Are customer gifts deductible for corporate income tax in Vietnam?

Every Tet, Mid-Autumn Festival or company anniversary, finance teams get the same question: can the cost of gifts for customers and partners be deducted? The short answer is yes, provided the expense meets the general conditions of the new Law on Corporate Income Tax. In audits, these costs are usually disallowed because the business purpose is undocumented, the gifts were paid in cash, or output VAT on the gifted goods was never declared.

The general rule under the 2025 CIT Law

The Law on Corporate Income Tax No. 67/2025/QH15 took effect on 1 October 2025 and applies from the 2025 tax period. Article 9 sets out deductible expenses and is detailed by Decree 320/2025/ND-CP dated 15 December 2025. There is no specific provision on 'gift expenses', so customer gifts are tested like any other cost. Under Article 9.1 of Decree 320/2025/ND-CP, an expense is deductible when it meets all of the following conditions:

1. It is actually incurred and related to the company's business activities.
2. It is supported by proper invoices and documents as required by law.
3. Purchases of goods and services and other payments of VND 5 million or more per transaction are paid by non-cash means. Several purchases from the same seller on the same day, each below VND 5 million but totalling VND 5 million or more, are also deductible only with non-cash payment evidence.

The VND 5 million threshold replaces the former VND 20 million threshold and applies from the effective date of Decree 320/2025/ND-CP. Expenses that fail these conditions fall into the non-deductible list in Article 10.1 of the Decree. If the invoice is still unpaid when the cost is recorded, it may be deducted provisionally, but if it is later paid in cash the company must reduce the deduction accordingly.

Proving the business purpose: documentation decides the outcome

The 'related to business' test is where tax officers push hardest, because a supplier invoice alone does not show where the gifts went. A minimum file should include:

• An internal expense policy or customer care policy stating who may receive gifts, on which occasions, and who approves them.
• A gift plan or proposal approved before the purchase.
• A recipient list: company, contact person, type and quantity of gift, confirmed by the sales team.
• Contract or purchase order, supplier invoice and bank transfer evidence.
• Warehouse release notes and the invoice the company issues for the gifted goods (see the VAT section below).

Output VAT: the step companies most often miss

Under Article 7.1(c) of the Law on Value Added Tax No. 48/2024/QH15, goods and services given away as gifts have a VAT taxable price equal to the price of identical or similar goods and services at the time of giving. In other words, a free gift still requires an invoice and output VAT. Decree 254/2026/ND-CP (which replaced Decree 123/2020/ND-CP and Decree 70/2025/ND-CP from 1 July 2026) allows a summary invoice per month or quarter, matching the VAT filing period, for goods used for promotions and gifts.

The good news is that this output VAT is not lost. Article 10.12 of Decree 320/2025/ND-CP carves out of the non-deductible list the output VAT on goods given away free of charge for business purposes. The tax department has issued guidance to the same effect in Official Letter 3008/CT-CS. Input VAT on goods bought as business gifts may be credited under Article 14 of the VAT Law, provided purchases of VND 5 million or more are paid by non-cash means as required by Article 26 of Decree 181/2025/ND-CP.

Illustrative example: Company A buys 200 Tet hampers at VND 1.5 million each before VAT from one supplier, paying VND 300 million in a single payment. Because the payment exceeds VND 5 million, Company A must pay by bank transfer. When the hampers are given out, Company A issues a summary invoice for the gifted goods at the price of equivalent goods and declares output VAT. With complete records, both the purchase cost and that output VAT are deductible. If paid in cash, the entire VND 300 million is at risk of being disallowed.

Does the recipient pay personal income tax?

Under Article 3.9 of the Law on Personal Income Tax No. 109/2025/QH15, income from gifts is taxable only where the gift is securities, capital in a business, real estate or other assets subject to ownership or use registration. Ordinary gifts such as hampers, wine or souvenirs fall outside this scope. Note that gifts to the company's own employees are a different matter, as they may be treated as employment income and need separate handling.

Checklist before the Tet gift season

1. Issue or update a customer gift policy with clear approval levels.
2. Prepare the gift plan and recipient list before ordering.
3. Use suppliers that issue full invoices; pay every amount of VND 5 million or more by bank transfer.
4. Invoice the gifted goods (a summary invoice per filing period is allowed) and declare output VAT.
5. Keep delivery records or recipient confirmations and reconcile them with the list.

How Kaizen can help

The Kaizen team brings more than 17 years of Big4 experience and regularly reviews expense files ahead of the finalization season. Sign up for Kaizen's free tax health check and we will review your gift policy, invoices and VAT treatment of gifted goods before the tax authority does.