Conditions for deductible expenses according to Clause 1, Article 9 Corporate Income Tax Law No. 67/2025/QH15 Requires that expenses to be counted as valid expenses from October 1, 2025 must actually arise during the period, be directly related to production and business activities, have legal invoices and documents, and be paid non-cash if the invoice is 20 million VND or more.
In fact, the new Corporate Income Tax Law expands deductible expenses such as research & development expenses, environmental protection investment expenses or public works expenses if fully meeting the conditions for deductible expenses, creating new opportunities for businesses to optimize taxes.
Overview of deductible expenses for corporate income tax
In the context of increasingly strict tax management, it is important to understand deductible expenses. corporate income tax and the conditions for deductible expenses are an issue that cannot be ignored by any business. If determined correctly, businesses will not only legally reduce the amount of tax payable but also increase transparency in financial management.
On the contrary, if there is an error or non-compliance, the business may have its expenses excluded, leading to increased tax obligations and even penalties. Therefore, understanding the overview, definition and role of deductible expenses is an important foundation for effective tax management.
What are deductible expenses?
Deductible expenses are legal, reasonable and valid expenses that businesses are allowed to include in their expenses when determining taxable income. In other words, these are valid expenses that help businesses legally reduce their tax obligations.
To be recognized as a valid expense, the expense must meet the conditions for deductible expenses as prescribed by law. Otherwise, even if the enterprise actually spends, the expense will still be excluded from tax calculation.
Why is it necessary to determine the conditions for deductible expenses in tax management?
Determining the correct and sufficient conditions for deductible expenses when calculating corporate income tax (CIT) is not only a legal procedure, but also a key factor for businesses to effectively manage their finances and limit risks. During the tax settlement process, the tax authority will review all expenses declared by the business.
If the expense does not meet the conditions for deductible expenses, the business will be excluded from tax calculation, increasing the amount of corporate income tax payable. This directly affects the net profit, cash flow and even the reputation of the business with partners and investors.
According to the 2024 public report of the General Department of Taxation, many businesses across the country had their expenses eliminated due to not meeting the conditions, mainly falling into the following cases: expenses not directly related to business activities, cash payments for invoices over 20 million VND, or lack of valid documents. These cases lead to serious consequences: tax arrears, late payment penalties, false declaration penalties, and in many cases, being put on the high-risk list for inspection and examination.
Therefore, understanding and complying with the conditions for deductible expenses not only helps businesses minimize the risk of being fined, but also contributes to optimizing legal taxes, improving cost management efficiency and ensuring transparent and sustainable business operations. This is also an important factor for businesses to build trust with management agencies and investors.
Legal basis related to expenses deductible from corporate income tax
To accurately determine which expenses are deductible when calculating corporate income tax, businesses cannot rely solely on practical experience but must rely on the current legal system. These documents not only clearly stipulate the conditions for recognizing reasonable and valid expenses but also list in detail the expenses that are not deductible. Understanding the legal basis helps businesses manage expenses in accordance with the law, avoid exclusions when finalizing and optimize tax obligations.
