Deductible Expenses When Determining Corporate Taxable Income (CIT) – 2025 Updated Guide

1. What Are Deductible Expenses for CIT Purposes?

Deductible expenses are legitimate business costs that a company incurs during its operation, which meet specific legal conditions to be excluded from taxable income when calculating Corporate Income Tax (CIT). When correctly document

2. Deductible Donations and Sponsorships for COVID-19 Prevention in Vietnam

According to Article 2 of Decree 15/2022/ND-CP, companies subject to CIT are allowed to deduct donations and sponsorships made in cash or kind for COVID-19 prevention and control in Vietnam when calculating taxable income for the 2022 tax year, if certain conditions are met.

2.1 Eligible Beneficiaries:

• Vietnam Fatherland Front Committees at all levels
• Healthcare facilities, centralized quarantine centers
• Armed forces units
• Educational institutions
• Press agencies
• Party organizations, Youth Union, Women’s Union, Trade Unions at all levels
• Government agencies and local authorities with fundraising authority
• COVID-19 Prevention and Vaccine Funds
• National Humanitarian Electronic Portal
• Registered charity and humanitarian organizations

2.2 Required Documentation:

• Confirmation minutes using Form 02 in Appendix IV of Decree 15, or any written or electronic confirmation signed and stamped by both the sponsoring company and the recipient organization;
• Legal invoices and supporting documents for both cash and in-kind contributions.

3. Other Deductible Expenses Under Circular 96/2015/TT-BTC

According to Article 4 of Circular 96/2015/TT-BTC, all expenses may be deducted when calculating CIT if they meet all three of the following conditions:

3.1 Deductibility Conditions:

1. Actually incurred in connection with the company’s business or production activities;
2. Supported by legitimate invoices and documents in accordance with Vietnamese law;
3. For any transaction with a value of VND 20 million or more (including VAT), non-cash payment evidence is required (e.g., bank transfer, wire payment, etc.).

Important Notes:

• If an invoice over VND 20 million hasn’t been paid by the time the cost is recorded, it may still be temporarily deducted;
• If it is later paid in cash, the company must adjust and reduce the deductible expense in the tax period when payment is made;
• For purchases made before Circular 78/2014/TT-BTC came into effect, no retrospective adjustment is needed even if paid in cash.

4. Use of Invoices from Cash Register Machines (CRM)

If your business receives invoices generated directly from CRM systems (in compliance with Vietnamese e-invoicing regulations), follow these guidelines:

• If invoice value ≥ VND 20 million: require non-cash payment documents;
• If invoice value < VND 20 million: cash payments are still accepted for deduction.

5. Summary: When Is an Expense Deductible for CIT?

In summary, any business-related expense is deductible for CIT purposes if:

• It directly relates to business or production activities;
• It has valid invoices and documents;
• It complies with payment method rules (especially for expenses ≥ VND 20 million);
• It is not listed under non-deductible expenses in Clause 2, Article 4 of Circular 96/2015/TT-BTC.