Are Meal Support Expenses Deductible for Corporate Income Tax Purposes?

1. Who are corporate income taxpayers?

Under Decree 320/2025/ND-CP guiding the implementation of the Law on Corporate Income Tax 2025 (No. 67/2025/QH15), the following are corporate income taxpayers:

(1) Corporate income taxpayers are organizations engaged in production and business of goods and services with taxable income (hereinafter referred to as enterprises), including:

– Enterprises established and operating under the Law on Enterprises, the Law on Investment, the Law on Credit Institutions, the Law on Insurance Business, the Law on Securities, the Law on Petroleum, the Law on Commerce and other legal documents in the following forms: joint-stock companies; limited liability companies; partnerships; private enterprises; law offices and private notary offices; parties to business cooperation contracts; parties to petroleum product sharing contracts, petroleum joint ventures, and joint operating companies.

– Public and non-public service units engaged in production and business of goods and services with taxable income in all fields.

– Organizations established and operating under the Law on Cooperatives.

– Enterprises established under foreign law (hereinafter referred to as foreign enterprises) with a permanent establishment in Vietnam.

A permanent establishment of a foreign enterprise is a production or business establishment through which the foreign enterprise carries out part or all of its production and business activities in Vietnam, including:

+ Branches, executive offices, factories, workshops, means of transport, mines, oil and gas mines or other natural resource exploitation sites in Vietnam;

+ Construction sites, construction works, installation and assembly;

+ Service provision establishments, including consultancy services through employees or other organizations or individuals;

+ Agents for foreign enterprises;

+ Representatives in Vietnam where the representative has the authority to sign contracts in the name of the foreign enterprise, or the representative does not have the authority to sign contracts in the name of the foreign enterprise but regularly delivers goods or provides services in Vietnam.

Where a double taxation avoidance agreement signed by the Socialist Republic of Vietnam provides otherwise on permanent establishments, such agreement shall prevail.

– Other organizations apart from those specified at Points a, b, c and d, Clause 1 of this Article engaged in production and business of goods or services with taxable income.

(2) Foreign organizations engaged in production and business in Vietnam not under the Law on Investment or the Law on Enterprises, or with income arising in Vietnam, pay corporate income tax under the separate guidance of the Ministry of Finance. Where these organizations transfer capital, they pay corporate income tax under the guidance in Article 14, Chapter IV of this Circular.

2. What does taxable income of domestic enterprises comprise?

Taxable income of enterprises is specifically regulated in Decree 320/2025/ND-CP as follows:

(1) Taxable income includes income from production and business of goods and services and other income specified in Clause 2 of this Article. For an enterprise registered for business with income specified in Clause 2 of this Article, such income is determined as income from the establishment’s production and business activities.

(2) Other income includes:

– Income from capital transfer, including income from the transfer of part or all of the capital invested in the enterprise, including the sale of the enterprise, transfer of securities, transfer of capital contribution rights and other forms of capital transfer under the law;

– Income from transfer of investment projects, income from transfer of rights to participate in investment projects, income from transfer of rights to explore, exploit and process minerals under the law; income from transfer of real estate under Articles 13 and 14 of this Decree;

– Income from the right to use or own assets, including income from intellectual property rights and income from technology transfer under the law;

– Income from transfer, lease or liquidation of assets (excluding real estate), including other valuable papers;

– Income from deposit interest, lending interest and foreign currency sales, including: deposit interest at credit institutions, lending interest in all forms under the law including late payment interest, installment interest, credit guarantee fees and other fees in the loan contract; income from foreign currency sales; exchange rate differences from revaluation of foreign-currency-denominated payables at the end of the fiscal year; exchange rate differences arising during the period (except for exchange rate differences arising during basic construction investment to form fixed assets of a newly established enterprise where such fixed assets have not yet been put into production and business operation, which follow the Ministry of Finance’s guidance). For receivables and loans denominated in foreign currency arising during the period, the exchange rate difference of such receivables and loans is the difference between the exchange rate at the time of debt recovery and the exchange rate at the time the receivable or loan was initially recorded;

– Accrued expenses not used or not fully used within the accrual period that the enterprise does not adjust to reduce expenses;

– Bad debts written off but now recovered;

– Payables whose creditors cannot be identified;

– Income from business of prior years omitted and discovered;

– The difference between fines and compensation received for breach of economic contracts or bonuses for good performance of contractual commitments (excluding fines and compensation recorded to reduce the value of works during the investment phase) minus (-) fines paid and compensation paid for breach of contracts under the law;

– Sponsorships in cash or in kind received;

– Differences from revaluation of assets under the law for capital contribution, transfer upon division, split, merger, consolidation or conversion of enterprise form, except for equitization, rearrangement and renovation of enterprises with 100% State-owned charter capital. The enterprise receiving the assets records them at the revalued price when determining deductible expenses under Article 9 of this Decree;

– Income received from production and business activities outside Vietnam;

– Other income, including tax-exempt income specified in Clauses 6 and 7, Article 4 of this Decree.

