between “"Gifts, presents, and presents" and ""Promotional items are free of charge." are two forms completely different In terms of legal, accounting, and tax matters, there are specific legal regulations in place.
The cost of purchasing goods and services for gifts or donations, if it meets the conditions stipulated by law, is deductible when settling corporate income tax for the year 2025.
- To support the business operations of enterprises;
- There must be sufficient legal invoices and supporting documents. If the invoice for goods or services is worth 05 million VND or more (including VAT), non-cash payment documents must be provided;
- Goods and services given as gifts or presents to customers must be invoiced with VAT and declared and subject to output VAT as with normal sales. The VAT taxable value is determined based on the selling price of similar or equivalent goods and services at the time of the gift.
h) Interest expense
Interest expense refers to the amount of interest a business pays when borrowing capital to finance its production and business operations. Deductible interest expense requires sufficient supporting documentation, such as loan agreements, check payments, or payment orders.
In the case of personal loans, the interest rate must not exceed 150% of the basic interest rate announced by the State Bank of Vietnam at the time of borrowing, and when paying interest, 5% personal income tax must be deducted from the amount paid to that individual.
Note:
The interest expense related to loans that are identified as equity capital contributions under the Corporate Income Tax Law will not counted These expenses are deductible when settling corporate income tax.
💡 For example, Company A needs additional capital to expand production. The company director (who is also the owner) invests an additional 5 billion VND into the company and calls it a "loan to the company". Company A accounts for the interest it has to pay the director at 10% per year.
However, according to the Corporate Income Tax Law and its guiding circulars:
- This "loan" is actually considered to be owner's capital contributionBecause that money was invested by the business owner himself.
- Therefore, the 10% annual interest payment that the company accounts for and pays to the director will Not accepted as a reasonable expense. when calculating corporate income tax.
Opposite:
If Company A borrows 5 billion VND from a commercial bank at an interest rate of 10% per year, then... This interest is considered a deductible interest expense.Because this is a real loan relationship with a third party.
i) Losses due to foreign exchange rate differences
This refers to losses arising from the revaluation of foreign currency liabilities at the actual exchange rate at the end of the tax period. If the foreign exchange rate increases compared to the initial recording time, the amount of debt converted to VND will increase, resulting in an exchange rate loss.
Losses are considered deductible expenses when the expense actually arises, is directly related to the business operations of the enterprise, and is supported by valid invoices and documents in accordance with the law.
j) Provision for contingency expenses
Provisioning for risks is understood as a proactive measure by businesses to record a portion of expenses in advance to prevent and manage potential risks arising in their production and business operations.
According to the Article 2 According to Circular 48/2019/TT-BTC, the provisions that enterprises are allowed to set aside include:
- Clearance sale: Provision for when the actual value of inventory decreases compared to the value recorded in the accounting books (e.g., clothing inventory loses value due to outdated designs);
- Investment losses: Provision for potential decline in the value of securities held by the enterprise or other investments in other economic entities due to market fluctuations (excluding overseas investments);
- Uncollectible accounts receivable: Provisions for overdue debts or debts that are not yet due but are at risk of not being collected on time;
- Warranty for products, goods, services, and construction works: Provide a reserve fund to cover the costs of repairs and warranty claims for products, goods, or works that may arise after delivery as per the commitment or contract with the customer.
Provisions for contingencies are deductible expenses when settling corporate income tax if they meet the documentation requirements as stipulated by law.
- There are legal documents and invoices proving ownership of the inventory;
- Investment securities that are listed or registered for trading, and whose market value at the time of preparing the financial statements is lower than their book value;
- There are accounts receivable records proving that the customer has not yet paid;
- There are contracts for the sale of goods and contracts for construction projects that clearly stipulate warranty terms;
- There is an internal approval decision: a proposal or decision from the director or management board regarding the creation of a provision.
k) Accrued expenses
Accrued expenses are future expenses that a business temporarily records as expenses in the current period to ensure they match revenue, even if the expense has not yet been fully incurred at the time of recording. Later, when the actual expense is incurred, the business adjusts the accrued expense based on legitimate invoices and supporting documents to match the revenue.
💡 For example, Company B signs a contract to manufacture and deliver 10,000 pairs of shoes to a customer, with a contract value of 5 billion VND. According to the agreement, the customer receives the goods at the end of December, and Company B has recorded the full revenue of 5 billion VND upon signing the contract.
However, to fulfill its contractual obligations, Company B incurred estimated shipping and delivery costs of 200 million VND (to be incurred in January of the following year). The company is permitted to accrue 200 million VND in shipping costs in the period in which revenue is recognized, to ensure the matching principle between revenue and expenses.
At the end of the contract, compare the actual costs:
- If the actual shipping cost is 220 million → Company B will record an additional 20 million as an expense.
- If the actual cost is only 180 million → Company B must reverse the 20 million that was over-allocated.
