Establishment cost is considered deductible for tax purposes in Vietnam

Written by |on 22 May, 2022

Establishment cost

Establishment cost is the expense incurred prior to the business registration certificate granted by the competent authority. Cost may consist of licensing fees, office rent, and other costs for goods and services rendered.

Shall these expenses be considered reasonable expenses for CIT calculation, or deductible for VAT declaration?

Establishment cost is considered reasonable expenses

It is legal for the person establishing an enterprise to sign a contract to serve the establishment and operation of the enterprise before and during the business registration (Article 18, Enterprise Law 2020).

Actual expenses incurred related to production and business activities of the enterprise which are supported by proper invoices and paid via bank for payment greater than VND 20 million shall be considered as reasonable expenses for determining CIT (Article 4, Circular 96, 2015 issued by the Ministry of Finance).

Thus, based on the above regulations, establishment costs shall be considered reasonable expenses.

VAT deductible for establishment cost

According to Article 14, Circular 219, 2013 issued by the Ministry of Finance stipulating the principles of claiming VAT deduction, an enterprise may claim VAT deductible for establishment cost if:

  • The enterprise attains a written authorization for the organization or individual who shall make payments on the enterprise’s behalf
  • Invoices shall be under the name of authorized organizations or individuals
  • Payment is made to authorized organizations and individuals and via bank transfer for payment greater than 20 million VND.

There are a number of official letters issued by the tax departments (Hanoi and Ho Chi Minh City) responding to the recognition of establishment costs for the purpose of determining CIT and claiming VAT deductible.


To sum up, enterprises shall be allowed to record establishment costs as reasonable expenses according to the Enterprise Law 2020 and regulations on CIT. Establishment cost could be claimed for VAT deductible having given that the cost complies with the deduction principle of VAT regulations.

Law and regulations reference

Enterprise Law 2020 – Enterprise Law No. 59/2020/QH14 dated 17 June 2020

Circular 96, 2015 – Circular 96/2015/TT-BTC, dated 22 June 2015, guiding implementation of Corporate Income Tax (CIT) Law

Circular 219, 2013 – Circular 219/2013/TT-BTC, 31 December 2013, guiding implementation of value-added tax (VAT) Law

Please contact us at: for further details.