Below is a summary of important legal documents related to deductible expenses:
| Legal documents | Main content | Implications for deductible expenses |
| Corporate Income Tax Law No. 14/2008/QH12 (and amended laws 2012, 2013, 2014) | Regulations on the general legal framework for corporate income tax, principles for determining taxable income and reasonable expenses | The highest legal basis for determining deductible expenses |
| Decree 218/2013/ND-CP (and amending decrees: 91/2014, 12/2015, 132/2020) | Detailed instructions on deductible and non-deductible expenses; limits on interest expenses, transfer pricing | Specific legal basis for businesses to apply in practice |
| Circular 96/2015/TT-BTC | Detailed regulations on conditions for deductible expenses: related to production and business, legal documents, non-cash payments; list of invalid expenses | Is the most important document when settling corporate income tax |
| New documents and circulars of the Ministry of Finance & General Department of Taxation (2022–2025) | Update regulations on electronic invoices, R&D costs, interest expense deduction mechanism, and related-party transaction management | Ensure businesses comply with new regulations and avoid risks when applying costs |
Conditions for deductible expenses from corporate income tax 2025
To be recognized as a deductible expense for corporate income tax, enterprises not only need to incur actual expenses but also have to strictly comply with legal regulations. Determining the correct conditions helps enterprises avoid the risk of having expenses excluded when settling taxes, thereby optimizing tax obligations and effectively managing finances. Below are 3 important conditions that all expenses must meet according to current regulations:
| Condition | Detailed content | Illustrative example | Legal basis |
| Directly related to production and business activities | Expenditure must serve the activities of generating revenue and maintaining production and business of the enterprise. | Cost of purchasing raw materials, transporting goods, advertising, and renting warehouses. | Corporate Income Tax Law No. 14/2008/QH12, Article 9 |
| Have full legal invoices and documents | Expenses must have legal, reasonable and valid documents. | VAT invoices, contracts, payrolls, service acceptance reports, bank documents. | Circular 78/2014/TT-BTC, Circular 96/2015/TT-BTC |
| Cashless payment (≥ 20 million VND) | Expenses with invoices from 20 million VND (including VAT) must be paid through the bank. | Enterprises paying 50 million for raw materials via bank transfer are deductible; cash payments are excluded. | Circular 96/2015/TT-BTC, Clause 2, Article 6 |
Common types of expenses that qualify as deductible expenses
For an expense to be considered a deductible expense for corporate income tax, the enterprise must ensure that the expense directly serves production and business activities, has legal invoices and documents, and is paid in accordance with regulations. The table below summarizes common expense groups that are often accounted for by enterprises as reasonable expenses, with illustrative examples and specific notes.
| STT | Cost group | Detailed content | Notes / Examples |
| 1 | Cost of raw materials, goods, production and business services | Purchase of raw materials, fuel, imported goods, transportation, logistics, outsourcing | Direct costs of production and business |
| 2 | Labor costs | Salary, bonus, allowance; social insurance, health insurance, unemployment insurance; training and skill improvement costs | Have a labor contract and legal payroll |
| 3 | Fixed asset depreciation costs | Machinery, factories, vehicles and equipment serving production and business according to the prescribed framework | Depreciation according to regulations |
| 4 | Outsourcing service costs | Advertising, marketing, communication, auditing, accounting, legal consulting, IT services | Must have valid contract and invoice |
| 5 | Legitimate financial costs | Interest within 30% EBITDA limit, guarantee fee, bond issuance cost | According to Decree 132/2020/ND-CP |
| 6 | Business management costs | Electricity, water, stationery, business trip expenses, conferences, labor safety | Expenses for business management and operations |
| 7 | R&D costs | Research, product development, application of science and technology | Under new incentives from 2025 |
Non-deductible expenses
In addition to valid expenses, there are many expenses that, although actually incurred, do not meet the conditions for deductible expenses and will be eliminated when determining taxable income. Clearly identifying invalid expenses helps businesses avoid the risk of having expenses eliminated by tax authorities, thereby managing finances and taxes more effectively. The table below lists in detail the groups of expenses that are not deductible, with examples and specific notes.
| STT | Cost group | Detailed content | Notes / Examples |
| 1 | Expenses not related to production and business | Expenses not serving production and business | Examples of personal expenses and non-business expenses |
| 2 | Expenses without invoices or legal documents | No VAT invoices, contracts, payment vouchers, or payroll | Although the actual occurrence is still excluded |
| 3 | Cash payment over 20 million | Invoices ≥20 million VND paid in cash | Must pay via bank to be deducted |
| 4 | Invalid depreciation of fixed assets | Depreciation of fixed assets exceeding the limit, not serving production and business | Example of depreciation of personal car |
| 5 | Overdraft or personal loan | Interest on loans exceeding 30% EBITDA or personal loans not through credit institutions | According to Decree 132/2020/ND-CP |
| 6 | Penalty costs | Administrative fines, contract fines, tax fines | Not included in reasonable expenses |
| 7 | Overspending | Meal, uniform and promotion expenses exceeding regulations | Must comply with corporate/legal regulations |
| 8 | Charitable expenses, sponsorship not in accordance with regulations | Expenditure on illegal social activities/sponsorship | Not included in deductible expenses |
New points in the 2025 regulations related to expenses deductible from corporate income tax
In the context of 2025, the Law on Corporate Income Tax has many important changes related to deductible expenses for corporate income tax. These new points directly affect the determination of reasonable expenses when declaring taxes, and at the same time open up opportunities to optimize tax obligations for businesses. Understanding the expanded expenses, the conditions that must be met and the non-deductible expenses will help businesses manage their finances and taxes transparently, reduce risks and comply with the law effectively. Below is a summary of the new points to note.
