Not all allowances paid to employees are deductible for corporate income tax (CIT) purposes. So, which allowances are treated as deductible expenses in 2026? Below are the details.
1. Which allowances are deductible when calculating corporate income tax (CIT) in 2026?
Pursuant to Article 10 of Decree No. 320/2025/ND-CP, the following allowances are deductible for CIT purposes:
Expenses for funerals and weddings of employees and their relatives.
Expenses for summer holidays.
Expenses for medical examination and treatment support.
Expenses for refresher training at educational institutions or vocational education establishments.
Expenses for supporting employees’ families affected by natural disasters, enemy sabotage, accidents and illness.
Expenses for rewarding employees’ children for their study achievements.
Expenses for supporting employees’ traveling during holidays.
Payment for accident insurance (excluding cases of payment for compulsory accident insurance under specialized laws), health insurance, and other voluntary insurance for employees (except for contributions to supplementary retirement insurance as prescribed by the Law on Social Insurance, and expenses for purchasing life insurance or voluntary retirement insurance for employees as guided at Point dd Clause 4 Article 10 of Decree No. 320/2025/ND-CP).
Other expenses on the employees’ welfare.
Note: The above welfare expenses are deductible for CIT purposes provided that they do not exceed one month’s wage average actually implemented in the tax year.
Allowances for travel expenses for annual leave in accordance with the Labor Code 2019.
Allowances, traveling and accommodation expenses for laborers going on business trips provided that sufficient invoices and documents are available, and non-cash payment documents are available for payments of VND 5 million or more per transaction, and such payments are made in accordance with the enterprise’s financial regulations or internal rules.
Overtime allowances for female employees who, for objective reasons, do not take leave after childbirth or have breaks for breastfeeding their babies, but stay to work for enterprises and get paid under current regulations.
Salaries and allowances (if any) for teachers in crèches and kindergartens organized and managed by enterprises.
2. Conditions for deductibility of allowances for corporate income tax (CIT) purposes
Pursuant to Article 9 of Decree No. 320/2025/ND-CP, allowances deductible for CIT purposes in 2026 must satisfy the following conditions:
Actual expenses related to production and business activities of the enterprise.
The enterprise has adequate invoices and documents as prescribed by law regulations.
Non-cash payment documents are required for the expense for purchasing goods or services and other payments with a value from VND 05 million or more per transaction.
The expenses must not fall under non-deductible expenses specified in Article 10 of this Decree and Article 10 of the Law on Corporate Income Tax 2025.
In addition, welfare expenses for employees must not exceed one month’s average wage actually incurred in the tax year.
3. Which expenses are non-deductible for corporate income tax (CIT) purposes under the Law on Corporate Income Tax
Pursuant to Article 9 of the Law on Corporate Income Tax 2025 (No. 67/2025/QH15), non-deductible expenses for CIT purposes include the following 14 items:
(1) Expenses not fully satisfying the conditions specified in Clause 1 of this Article;
(2) Fines for administrative violations;
(3) Expenses offset by other funding sources;
(4) Expenses in excess of the Government-specified levels with respect to: business management costs allocated by foreign enterprises to their permanent establishments in Vietnam; expenses for hiring the management of prize-winning video games and casino business; payments for interests on loans for enterprises with related-party transactions; expenses as direct welfare for employees; contributions to supplementary retirement insurance as specified by the Law on Social Insurance or social security funds, and for payment of voluntary retirement insurance premiums and life insurance premiums for employees;
(5) The deductions that are improperly made or exceed the levels stated in the regulations on making of deductions for risk provisions;
(6) Deductions for fixed asset depreciation that are improperly made or exceed the law-specified levels;
(7) Amounts included in advance in expenses in contravention of law;
(8) Salaries and wages of owners of sole proprietorships, individual owners of single-member limited liability companies; remuneration paid to enterprise founders who do not personally administer production and business activities; salaries, wages and other amounts accounted as expenses for payment to employees but not actually paid or paid without invoices or documents as specified by law;
(9) The loan interest amount paid corresponding to the deficient amount of charter capital; the loan interest earned from investment activities that has been included in the investment value; loan interests for implementing oil and gas prospecting, exploration and extraction contracts; interests on loans for production and business activities of subjects other than credit institutions that exceed the levels specified in the Civil Code;
(10) Recoverable expenses exceeding the percentage stated in the approved oil and gas contracts; where such contracts do not specify the expense recovery percentage, the excess over the Government-prescribed level is non-deductible;
(11) The value-added tax amount already credited; the value-added tax amount paid by the credit method; the input value-added tax amount for the value of passenger cars with 9 seats or less that exceeds the Government-specified level; CIT; other taxes, charges, fees and revenues that are not allowed to be included in expenses as specified by law and late-payment interests as specified by the law on tax administration.
The value-added tax amount paid by the credit method specified at this Point excludes the input value-added tax amount for goods and services directly related to the enterprise’s production and business activities that has not been fully credited but is ineligible for tax refund.
The input value-added tax amount that has been included in deductible expenses may not be cleared against the output value-added tax amount;
(12) Expense not corresponding to the taxed revenue, except the expenses specified at Point b, Clause 1 of this Article; expenses failing to meet the conditions and contents specified by specialized laws;
(13) Donations, except those specified at Item b5, Point b, Clause 1 of this Article;
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