1. Concept of terms: Eligible Reasonable Expenses, Deductible Expenses
According to Vietnamese Accounting Standard No. 01 - General Standards stipulate:
“Cost: Is the total value of items that reduce economic benefits in the accounting period in the form of amounts spent, deductions of assets or arising liabilities resulting in a decrease in equity, does not include distributions to shareholders or owners. ”
According to Vietnamese - Vietnamese dictionary:
“Reasonableness is right, in accordance with logic.
Valid is true with the prescribed form.”
2. Tax regulations on reasonable and valid expenses, deductible expenses
According to current regulations in Circular 96/2015 / TT-BTC dated 22 June 6
“Except for the non-deductible expenses specified in Clause 2 of this Article, all expenses may be deducted if the following conditions are satisfied:
a) The actual expenses are incurred in connection with the business and production activities of the enterprise.
b) The expenditure has enough legal invoices and documents as prescribed by law.
c) If there is an invoice for each purchase of goods or services valued at VND 20 million or more (the price includes VAT), there must be a non-cash payment voucher. "
👉 See more: Deductible and non-deductible expenses when settling Corporate Income Tax (2025)
3. Reasons for arguing about reasonable and valid costs
The arguments all come from enterprises that the arising costs are reasonable and valid, but the tax authorities say not. Who is right and who is wrong is always a controversial story for many times when the tax office performs the settlement at the enterprise.
The tax authorities make arguments on the reasonableness and validity of the expenses that the enterprises have incurred in the period to eliminate them from deductible expenses. Enterprises cannot prove, criticize and convince the tax authorities to believe in the logic, reasonableness and truth of the costs of their business.
Example 1:
A business has a fixed asset of a car and incurs the cost of buying gasoline for this car. This cost is completely reasonable for the business, how can the tax authority not accept it?
If the cost of purchasing gasoline of the enterprise is too large, incompatible with the travel route of the user, this is not consistent with the logic, not reasonable, the tax authority will not accept it.
Example 2:
Your business travel expenses are rejected by the tax authority because the business does not have full invoices and documents as prescribed, does not ensure validity, or the business cannot prove that the business travel expenses are "real".
Example 3:
Why are golf expenses of enterprises being accounted for? Because the tax authority considers this expense as personal expenses, not related to the production and business activities of the enterprise even though the enterprise has full red invoices.
4. How to eliminate the difference between tax authorities and accountants
Reasonable reasonable expenses / Deductible expenses = Accounting expenses on the financial statements (+/-) adjustments due to differences between tax and accounting.
The smaller the adjustments for the difference between tax and accounting, the less the difference between tax and accounting data. To achieve that, businesses need to prove their costs are reasonable, "right, in accordance with logic" and can counter the arguments of the tax authorities. This is the content that the tax authorities pay attention to and is also something that businesses often ignore, only focusing on the collection of documents (validity).
To ensure the validity, enterprises only need to have sufficient documents and documents in accordance with the tax law. To ensure the reasonableness, enterprises need to ensure that costs incurred are REAL, logically relevant and necessary for production and business activities.
The shorter the difference between accounting and taxation becomes, which means that the adjustments for differences also diminish, the greater the firm's responsibility for its own data. Instead of dealing with the tax authorities, businesses just follow the above principle, prove as clear as possible, don't let tax become your concern.