Vietnam’s CIT Documentation Requirements: A Guide to Circular 20/2026

Vietnam’s Circular 20/2026/TT-BTC, effective from March 12, 2026, replaces previous CIT circulars and imposes new, stricter documentation requirements for CIT deductible expenses. This article explains why the new rules matter, breaks down documentation by expense category, identifies common audit risks, and provides a compliance checklist for finance teams.

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On March 12, 2026, the Vietnamese Ministry of Finance issued Circular No. 20/2026/TT-BTC (“Circular 20”). It applies from the tax year 2025 and replaces several earlier circulars, including Circulars 78/2014, 96/2015, and parts of others. The new circular brings major changes to how companies must document their expenses to claim corporate income tax (CIT) deductions.

While stricter documentation requirements increase the compliance burden and necessitate stronger internal controls, they also provide greater clarity and enhance the robustness of the basis for claiming tax deductibility. Enterprises now have detailed guidance on what supporting documents are needed for various types of expenses – including some that were previously not regulated.

Why Circular 20 matters for tax‑deductible expenses

Circular 20 is not just a routine update. It significantly strengthens Vietnam’s CIT legal framework for deductible expenses in several ways:

• Clarity and standardization: The circular provides detailed, article‑by‑article guidance on what documents are required for each type of deductible expense. This reduces ambiguity that often leads to disputes with tax authorities.
• Stronger legal basis: By setting clear documentation rules, the circular gives enterprises a firmer footing to defend their deductions during inspections.
• Reduced audit risk: When companies follow the prescribed documentation, they are less likely to face disallowance of expenses, tax adjustments, penalties, or late payment interest.
• First‑time guidance for new expense categories: For the first time, Circular 20 specifies documentation for expenses related to “green transition” (greenhouse gas emission reduction), sustainable development, and certain operating costs that do not correspond to revenue in the same period.

In short, compliance is no longer just about having an invoice. It is about having the right set of supporting documents for each expense.

Documentation requirements by expense category

Generally, an expense is deductible for Vietnamese CIT purposes if it meets the following requirements:

• The expense is actually incurred and is directly related to the Company’s business activities;
• The expense is supported by valid invoices and adequate supporting documentation;
• Non-cash payment evidence is available for purchases of goods or services and other payments with a value of VND 5 million or more (inclusive of VAT) per transaction; and
• The expense does not fall within the categories of non-deductible expenses under the prevailing Vietnamese CIT regulations.

Circular 20 provides more detailed guidance on what constitutes “adequate supporting documentation” for tax purposes. The table below summarizes the key supporting documents typically required to substantiate the deductibility of common types of expenses.

Common risk areas during tax audits

Tax authorities will focus on the following weak points. Finance and accounting teams should pay special attention to:

• Missing or incomplete invoices for any expense – even small ones. Without a legal invoice, the expense is automatically disallowed.
• Cash payments for large amounts (≥ VND 5 million) without non-cash payment proof. This is one of the most frequent violations.
• Failure to prepare contemporaneous documentation for non‑recurring expenses such as R&D failure costs, asset destruction, or pre-operational land rent. These require specific records, not just invoices.
• Inadequate support for employee‑authorized purchases. Some companies do not have internal financial regulations, internal policies, or formal authorization decisions in place, and also lack non-cash payment documentation from both employees and the company.
• Failure to maintain separate accounting records for activities eligible vs. ineligible for tax incentives. Mixed records often lead to the loss of incentives for the entire operation.

Compliance checklist for finance and accounting teams

To stay compliant with Circular 20, finance teams should take the following six steps:

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1. Review internal financial regulations: Ensure they cover training policies, employee authorization procedures, and any other internal rules that Circular 20 references.

2. Implement a non‑cash payment policy: Mandate bank transfers or card payments for any expense of VND 5 million or more. Communicate this clearly to all departments.

3. Prepare documentation templates: Create standard forms for donation minutes, destruction records, research reports, and other documents required by Article 3.9.

4. Train staff, especially procurement, project, and accounting teams, on the new documentation rules. Use examples to illustrate correct and incorrect practices.

5. Perform a pre-audit self‑checkbefore submitting the annual CIT finalization return: Focus on high‑risk categories: large cash payments, employee‑authorized purchases, and non‑recurring expenses.

6. Keep all supporting documents for the statutory period – generally 10 years for tax purposes. This includes invoices, non‑cash payment proofs, contracts, and internal decisions.

Conclusion

Circular 20 marks a significant step toward greater transparency and consistency in the administration of CIT deductible expenses in Vietnam. While the new requirements impose a higher documentation standard and increase the compliance burden, they also provide taxpayers with clearer guidance on the supporting documents expected by the tax authorities.

Businesses should take this opportunity to review their existing processes, strengthen internal controls, and ensure that appropriate supporting documents are maintained from the outset. A proactive approach to documentation will not only facilitate tax compliance but also help mitigate the risk of tax adjustments, penalties, and prolonged disputes during tax audits.

See also: Vietnam CIT Incentives for Software Production

(With input from Luy Doan.)

Managing tax in Vietnam is critical for FDI companies to stay compliant with local regulations, GST requirements, and global standards such as IFRS, navigate complex filings, and apply correct tax treatments. A well-structured tax process helps to avoid penalties and stay 100% compliant.

Luy Doan

Assistant Manager, Tax

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