(3) Taxable income arising in Vietnam of foreign enterprises specified at Points c and d, Clause 2, Article 2 of the Law on Corporate Income Tax 2025 (No. 67/2025/QH15, effective from 01/10/2025) is income of Vietnamese origin received from the provision of services, supply and distribution of goods, lending of capital, royalties paid to Vietnamese organizations or individuals or to foreign organizations or individuals doing business in Vietnam, or from the transfer of capital, investment projects, capital contribution rights, rights to participate in investment projects, or rights to explore, exploit and process mineral resources in Vietnam, regardless of the place of business.

Taxable income under this Clause excludes income from services performed outside the territory of Vietnam, such as: repair of means of transport, machinery and equipment abroad; advertising, marketing, investment promotion and trade promotion abroad; brokerage of goods sales and services sales abroad; training abroad; sharing of international postal and telecommunications service charges with the foreign party.

In addition, the Ministry of Finance provides specific guidance on taxable income under this Clause.

3. Are meal support expenses legitimate expenses for corporate income tax deduction?

Pursuant to Article 4 of Decree 320/2025/ND-CP guiding the implementation of the Law on Corporate Income Tax 2025 (No. 67/2025/QH15) on deductible and non-deductible expenses when determining taxable income:

– Except for the non-deductible expenses listed in Clause 2 of this Article, an enterprise may deduct all expenses if the following conditions are met:

+ The expense actually arises and relates to the enterprise’s production and business activities.

+ The expense has lawful invoices and documents as prescribed by law.

+ For expenses with invoices for each purchase of goods or services valued at VND 5 million or more (VAT inclusive), payment must be supported by non-cash payment documents.

+ Non-cash payment documents follow the legal documents on value-added tax.

….

– Non-deductible expenses when determining taxable income include:

+ Salaries, wages and other payables to employees that the enterprise has recorded in production and business expenses during the period but has not actually paid or has no payment documents as prescribed by law.

+ Salaries and bonuses for employees whose entitlement conditions and levels are not specifically stated in one of the following dossiers: labor contract; collective labor agreement; financial regulations of the company, corporation or group; bonus regulations issued by the Chairman of the Board of Directors, General Director or Director under the financial regulations of the company or corporation.

– Expenses not corresponding to taxable revenue, except for the following expenses:

+ Welfare expenses paid directly to employees, such as: funeral and wedding expenses for employees and their families; vacation expenses; medical treatment support; support for additional training at training institutions; support for families of employees affected by natural disasters, enemy sabotage, accidents or illness; rewards for employees’ children with good academic achievements; support for employees’ travel expenses on holidays; accident insurance, health insurance and other voluntary insurance for employees (excluding expenses for purchasing life insurance for employees and voluntary retirement insurance for employees as guided at Point 2.11 of this Article) and other welfare expenses. The total of the above welfare expenses must not exceed 01 month’s actual average salary in the tax year of the enterprise.

The determination of 01 month’s actual average salary in the enterprise’s tax year is determined by the actual salary fund in the year divided (:) by 12 months. Where the enterprise operates for less than 12 months: the determination of 01 month’s actual average salary in the tax year is determined by the actual salary fund in the year divided (:) by the actual number of months of operation in the year.

The actual salary fund is the total actual salary paid for the finalized year up to the final deadline for submitting the finalization dossier as prescribed (excluding the salary reserve fund of the previous year paid in the tax finalization year).

– Other expenses of a specific nature appropriate to each industry and field under the Ministry of Finance’s guidance.

Accordingly, if the meal expense is agreed in the labor contract, the collective labor agreement, or prescribed in the company’s financial regulations or bonus regulations, and has complete payment documents, the company may record it as a legitimate expense under the guidance at Point 2.4 above. Alternatively, the company may record this expense as a welfare expense under Point 2.30; if the conditions at Point 2.30 are met, it is a legitimate expense when calculating corporate income tax.