What are travel expenses according to the 2024 Ordinance on proceeding costs in Vietnam?

What are travel expenses according to the 2024 Ordinance on proceeding costs in Vietnam?

According to Article 2 of the 2024 Ordinance on proceeding costs, Travel Expenses are the monetary amounts paid to those with authority to conduct proceedings, participants in the proceedings, individuals invited to participate in the proceedings according to legal regulations on the content and level of expenditure regarding per diem policies, conference expenditure policies for state agencies and public service providers.

Note: The 2024 Ordinance on proceeding costs takes effect from July 01, 2025.

What are travel expenses according to the 2024 Ordinance on proceeding costs in Vietnam? (Image from the Internet)

Are travel expenses for employees deductible when calculating CIT in Vietnam?

Based on point 2.9 clause 2, Article 6 of Circular 119/2014/TT-BTC (amended and supplemented by Article 4 of Circular 96/2015/TT-BTC):

Deductible and non-deductible expenses when determining taxable income

1. Amend and supplement point b, clause 3, Article 5 of Circular No. 78/2014/TT-BTC as follows:

“b) For goods and services used for exchange (excluding goods and services used to continue the production and business process of the enterprise), these are determined according to the selling price of similar or equivalent products, goods, services on the market at the time of exchange.”

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2. Expenses not deductible when determining taxable income include:

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2.9. Allowance for travel expenses for leave not in accordance with the Labor Code.

Allowance for employees on a business trip, travel expenses, and lodging expenses for employees on a business trip, if fully supported by invoices and documentation, are deductible expenses when determining taxable income. If a company provides a lump sum for travel expenses, accommodation, and allowance for employees on a business trip and complies with the company's financial or internal regulations, these are deductible lump sum expenses.

In cases where a company sends an employee on a business trip (including domestic and international travel), and expenses of 20 million VND or more arise, such as airfare purchased with a personal bank card, these expenses qualify as non-cash payments and are deductible if all conditions are met:

- Appropriate invoices and documentation provided by the supplier of the goods or services.

- The company has a decision or document assigning the employee on the business trip.

- The company’s financial or internal regulations allow the employee to settle travel expenses and buy air tickets using a personal bank card, with the company reimbursing the employee afterward.

If a company purchases airplane tickets through an e-commerce website for an employee's business trip for production and business activities, the qualifying documentation for deductible expenses includes e-tickets, boarding passes, and non-cash payment documents of the company for the participating individual. If the company cannot retrieve the employee's boarding pass, the documentation for deductible expenses includes e-tickets, a decision or document assigning the employee on the business trip, and non-cash payment documents of the company for the participating individual.

Thus, travel expenses for employees, if fully supported by invoices and documentation, are deductible expenses when determining taxable income and are deductible when calculating corporate income tax.

How to calculate corporate income tax in Vietnam?

Based on Article 6 of the Law on Corporate Income Tax 2008 and Article 5 of Decree 218/2013/ND-CP, CIT is calculated as follows:

Where:

(1) Taxable income:

Taxable earnings for CIT are determined as follows:

Taxable earnings = Revenue - Deductible expenses + Other income

(2) CIT Tax rate

Based on Articles 10, 13, and 14 of the Law on Corporate Income Tax 2008 and Article 10 of Decree 218/2013/ND-CP, the CIT tax rate is 20%.

Note: In certain cases, a higher tax rate applies, such as activities involving the extraction of oil, gas, and other precious resources in Vietnam, or preferential tax rates may apply with lower rates.

See detailed CIT tax rates in the Law on Corporate Income Tax 2008 and Decree 218/2013/ND-CP.