NON-DEDUCTIBLE EXPENSES UNDER THE 2025 CORPORATE INCOME TAX LAW

In an increasingly competitive business environment, cost management is a decisive factor in tax obligations and is directly related to the financial matters of the enterprise. The Law on Corporate Income Tax (CIT) 2025 has provided specific regulations on deductible and non-deductible expenses, to ensure transparency and fairness in determining taxable income. As a legal consulting - tax consulting unit, TXINDECO Company would like to send to your business a summary of non-deductible expenses, to help your business effectively manage finances and comply with legal regulations.

1. General principles when determining deductible expenses

According to Article 9 of the 2025 Corporate Income Tax Law, enterprises are only allowed to include reasonable expenses when they meet the following three conditions :

1. Actual expenses incurred and directly related to the production and business activities of the enterprise.

2. Expenses in special cases are allowed to be accounted for by law.

3. Have legal invoices and documents, and make non-cash payments for expenses exceeding the prescribed limit.

2. Specific groups of expenses that are not deductible

3. How to determine taxable income for corporate income tax

According to Clause 2, Article 7 of the Corporate Income Tax Law 2025:

Taxable income = Taxable income – (Tax-exempt income + Carry-forward losses)

Some practical notes:

· If a business has multiple lines of business, taxable income is the total income from all business activities.

· In case of loss, the enterprise is entitled to offset the loss against income from profitable activities, except for some special activities such as:

o Real estate transfer;

o Transfer of investment projects;

o Transfer of rights to participate in investment projects;

o Some activities are enjoying tax incentives according to regulations.

· Income from mineral exploitation and processing must be determined separately and cannot be offset against income from other activities.

For example:

· Enterprise A has a revenue from trading activities of 2 billion VND, a loss from production activities of 500 million VND, then it can be offset, and taxable income is 1.5 billion VND.

· However, if A has a profit of 1 billion from production activities and a loss of 300 million from real estate transfer, this loss cannot be offset .

The 2025 Corporate Income Tax Law expands and adds many deductible expenses, while also placing higher requirements on transparency of documents and accounting. Businesses need to understand clearly to build a reasonable financial and tax strategy, ensuring sustainable and legal development.

4. Recommendations for Enterprises

The enterprises need:

· Review all accounting and tax policies to update according to the 2025 Corporate Income Tax Law;

· Develop a process for controlling documents, invoices, and contracts to ensure expenses are deducted;

· Monitor the ceiling and control levels prescribed by the Government to avoid the risk of cost exclusion;

· Consult a lawyer or consultant to optimize your legal interests.

If you still has questions about reasonable cost regulations, how to calculate taxable income or optimal tax planning , please contact us immediately via email: consultant@txindeco.com or hotline 84-961 977 764 for detailed advice.