Provisions for expenses may include:
- Costs that have not yet been incurred/have not been fully incurred but corresponding revenue has already been recognized (as in the example above);
- Asset maintenance costs are cyclical in nature, as per contractual obligations.
Note:
"Accrued expenses" (Account 335) for the maintenance of assets of a cyclical nature under other contractual obligations other than “"Provision for expenses" (Account 352) for warranty and repair if any issues arise as mentioned in this section. (J) on.
Accrued expenses are deductible when settling corporate income tax if:
- Expenditures were made on schedule and according to the accrual cycle;
- There are legal records and documents for the expenditures.
l) Costs of losses that are not compensated
This refers to losses of raw materials and goods damaged due to expiration or natural disasters such as storms and floods, for which no compensation is provided. Businesses are responsible for determining and clearly declaring the total value of the losses incurred.
Note:
Only the uncompensated portion of the loss borne by the business is considered a deductible expense when settling taxes; losses that have been partially or fully compensated by insurance are not considered deductible expenses.
Documentation used to determine deductible expenses for these losses may include:
- A written explanation regarding the damaged goods and assets should be submitted to the tax authority directly responsible for managing the case.
- Minutes of inventory of damaged goods and assets;
- The claim for damages is accepted by the insurance company (in cases where the insurance only compensates for a portion of the value of the damaged goods or property);
- Documents that determine the liability for compensation of the organization or individual involved.
m) Costs for funding education, healthcare, natural disasters (floods), and poverty alleviation.
These are financial or in-kind donations for programs supporting education, healthcare, disaster relief, and poverty alleviation.
These expenditures must be directed to the correct recipients and for the correct purposes as stipulated by law, and must be carried out through agencies and organizations authorized to mobilize funding under state programs, with priority given to localities in areas with particularly difficult socio-economic conditions.
Documentation identifying deductible expenses for grants includes:
- A sponsorship confirmation record, signed by the legal representative of the enterprise and the representative of the organization receiving the sponsorship or the agency/organization responsible for fundraising;
- Invoices, purchase documents for sponsored goods, or payment vouchers;
II. Expenses that are not deductible when calculating corporate income tax.
1. Legal basis
Expenses that are not deductible when settling corporate income tax fall under the following cases:
a) Not eligible for deduction Regarding invoices, supporting documents, or other specific conditions mentioned in Part I of this article;
b) According to Clause 2 Article 9 Corporate Income Tax Law 2025 No. 67/2025/QH15, some other specific cases include:
- Administrative fines;
- The costs are covered by other funding sources. (insurance, aid, funding from the state budget and other organizations);
- The portion of expenditure exceeding the government's prescribed limit. for:
- Business management expenses allocated by foreign enterprises to their permanent establishments in Vietnam;
- Costs of hiring management services for electronic gaming and casino businesses;
- Interest payments by businesses with related-party transactions;
- This service is of a direct welfare nature for employees;
- Contribute to supplementary retirement insurance as prescribed by the Social Insurance Law;
- The fund contribution is of a social security nature, encompassing voluntary retirement insurance and life insurance for workers.
- Salaries, wages of the:
- Private business owner;
- The owner of a single-member limited liability company is an individual.
- Remuneration paid to business founders who do not directly participate in the management of production or business operations.
- Expenses that do not correspond to taxable revenue., excluding expenses as specified in Point b, Clause 1, Article 9; and expenses that do not meet the conditions or content requirements of specialized laws;
- Grants, except for the funding stipulated in sub-point b5, point b, clause 1, Article 9;
- Capital expenditure during the investment phase to create fixed assets.; expenses directly related to increasing or decreasing the equity capital of the business;
- Expenditures from business operations in special sectors such as banking, insurance, lottery, securities, BT, BOT, BTO contracts if they do not comply with or exceed legal regulations;
- Other expenses.
2. Handling non-deductible expenses
During the course of its business operations, enterprises need to closely monitor their expenses throughout the fiscal year. They should proactively review and identify expenses that are not deductible when settling corporate income tax for 2025.
Summarize these non-deductible expenses under item B4: "Expenses that are not deductible when determining taxable income" when filing corporate income tax return (according to Form 1) Declaration Form 03/TNDN (issued together with Circular 80/2021/TT-BTC).
Note:
Do not record adjusting entries in the accounting books when summarizing non-deductible expenses.Because these expenses are still actual costs incurred by the business, they are simply not considered deductible expenses when settling corporate income tax according to the regulations of the Ministry of Finance.
Managing costs in accordance with the 2025 Corporate Income Tax regulations not only helps businesses optimize their tax obligations but also builds a transparent and sustainable foundation for financial operations. Understanding and accurately applying these principles is crucial. Deductible and non-deductible expenses This is one of the key factors for businesses to improve management efficiency, prevent legal risks, and strengthen their reputation in relationships with partners, tax authorities, and investors.