1. Concepts of the terms Reasonable and Deductible Expenses
According to Vietnamese Accounting Standard No. 01 – General Standard:
"Expenses: The total value of items that reduce economic benefits during an accounting period in the form of cash outflows, asset deductions, or the incurrence of liabilities that result in a decrease in equity, excluding distributions to shareholders or owners."
According to the Vietnamese-Vietnamese dictionary:
"Reasonable means right and in accordance with logic."
Valid is correct with the prescribed format.”
2. Tax regulations regarding reasonable and deductible expenses.
According to current regulations in Circular 96/2015/TT-BTC dated June 22, 2015
"Except for the non-deductible expenses specified in Clause 2 of this Article, enterprises are allowed to deduct all expenses if they meet the following conditions:
a) Actual expenses incurred in connection with the business operations of the enterprise.
b) The expenditure is supported by valid invoices and documents as required by law.
c) For expenditures with invoices for goods and services valued at 20 million VND or more (including VAT), payment must be made using non-cash methods.
👉 See more: Deductible and Non-Deductible Expenses When Settling Corporate Income Tax (2025)
3. Reasons for the debate on reasonable and valid expenses
The arguments stem from businesses claiming that the incurred expenses are legitimate and justifiable, while the tax authorities assert they are not. Who is right and who is wrong is always a recurring point of contention when tax authorities conduct audits at businesses.
The tax authorities raise objections regarding the reasonableness and validity of expenses incurred by the business during the period in order to exclude them from deductible expenses. Businesses, however, are unable to prove, argue, or convince the tax authorities of the logic, reasonableness, and authenticity of their expenses.
Example 1:
The company owns a fixed asset, a car, and incurs fuel costs for this vehicle. This expense is perfectly reasonable for the company, so how could the tax authorities possibly reject it?
If a business's fuel costs are excessively high and disproportionate to the user's travel route, this is illogical, unreasonable, and will not be accepted by the tax authorities.
Example 2:
Your company's business travel expenses are being disallowed by the tax authorities because your company lacks the required invoices and supporting documents, their validity is questionable, or your company cannot prove that the business travel expenses were incurred "genuinely".
Example 3:
Why were the company's golf expenses disallowed? Because the tax authorities considered this expense to be for personal use, unrelated to the company's business operations, even though the company had all the necessary invoices.
4. How to eliminate the differences between tax authorities and accountants.
Reasonable and eligible expenses / Deductible expenses = Accounting expenses on the financial statements (+/-) adjustments due to differences between tax and accounting.
The smaller the adjustments resulting from differences between tax and accounting figures, the less discrepancy there will be between the tax and accounting figures. To achieve this, businesses need to demonstrate that their expenses are reasonable, "just and logical," and be able to refute the tax authorities' arguments. This is something that tax authorities often pay attention to, but it's also something businesses often overlook, focusing only on collecting supporting documents (validity).
To ensure validity, businesses only need to have sufficient documentation as required by tax laws. To ensure reasonableness, businesses must ensure that the incurred expenses are REAL, logically justified, relevant, and necessary for their business operations.
The gap between accounting and tax will narrow over time, meaning that adjustments due to these differences will gradually decrease, and businesses will bear greater responsibility for their own figures. Instead of focusing on dealing with tax authorities, businesses should adhere to the above principles, provide as clear evidence as possible, and avoid letting taxes become a source of worry for themselves.