When filing corporate income tax returns, correctly identifying deductible and non-deductible expenses is crucial. This not only helps businesses optimize their taxes legally but also avoids risks related to tax audits and inspections. Furthermore, the electronic invoicing system plays a key role in proving the legitimacy of these expenses.

This article will help you understand the types of deductible expenses when calculating corporate income tax, as well as how GTG CRM supports businesses in effectively managing invoices and documents.

Basic principles of deductible expenses

According to the current Corporate Income Tax Law, deductible expenses when determining taxable income must meet the following conditions:

Conditions for deductible expenses

• Actual costs incurred related to business operations.
• All invoices and legal documents are available as required.
• The expense is not included in the list of non-deductible expenses as stipulated by law.
• The value of goods and services has been accurately and fully accounted for.
• Fully documented in accounting and tax records.

Common types of deductible expenses

1. Cost of raw materials and goods

• The cost of purchasing direct raw materials for production.
• Cost of purchasing goods for resale
• Cost of materials, tools and equipment

Note: Complete input VAT invoices and payment documents are required.

2. Labor costs

• Salaries, wages, and allowances
• Social insurance, health insurance, unemployment insurance (employer's contribution)
• Workplace accident and occupational disease insurance
• Trade union funds (according to the prescribed ratio)

3. Depreciation expense of fixed assets

• Tangible fixed assets (factories, machinery, equipment, etc.)
• Intangible fixed assets (software, copyrights, etc.)
• Depreciation must be calculated in accordance with regulations.

4. Outsourced service costs

• Office and factory rental costs
• Consulting, auditing, and legal fees.
• Shipping and delivery costs
• Advertising and marketing expenses (within permitted limits)

5. Cost of goods sold

• Costs of transporting and storing goods
• Packaging and packing costs
• Commission fees, trade discounts
• Promotional and advertising expenses (according to the prescribed percentage)

6. Business management costs

• Stationery, utilities, telephone
• Costs of repairing and maintaining assets
• Property insurance costs
• Employee training costs

7. Interest expense

• Interest rates on loans for production and business purposes.
• Limit: Interest rates must not exceed 150% of market interest rates (if the loan is unsecured or from a related party).

Expenses that are NOT deductible

1. Expenses without valid invoices or supporting documents.

• The invoice does not have the correct business name and tax identification number.
• The invoice has no signature and no stamp.
• Invoices from inactive businesses that do not pay taxes.

2. Costs of administrative fines

• Traffic violation fines
• Penalties for tax violations and late tax payments.
• Penalties for environmental violations, construction violations, etc.

3. Expenses unrelated to production and business activities.

• Personal expenses of the business owner
• Expenses for charitable activities (except for deductible expenses as per regulations)
• Costs of purchasing personal assets

4. Excess expenses for gifts and entertainment.

• Entertainment expenses exceeded the permitted limit (10 million VND/event).
• The cost of gifts and presents is not listed in detail.

5. Invalid contingency costs

• Provision for inventory devaluation (excluding certain specific industries)
• Provision for doubtful receivables (excluding credit institutions)

6. Other expenses

• Corporate income tax, personal income tax (the portion paid on behalf of employees)
• Interest on borrowed capital is not supported by equity (exceeds the permitted ratio).
• Costs from illegal transactions

Guidelines for determining reasonable expenses when filing taxes.

Step 1: Classify costs by nature.

Divide the expenses into groups:

• Direct production costs
• Cost of goods sold
• Business management costs
• Other expenses

Step 2: Verify the validity of the document.

Checklist:

• ✅ Valid VAT invoice available
• ✅ Payment documents are available (bank transfer, check, etc.)
• ✅ We have economic contracts (for large transactions)
• ✅ A liquidation and acceptance report is available (if needed).
• ✅ The information on the document matches the business.

Step 3: Compare with the allowed cost limit.

Some expenses have maximum deductible limits:

• Advertising expenses: Not exceeding 15% of total deductible expenses.
• Promotional expenses: Not exceeding 15% of the total deductible expenses.
• Entertainment expenses: A list is required, and expenses must not exceed a reasonable amount.
• Interest rate: Not exceeding 150% of the market interest rate (for unsecured loans)

Step 4: Record and archive documents

• Sort documents by date of issue.
• Assign serial numbers and maintain detailed records.
• Complete archiving as required (minimum 10 years)
• Be prepared for inspections and audits.

Step 5: Tax declaration and settlement

• Fill in all expenses on the corporate income tax return.
• Compare with accounting records.
• Prepare complete financial statements.
• Submit your tax return on time.

💡 Benefits of effective cost management

• ✅ Legally optimize tax compliance: Minimize tax payable transparently.
• ✅ Avoid legal risks: No penalties during tax audits or inspections.
• ✅ Effective financial management: Understand your cost structure and optimize profits.
• ✅ Enhance business reputation: Ensure compliance with legal regulations.
• ✅ Easy access to loans and partnerships: Transparent and complete documentation system.

Important notes when declaring expenses

Be cautious with electronic invoices.

• Check the invoice status on the tax portal before recording the transaction.
• Only accept invoices from businesses that are currently operating.
• Regularly check with the supplier.

Cashless payment

• Bank transfer is preferred for large transactions (over 20 million VND).
• Keep the transfer receipt along with the invoice.
• Clearly state the payment details on the transfer order.

Economic contract

• Large transactions (from 50 million VND or more) should have a contract.
• The contract must be signed before any costs are incurred.
• The content of the contract must match the invoice and payment documents.

GTG CRM - Automated electronic invoice management solution

To help businesses manage invoices and documents efficiently, GTG CRM offers a built-in automatic electronic invoice generation feature:

Key features:

• 🧾 Automatic Invoice Generation: Automatically generate electronic invoices upon order completion.
• 📊 Centralized management: Store all outgoing invoices in one system.
• 🔗 Integration with invoice providers: Connect with Sinvoice and MISA to issue legally compliant electronic invoices.
• 🔗 Connect to accounting software: Easily synchronize invoice data to accounting software.
• 📱 Send invoices instantly: Automatically send invoices to customers via email/SMS.
• 🔍 Quick lookup: Search for invoices by various criteria

Connect with electronic invoice providers.

GTG CRM supports direct connection with:

Sinvoice

• Automatically push order data to Sinvoice upon completion of the sale.
• Issuing legally valid electronic invoices in accordance with the regulations of the General Department of Taxation.
• Automatically receive invoice codes and digitally sign invoices.
• Synchronize invoice status (issued, canceled, etc.)

MISA

• Integrated with MISA electronic invoicing system.
• Issue VAT invoices and sales invoices directly from GTG CRM.
• Automatically update invoice status from MISA to the system.
• Supports easy invoice lookup and reconciliation.

Benefits for businesses:

• Save time on manual invoice processing.
• Minimize errors in the invoicing process.
• Ensure compliance with regulations regarding electronic invoices.
• Supporting accurate and transparent tax declaration procedures.
• A legally valid invoice recognized by the General Department of Taxation.
• The entire process, from sales to invoicing, is fully automated.

Important note: GTG CRM is a customer relationship management and sales system, not a tax filing tool . However, the automated and accurate management of invoices through connections with reputable invoice providers such as Sinvoice and MISA will help businesses have reliable and legitimate input data for accounting and tax filing purposes later on.

Conclude

Understanding deductible and non-deductible expenses when filing corporate income tax returns is fundamental for businesses to optimize their tax compliance legally and avoid risks. Combined with an automated invoice management system like GTG CRM – integrated with reputable electronic invoice providers (Sinvoice, MISA) – businesses will have an accurate, transparent, and legally compliant database for accounting and tax purposes.