SOME NEW POINTS DEDUCTIBLE EXPENSES UNDER DECREE 320/2025/ND-CP

SOME NEW POINTS REGARDING DEDUCTIBLE EXPENSES WHEN CALCULATING CORPORATE INCOME TAX UNDER DECREE 320/2025/ND-CP

On December 15, 2025, the Government issued Decree 320/2025/ND-CP guiding some provisions of the Corporate Income Tax Law.

This Decree takes effect from December 15, 2025 and applies to the corporate income tax period of 2025. Taxpayers may choose to apply the regulations on expenses in this Decree from the beginning of the 2025 tax period, or from the effective date of the Corporate Income Tax Law (October 1, 2025), or from the effective date of this Decree (December 15, 2025). The timing of application is not required to be applied consistently; therefore, the enterprise may apply it on a case-by-case basis for each type of expense in a manner that is more favorable to the enterprise.

In principle, deductible expenses for the purpose of calculating corporate income tax (CIT) must satisfy the following conditions:

- The expenses are actually incurred and are related to the enterprise’s production and business activities.

- There are sufficient invoices and supporting documents in accordance with regulations.

- For payments with a value of VND 5 million or more, there must be non-cash payment vouchers, applicable from 15 December 2025.

Note: In addition to purchases of goods and services where the invoice value per transaction or multiple purchases from the same supplier within one day VND 5 million or more (including VAT), enterprises should also pay attention to other payments—such as house rent or vehicle rent paid to individuals, and salaries paid to employees—where amounts of VND 5 million or more must likewise be settled via non-cash payment methods.

• Salaries and wages paid to employees in amounts of VND 5 million or more are deductible expenses only if the enterprise makes payment by bank transfer from the enterprise’s account to the employee’s account. The enterprise is not permitted to authorize payment to another individual on the employee’s behalf.
• For expenses related to the lease of assets that are jointly owned by spouses, the law allows authorization for payment to be made to either the husband or the wife as the representative recipient of the rental payment.

Compared to current regulations, Decree 320/2025/ND-CP contains many notable new provisions related to deductible expenses when determining corporate income tax.

1. Cancellation of orders is permitted in certain cases.

According to previous regulations, taxpayers were only permitted to destroy goods in certain objective, force majeure cases such as changes in natural biochemical processes, expiration dates, obsolescence, or outdated products. Decree 320/2025/ND-CP expands the cases for goods destruction as follows:

- Costs incurred for destroying damaged inventory due to natural biochemical changes, obsolescence, technological obsolescence, outdated goods, expired goods, goods that are no longer usable, or goods that do not meet the requirements for circulation in the market as stipulated by specialized laws.

- Costs incurred for destroying raw materials, supplies, and components that are no longer needed for use.

- Costs incurred for destroying assets that are damaged and no longer needed for use.

- Costs incurred for destroying scrap materials and defective products generated during processing and production.

2. Clear regulations on expenses serving production and business activities that have not yet generated corresponding revenue but are still deductible for corporate income tax (CIT) purposes in the following cases:

- Bidding expenses: Costs incurred in participating in tenders where the bid is unsuccessful.

- Market research and R&D expenses: Costs related to market research, research, and investment in new products or services that are unsuccessful or discontinued; such expenses are deductible provided that the enterprise prepares a report submitted to the competent state management authority in accordance with specialized laws (if any) or retains such documentation internally.

- Land lease expenses and costs for management and maintenance of infrastructure in cases where the assets have not yet been put into the enterprise’s production and business activities.

- Depreciation or amortization expenses for leased assets during periods when there is no lessee.

- Incorporation expenses and site restoration costs.

- Marketing and pre-sales service expenses.

3. Expenses related to domestic value-added tax (VAT) and contractor corporate income tax in certain specific cases:

- Output VAT on goods given as gifts or donations without charge; VAT on goods and services used for sponsorship purposes, shall be included as deductible expenses.

- Input VAT on goods and services purchased for production and business activities that has not been fully credited, but does not fall under cases eligible for VAT refund, shall be included as deductible expenses.

- Corporate income tax paid on behalf of contractors shall not be included as deductible expenses for CIT purposes in cases where the contract stipulates that revenue is inclusive of tax.