During their operations, businesses frequently incur expenses without invoices, especially when dealing with individuals. Without a proper understanding of the legal basis, businesses can easily have these expenses disallowed during tax settlements, leading to increased corporate income tax payable and the risk of tax arrears and penalties.

So, are expenses without invoices considered deductible expenses, and in what circumstances?

What constitutes a reasonable expense according to tax regulations?

Reasonable expenses (deductible expenses) are expenses that are included in the cost when determining taxable corporate income, provided they meet all legal requirements.

According to current regulations, an expenditure is considered reasonable when:

• These issues arise in practice and are directly related to production and business activities.
• There are sufficient legal documents and records for each specific case.
• It does not fall under the category of expenses that are prohibited or restricted under tax law.

Important note: Some expenses do not require invoices, but are still considered deductible if the supporting documentation is in accordance with regulations.

Expenses without invoices are still considered deductible.

Purchasing goods and services from individuals who are not engaged in business activities.

Businesses are allowed to purchase items without an invoice:

• Non-business personal assets.
• Services provided by individuals without business registration.
• The goods are produced, harvested, and caught directly by the local people and sold directly to them.

In this case, the business must prepare a list of purchases without invoices (Form 01/TNDN) and take full responsibility for its accuracy.

Note: If the purchase price recorded on the invoice is higher than the market price, the tax authorities have the right to adjust the expenses according to the market price.

Purchase goods and services from household businesses or individual businesses with annual revenue under 100 million VND.

In cases where households or individuals are not required to issue invoices, businesses can still claim expenses if:

• There is a statement form 01/TNDN.
• We have complete records of actual transactions.
• Proof of origin and expenditure is required.

In this case:

• No personal income tax is incurred by the seller.
• Businesses are not required to use cashless payment methods, even for transactions exceeding 20 million VND.

Purchase goods or services from individuals or household businesses with annual revenue exceeding 100 million VND.

This is a very important legal boundary.

If the seller:

• This refers to individuals or household businesses.
• Having revenue exceeding 100 million VND per year.

A receipt is REQUIRED.

In this case:

• Individuals or household businesses must go to the tax office to purchase invoices.
• Businesses are not allowed to use form 01/TNDN to replace invoices.

Without an invoice, the expense will be disallowed entirely during corporate income tax settlement.

Hiring seasonal workers, outsourcing short-term projects.

Businesses are allowed to claim expenses when:

• Hiring individuals on a temporary or contract basis.
• The work is short-term and not regular.

Tax obligations:

• Businesses deduct 10% personal income tax before making payments.
• This tax deduction is still considered a deductible expense.

Renting property from individuals (houses, cars, warehouses, etc.)

Rental expenses do not require invoices, but taxes must be paid on behalf of individuals in some cases.

Distinguish clearly:

• Contracts under 100 million VND/year: no VAT, personal income tax, or business license fees will be incurred.
• Contracts exceeding 100 million VND/year:
  • VAT: 5%
  • Personal income tax: 5%

Businesses can submit the documents on behalf of the applicant if there is an agreement in the contract.

How to calculate corporate income tax and personal income tax on expenses without invoices.

Each type of expense will have a different tax treatment; a single formula cannot be applied.

The key principle to remember:

• Deductible expenses when calculating corporate income tax depend on the documentation and nature of the transaction.
• Personal income tax only arises when an individual is subject to tax according to regulations.

For example:

• Purchasing goods produced by local people: no personal income tax.
• Hiring personal services for non-business purposes: 10% personal income tax deduction.
• Renting out high-revenue personal property: 5% personal income tax + 5% value-added tax.

Read more: What Revenue Level Requires Tax Payment?

Mistakes that cause expenses without invoices to be disallowed.

In actual tax audits, the most common mistakes include:

• Using form 01/TNDN for the wrong entity.
• It cannot be proven that the individual is not engaged in business activities.
• There was no handover record or contract.
• Record the purchase price as unusual compared to the market price.
• Failure to deduct personal income tax as required.

Just one small mistake, and the entire expenditure could be disallowed.

Read more: Which Business Expenses Are Tax Deductible?

Conclude

The fact that an expense lacks an invoice does not automatically mean that the expense will be disallowed for tax purposes. Current tax laws allow businesses to record various types of expenses without invoices, provided that the business correctly identifies the nature of the transaction, the correct party to which the expense is incurred, and prepares sufficient supporting documentation as required.

In reality, the risk doesn't lie in the lack of invoices, but rather in misapplication, using incorrect statements for the wrong recipients, failing to deduct personal income tax when necessary, or failing to prove the authenticity of the transaction. In such cases, even if the expense was actually incurred, the business may still have the expense disallowed and be subject to retroactive corporate income tax collection.

Therefore, to protect their tax interests, businesses need to thoroughly understand each expense category, grasp the corresponding legal requirements, and organize the storage of complete and consistent records from the moment a transaction occurs. Doing it right from the start not only helps optimize legitimate expenses but also forms a crucial foundation for transparent, safe, and sustainable business operations in the long term.