Deductible and Non-Deductible Expenses for Corporate Income Tax from October 1, 2025

On October 1, 2025, the 2025 Law on Corporate Income Tax officially takes effect. Article 9 specifically regulates deductible and non-deductible expenses when determining taxable income. Businesses should clearly understand these rules to ensure compliance and minimize tax risks.

1. Deductible Expenses for Corporate Income Tax from October 1, 2025

According to Clause 1, Article 9 of the 2025 Law on Corporate Income Tax, enterprises may deduct expenses if they meet the following conditions:

1.1. General conditions

• Actual expenses incurred related to business operations.

• Supported by valid invoices and non-cash payment documents as required by law.

• Not falling under the list of non-deductible expenses as prescribed by the Government.

1.2. Specific deductible expenses

• Research & Development (R&D) expenses, including additional costs calculated as a percentage of actual expenses.

• Expenses for national defense and security duties, such as national defense–security education, militia training, and other legally mandated tasks.

• Support for political and socio-political organizations within the enterprise.

• Vocational training and education for employees.

• Expenses for workplace HIV/AIDS prevention programs.

• Permitted sponsorships/donations:

  • Education, healthcare, and culture.

  • Natural disaster/disease prevention and relief, charity housing, gratitude housing.

  • Scientific research, technology development, digital transformation, and innovation.

  • Localities with especially difficult socio-economic conditions (as decided by the Government/Prime Minister).

• Expenses for greenhouse gas reduction, carbon neutrality, and environmental protection.

• Uncompensated damages from natural disasters, epidemics, or force majeure events.

• Expenses for seconded personnel managing special-control credit institutions.

• Certain expenses not matching revenue but allowed by Government regulations.

• Contributions to funds established by the Prime Minister’s decision.

In summary: expenses must be business-related + legally documented to be deductible.

2. Non-Deductible Expenses for Corporate Income Tax from October 1, 2025

According to Clause 2, Article 9 of the 2025 Law on Corporate Income Tax, non-deductible expenses include:

2.1. Violations of principles

• Expenses not meeting the conditions in Section 1.

• Expenses reimbursed by other funding sources.

• Administrative fines and penalties.

2.2. Excessive expenses beyond limits

• Business management fees allocated by foreign enterprises.

• Casino and gaming management service fees.

• Interest payments on related-party transactions exceeding the cap.

• Employee welfare expenses beyond the permitted threshold.

• Contributions to supplementary pension funds, voluntary pension/life insurance exceeding limits under the 2024 Law on Social Insurance.

2.3. Invalid provisions

• Provisions for reserves not in line with regulations.

• Depreciation of fixed assets beyond prescribed limits.

• Improper accruals of expenses.

2.4. Invalid salaries and remunerations

• Salaries of private business owners or one-member LLC owners.

• Remuneration to founders not directly managing operations.

• Salaries/expenses booked but not actually paid or without valid invoices.

2.5. Non-deductible interest expenses

• Interest corresponding to un-contributed charter capital.

• Interest capitalized into investment value.

• Interest in petroleum contracts.

• Interest from non-credit institutions exceeding Civil Code limits.

2.6. Taxes and fees

• Deductible VAT already credited.

• Input VAT for cars with ≤9 seats exceeding the threshold.

• Corporate income tax itself, and other taxes/fees not deductible under law.

2.7. Other excluded expenses

• Non-permitted sponsorships (outside education, healthcare, disaster relief…).

• Construction investment costs during asset formation.

• Costs related to changes in equity.

• Excessive/unlawful expenses in banking, insurance, lottery, securities, BOT/BT/BTO projects.

3. Conclusion

From October 1, 2025, businesses must strictly comply with Article 9 of the 2025 Law on Corporate Income Taxregarding deductible and non-deductible expenses. Correct cost allocation ensures:

• Lawful tax optimization.

• Reduced risk of expense rejection during tax audits.

• Compliance with regulations, avoiding administrative fines.