Expanding deductible expenses
From 2025, the Law on Corporate Income Tax will expand a number of expenses that can be counted as deductible expenses for corporate income tax, including:
- Direct research and development (R&D) costs serving production and business.
- Cost of training and improving professional qualifications for employees.
- Cost of environmental protection, cultural heritage protection.
- Cost of applying information technology and digital transformation in management and production.
- Insurance costs for employees and business assets.
These expenses help businesses both invest in development and enjoy legal tax incentives.
Conditions for deductible expenses
Expenses that want to be counted as deductible expenses for corporate income tax still need to fully meet 3 main conditions:
- Expenses must actually arise and be directly related to production and business activities.
- Have full invoices and legal documents as prescribed.
- For bills from 20 million VND or more, payment must be made through the bank, not in cash.
Compliance with these conditions helps businesses avoid being excluded from tax settlement costs.
Non-deductible expenses
Law 2025 also emphasizes expenses that are not included in reasonable expenses, including:
- Costs not related to production and business activities.
- Expenses without invoices or legal documents.
- Costs exceeding the prescribed level or administrative fines, contract fines, tax fines.
- Sponsorship and charity costs are not in accordance with the law.
Businesses need to clearly distinguish to declare taxes accurately and optimize tax obligations.
Benefits of knowing the rules
Understanding and correctly applying the new points in deductible expenses for corporate income tax 2025 helps businesses:
- Optimize reasonable costs and tax obligations.
- Minimize the risk of having expenses excluded when tax authorities audit.
- Transparent and efficient financial and tax management.
Experience & notes for businesses related to expenses deductible from corporate income tax
Managing legitimate expenses is a key factor in helping businesses optimize their tax obligations. In order for expenses to be recognized as deductible expenses for corporate income tax, businesses need to master important experiences and notes in managing invoices, documents, payments, salary and bonus payments, as well as reviewing and consulting on specific expenses. The following section summarizes practical instructions to help businesses comply with regulations and avoid risks with tax authorities.
Manage invoices and documents fully and scientifically
In order for expenses to be counted as deductible expenses for corporate income tax, businesses need to keep all invoices and legal documents. All expenses incurred must have VAT invoices, contracts, payrolls, payment vouchers or service acceptance records. Scientific document management not only helps to comply with the law but also reduces the risk of tax authorities rejecting expenses when settling.
Payment via bank for amounts ≥ 20 million VND
For expenses worth VND20 million or more, businesses must pay via bank. This ensures that the expense is legal and recognized as a deductible expense for corporate income tax. Paying cash for invoices over VND20 million will cause the expense to be deducted when settling taxes.
Transparency in salary, bonus and benefits
All expenses for salaries, bonuses, allowances or benefits for employees need to have a clear labor contract, bonus payment decision and payroll. This helps labor costs to be recognized as deductible expenses for corporate income tax, and at the same time avoids disputes with tax authorities.
Periodic checks and reviews
Enterprises should regularly review expenses to ensure compliance with the conditions on expenses deductible from corporate income tax. Periodic checks help detect invalid expenses early, make timely adjustments and optimize tax obligations.
Consult an expert for specific expenses.
For complex expenses such as M&A, transfer pricing, R&D or large investment costs, businesses should consult tax and accounting experts. This ensures that expenses are properly accounted for as CIT deductible expenses, reducing legal risks and optimizing tax benefits.
