Expenses not included in CIT expenses in 2025

Corporate income tax (CIT) is a type of tax directly collected, levied directly on taxable corporate income. CIT includes incomes of enterprises from the production and trading of goods and services and other incomes as prescribed by law. When calculating income subject to corporate income tax, accountants need to determine deductible and non-deductible expenses in order to ensure the correct tax amount and benefits of the enterprise. Viet An Tax Agent will provide you with expenses that are not deductible according to Article 4 of Circular 96/2015/TT-BTC, amended and supplemented by Circular 25/2018/TT-BTC.

Definition of non-deductible expenses when calculating CIT

Deductible expenses when calculating corporate income tax are expenses that meet the following conditions:

Non-deductible expenses when calculating corporate income tax are expenses that do not fully meet the above conditions.

Expenses not deducted when calculating CIT

Cost of raw materials

For this part of the cost, the enterprise balances and builds a norm of loss and use of raw materials. This norm is usually developed and planned from the beginning of the year or the beginning of the production period and is stored and managed at the enterprise. Non-deductible expenses include expenses in excess of the raw material consumption norms that the enterprise has built.

Interest expenses are not deductible when calculating CIT

• Interest expense which has been recorded in capital contributed assets and the value of capitalized investment works shall not be included in deductible expenses when determining taxable income.
• When an enterprise needs to borrow capital to supplement its charter capital, the loan interest payment corresponding to the missing charter capital shall not be considered as a deductible expense if it does not meet the following conditions:
• If the borrowed amount is less than or equal to the missing charter capital: the entire interest expense is an expense that cannot be deducted.
• If the borrowed amount is greater than the missing charter capital, there will be 2 cases as follows:

Case 1: Many loans arise

Case 2: Incurring a loan

• For enterprises that do not incur related-party transactions: Interest expenses are calculated as reasonable expenses if the enterprise fully meets the above conditions.
• For enterprises that have related-party transactions.

In which:

• If the interest expense is greater than the above, this expense will not be calculated as a reasonable expense when calculating CIT.
• If the interest expense is less than or equal to the above-mentioned part, it shall be calculated as a reasonable expense.

Fixed asset depreciation costs

• Depreciation amounts are not used for the purpose of production and trading of goods and services.
• Depreciation of fixed assets does not prove that it is the property of the company.
• The depreciation of fixed assets exceeds the level prescribed by the Ministry of Finance.
• For enterprises not in the group of passenger transportation, tourism and hotel businesses, the depreciation from the original cost exceeding 1.6 billion VND/vehicle will not be counted as a reasonable expense.
• The depreciation of fixed assets is not in the name of the enterprise.
• Depreciation for works on land not used for business purposes.

Purchase costs without invoice

• Expenses for purchasing goods of individuals and organizations without invoices and documents and without making a list according to form No. 01/TNDN.
• The purchase cost is attached to the list according to form No. 01/TNDN but the price is higher than the market price at the time of purchase.

Expenses for renting houses and renting assets

• Payments made to individuals or organizations for property rental without invoices, supporting documents, or a mutual agreement
• Payment for house rent or property lease that does not serve the business’s production and operation or the business is not named in the lease agreement
• Payment for house rent to individuals or organizations for rent with a total payment amount greater than the agreed price in the contract

Expenditure on salaries, wages, and bonuses for employees

• Salaries and remuneration for owners of 1-member limited liability companies or owners of private enterprises.
• The salary is paid to the members of the board of members and the management but is not directly involved in the operation of the company.
• There are no salary payment vouchers or the deadline for submitting tax finalization dossiers has expired but has not yet been paid.
• It must not be specified in the labor agreement contract or the enterprise’s salary and bonus regulations.

Allowances such as rice, uniforms, telephones, overtime; working expenses; Expenses for paying voluntary insurance premiums

• There are no salary payment vouchers or the deadline for submitting tax finalization dossiers has expired but has not yet been paid.
• It must not be specified in the labor agreement contract or the enterprise’s salary and bonus regulations.
• Spending on uniforms exceeding 5 million/person/year or spending in kind without invoices and documents.
• The cost of deduction and remittance to the fund or voluntary pension insurance, life insurance for employees exceeds 3 million/person/month.
• Expenses for work, travel and accommodation if there is no document or decision on sending on a business trip or valid vouchers and invoices.

Employee Benefits

• The total welfare expenses exceed 1 month’s actual average salary implemented in the tax year of the enterprise.
• Not specified in the enterprise’s salary and bonus regulations
• There are no valid payment documents or invoices such as travel agency service bills, food bills, and tuition bills,…
• Businesses buy goods as gifts or give promotional goods to employees but do not make VAT invoices.

Spending bonuses for initiatives, improvements and scientific research,…

• It is not specified in the regulations on remuneration and remuneration of enterprises or is not accepted for initiatives and reforms by the acceptance council.
• Expenditures on funding for scientific research not according to the programs of the State or the Government.
• There is no record of full confirmation of signatures between the sponsor, the prize party and the sponsor or prize recipient.
• There are no payment documents, invoices for the purchase of goods when sponsoring or rewards in kind.
• There is no proof of spending money when sponsoring or rewarding money.

Provisions

• Provision for inventory price reduction: there is no invoice from a valid legal payment when purchasing goods or services or the inventory loss is not identified under the ownership of the enterprise.
• Provision for bad debts: there are no original documents or cannot prove that the customer has unpaid debts such as economic contracts, debt acceptance contracts, and reconciliations,…
• Provision for financial investment losses: not securities in which the enterprise is investing or the actual value of securities in the market is still higher than the value in which the enterprise is investing and recorded in the books at the time of making financial statements.
• Provision for warranty of goods, services and construction works: there is no economic contract, construction work contract or the terms of the contract do not specify the terms of warranty and repair.
• Provisions set aside from the salary and wage fund: must not be deducted in excess of 17% of the total salary fund actually paid in that settlement year. After setting up the provision, the enterprise is not allowed to make a loss.

Expenses deducted in advance

• Expenses deducted in advance on a cyclical basis, by term but at the end of the cycle, expired but still not paid or not fully spent.
• There are no valid legal payment documents or invoices after deducting expenses.
• The deducted estimates are larger than the actual expenditures on legal invoices and payment vouchers.

Cost of promotional goods and gifts for customers

• There are no legal invoices and documents when buying goods as gifts, gifts or gifts. If the expenditure on the purchase of goods is valued at 20 million VND or more but there are no non-cash payment vouchers.
• Do not invoice VAT when giving, donating, giving gifts or promotional goods to customers.
• Enterprises do not declare VAT calculation and payment.
• The actual expenditure is not related to the business and production activities of the enterprise.

Expenses for electricity and water to rent company offices and business locations

• The lessee has signed a contract for electricity and water supply with the supplier, that is, the company pays directly to the electricity and water supplier, but does not have more than electricity and water bills, payment vouchers and lease contracts for production and business locations.
• The company pays to the lessor but does not have an electricity and water bill, a payment voucher for electricity and water bills in accordance with the actual amount of electricity and water consumed by the company and the contract for lease of production and business location.

If you have any difficulties or questions related to expenses that are not subject to CIT in Vietnam, please contact Viet An Tax Agent for the most specific advice.