From accounting profit to taxable income: building the CIT adjustment schedule in Vietnam

Vietnamese corporate income tax (CIT) is not calculated on a separate set of tax books. The annual finalisation starts from the accounting profit before tax in the company's financial statements and adjusts it, item by item, to arrive at taxable income. Expenses that are not deductible are added back; income that is not taxable, or that has already been taxed, is deducted; losses brought forward are then offset; and the applicable rate — 20% for most foreign-invested enterprises (FIEs), 15% or 17% for smaller companies — is applied to what remains.

The adjustment schedule is therefore where most of a company's CIT risk sits. A rate is a single number; the schedule is dozens of judgements about invoices, payments, caps and timing. From the 2025 tax year those judgements are made under the new CIT law, Law 67/2025/QH15, which revised the list of deductible and non-deductible items. This guide explains how the schedule is built and which items deserve the most attention.

The structure of the calculation

The CIT finalisation return and its appendices follow this logic. The appendices differ in form from one set of guidance to the next, but the questions they ask do not.

Why accounting profit and taxable income differ

Differences fall into two groups, and it helps to tag each adjustment accordingly.

• Permanent differences never reverse. An administrative fine is booked as an expense and is never deductible. A dividend from another Vietnamese company, paid out of profits that have already borne CIT, is income in the accounts but not taxable again. These change the effective tax rate.
• Timing differences reverse in later years. A provision booked on management judgement but not meeting the tax conditions is added back this year and may become deductible when the loss actually occurs. Depreciation above what the tax rules allow is added back now and "recovered" over the asset's life. For group reporting under IFRS or local standards, these create deferred tax.

Keeping the two apart matters for more than neatness. A timing difference added back this year must be tracked so that it can be deducted when it reverses; companies that do not keep a running schedule often pay tax on the same amount twice without noticing.

The add-backs FIEs meet most often

The new law revised the list of non-deductible items, so use the current text rather than last year's schedule as your checklist. The items below are the ones that recur in foreign-invested companies; the conditions and caps for each must be read in the law and its guidance for the year concerned.

• Expenses without lawful invoices or documents — including domestic purchases supported only by a receipt or a PDF, and overseas purchases without a contract, invoice and payment evidence.
• Purchases paid in cash above the prescribed threshold. Check the current CIT rule rather than assuming it is identical to the VND 5 million line that Law 48/2024/QH15 sets for VAT input credit.
• Administrative fines and late-payment interest on tax. These are penalties, not business costs.
• Interest above the related-party cap in the transfer pricing rules. The tax administration of related-party transactions is governed from 1 July 2026 by Decree 255/2026/NĐ-CP; the excess is added back.
• Intercompany charges without evidence of benefit — management fees, IT recharges and royalties that cannot be tied to services actually received.
• Provisions and write-offs not made under the conditions of the finance regulations.
• Depreciation on assets not used for the business, or above the rates and ceilings allowed.
• Staff costs outside the contract or policy — bonuses or benefits not provided for in labour contracts, collective agreements or internal regulations, and, under rules applied for many years, salaries accrued but not actually paid within the time allowed. Confirm how the current guidance treats each.
• Caps on certain categories such as some welfare expenses or contributions. The law sets which categories are capped and how.

Our sister site KhauTru.com (in Vietnamese) goes through disallowed expenses category by category.

Downward adjustments that are easy to miss

Companies are usually careful with add-backs because auditors ask about them. Downward adjustments get less attention, and a missed one is simply tax overpaid:

• Dividends and profit distributions received from Vietnamese companies out of after-tax profits.
• Reversal of earlier add-backs — a provision added back in a prior year that is now used or reversed, or depreciation previously disallowed.
• Income taxed separately or exempt under the law, where it has been booked in the ordinary accounts.
• Exchange differences where the tax treatment of year-end revaluation differs from the accounting treatment; check the rules applying to the year.

Every downward adjustment should carry the same level of support as an add-back. The authority will ask why the amount is not taxable, and "the auditor agreed" is not an answer.

Separating incentivised and ordinary income

A company that enjoys a CIT incentive for one project and not for others has to split its taxable income before applying rates. In practice this is where schedules most often go wrong, because the accounts are rarely kept by project.

• Revenue should be traceable to the incentivised project through product codes, production lines or sites, not allocated by a percentage chosen at year end.
• Directly attributable costs go with the revenue they produce.
• Common costs — administration, finance, shared services — are allocated on a basis the company can explain and applies consistently, typically in proportion to revenue or another measurable driver.
• Adjustments in the schedule follow the same split: an add-back relating to the incentivised project increases incentivised income, not ordinary income.
• Income outside the project — interest on deposits, foreign exchange gains, sale of scrap or assets, other operating income — is usually not covered by the project incentive and is taxed at the rate that otherwise applies. Check how the current guidance classifies each type.

Document the allocation method once, in writing, and apply it every year. Changing the method in a year when it happens to reduce tax is the quickest way to invite a question.

A worked example

Hypothetical example. Suppose a foreign-invested manufacturer at the standard 20% rate reports accounting profit before tax of VND 10 billion for 2025. Its schedule shows:

If the company had overlooked the dividend deduction, it would have paid VND 100 million more; if the auditor had missed the invoice problem, a later tax audit would have added VND 60 million of tax plus late-payment interest. The point of a careful schedule is not to reduce tax but to get it right in both directions.

Making the schedule defensible

1. One line, one reason, one reference. Each adjustment should state what it is, why it is adjusted and which provision it relies on.
2. Tie every figure to the ledger. Amounts should be traceable to accounts or reports, not typed in.
3. Carry forward the timing differences. Keep a running schedule of amounts added back that will reverse later.
4. Review intercompany charges before year end. Evidence of services received is much easier to collect in the year than during an audit.
5. Reconcile to the provisional payments. Compare the final liability with what was paid during the year and understand the gap before the deadline — the last day of the third month after the year end under the Law on Tax Administration.
6. Keep it. Accounting documents used directly for bookkeeping and preparing financial statements must be kept for at least 10 years under the Law on Accounting; keep the schedule and its working papers with them.

Before filing, check your e-tax account for provisional payments credited and your managing office in the taxpayer information lookup.