Benefits of knowing the rules
Understanding and correctly applying regulations on deductible expenses from corporate income tax helps businesses:
- Optimize reasonable costs and tax obligations.
- Reduce the risk of having expenses excluded when tax authorities audit.
- Transparent and efficient financial and tax management.
Illustrative case study related to conditions for corporate income tax deduction
To help businesses better understand how to apply the conditions for deductible expenses to corporate income tax in practice, we will analyze some specific illustrative case studies. These examples not only show which criteria need to be met but also clearly demonstrate the impact of proper cost management on tax obligations. From raw material costs, human resource training to outsourcing services, each case brings important lessons for businesses in transparent and effective financial and tax planning.
Case 1: Raw material costs – Manufacturing enterprise A
Enterprise A operates in the food production sector and spends VND 500 million to purchase raw materials for production in the first quarter of 2025. All VAT invoices, payment vouchers, and purchase contracts are complete, and payments are made through the bank.
Analysis:
- This expense directly serves production activities and meets the conditions for deductible expenses for corporate income tax.
- Legal invoices and documents help businesses prove their validity to tax authorities.
- Bank payment for invoices ≥ 20 million VND ensures recognized costs.
Impact: The 500 million VND expense is considered a reasonable expense, helping the enterprise reduce the amount of corporate income tax payable in the final settlement period. At the same time, managing complete documents also helps avoid the risk of having expenses excluded when the tax authority inspects.
Lesson: For direct expenses related to production, businesses need to fully store documents, make transparent payments and account properly to optimize tax obligations.
Case 2: Human resource training and development costs – Enterprise B
Enterprise B spends 200 million VND to organize a training course to improve skills for sales staff. The expenditure has a contract with the training unit, a legal VAT invoice and is paid through the bank.
Analysis:
- This expense meets the conditions for deductible expenses from corporate income tax because it directly serves business activities and improves labor productivity.
- Invoices and contracts are legal evidence proving reasonable costs.
- Transparent payment via bank ensures no charges are excluded upon settlement.
Impact: Expenditures that help businesses improve the quality of human resources and are also included in reasonable expenses, reducing tax obligations. This is a typical example of expenses related to R&D or human resource capacity development, expenses that are increasingly prioritized by tax laws to be included in deductible expenses for corporate income tax.
Lesson: Training and human resource development costs are tax-advantaged expenses if they comply with the regulations on invoices, documents and payments. Businesses need to have a clear plan to take advantage of this incentive.
Case 3: Outsourcing service costs – Enterprise C
Company C hired an advertising company to launch a marketing campaign worth 150 million VND. Valid contract and invoice, payment via bank.
Analysis:
- Direct expenses for business activities, product and brand promotion, meeting the criteria for deductible expenses from corporate income tax.
- Contracts and invoices are proof of validity before tax authorities.
- Paying by bank helps avoid the risk of costs being rejected during inspection.
Impact: Expenses help businesses improve business efficiency, and are also included in reasonable expenses, reducing the amount of tax payable. This is evidence for outsourcing service expenses - a common group of expenses but must fully comply with regulations to be recognized as deductible expenses for corporate income tax.
Lesson: Outsourcing costs such as marketing, legal consulting, auditing or IT services can all be recognized if the documents are legal, the payments are transparent and directly related to business operations.
Conclude
The condition of deductible expenses from corporate income tax is a key factor for businesses to optimize tax obligations, ensure transparency and limit legal risks. Legal regulations are increasingly strict, especially in 2025 with many new points related to electronic invoices, loan interest expenses or R&D investment, requiring businesses to proactively update and comply right from the accounting stage.
If you are looking for effective cost management solutions, optimal tax planning and risk mitigation during settlement, please contact us. MAN – Master Accountant NetworkWith a team of experienced experts in the fields of accounting - tax - finance, MAN is committed to accompanying businesses to build a safe - transparent - optimal management system in every financial decision.
Contact information for corporate income tax services at MAN – Master Accountant Network
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