Deductible and non-deductible expenses upon determination of taxable incomes in Vietnam

Deductible expenses upon determination of taxable incomes in Vietnam

Except the non-eductible expenses upon determination of taxable incomes in Vietnam, enterprises are entitled to deduction of all expenses which fully meet the following conditions:

-  Actual expenditures on business operation of the company; expenditures on vocational education; expenditures on the company’s national defense and security duties as prescribed by law;

- Expenditures that have sufficient invoices and documents according to law. The invoice for any purchase of goods or services of at least 20 million VND must be enclosed with proof of cashless payment, except for the cases in which proof of cashless payment is not required by law.

Deductible and non-deductible expenses upon determination of taxable incomes in Vietnam (Internet image)

Non-deductible expenditures upon determination of taxable incomesin Vietnam

Non-deductible expenditures upon determination of taxable incomesin Vietnam include:

- The expenditures that fail to meet all conditions in Clause 1 of this Article, except for the loss cause by natural disasters, epidemics, and other force majeure that are not compensated.

- Fines for administrative violations;

- The expenditures that are covered by other budgets;

- The administrative expense allocated by the foreign enterprise to the permanent establishment in Vietnam that exceeds the limit imposed by Vietnam’s law.

- The extra expenditure according to the laws on making provision;

- The expenditure on interest on loans that are not given by credit institutions or economic organizations and exceed 150% of basic interest rates announced by the State bank of Vietnam when the loan is taken.

- Improper depreciation of fixed assets;

- Improper accrued expenses;

- Wages and remunerations of owners of private enterprises; wages of founders that do not participate in business management; wages, remunerations, and amounts payables to the employees that are not actually paid or do not have invoices according to law;

- The expenditures on loan interests corresponding to the charter capital deficit;

- Deducted input VAT, VAT paid using the deduction method, enterprise income tax;

- Sponsorships, except for sponsorships for education, health, scientific research, disaster recovery, houses of unity, houses of gratitude, houses for beneficiaries of social policies according to law, sponsorships for localities facing extreme socio-economic difficulties according to state programs;

- Voluntary payments to retirement funds or social security funds, payments for voluntary retirement insurance for employees that exceed the limits imposed by law;

- Expenditures on businesses: banking, insurance, lottery, securities, and some other special businesses specified by the Minister of Finance.

Pursuant to: Article 9 of the Law on Enterprise Income Tax 2008 (amended in 2013, 2015)

Mai Thanh Loi

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