Employee training expenses: Perspectives from corporate income tax and personal income tax

Investing in employee training and development is a crucial strategy for any enterprise. However, determining whether such training expenses are deductible for corporate income tax (“CIT”), and whether they are subject to personal income tax (“PIT”) for the employee remains a common concern for many enterprises. This article provides an overview of the applicable regulations on training expenses helping enterprises avoid unnecessary risks or non-compliance. 

1. Training expenses from a corporate income tax perspective 

Under Clause 2, Article 7 of the Law on Corporate Income Tax 2008 and Article 4 of Circular No. 96/2015/TT-BTC, employee training expenses are considered deductible expenses when determining taxable corporate income if they meet the following conditions: 

(i) Actual expenses related to their production and business activities 

Enterprises must maintain internal documentation to substantiate that the training directly serves their production and business operations. Such documentation may include: training agreements, policies on training expense sponsorship, or decisions on awarding professional certificates to personnel. These documents clearly demonstrate the purpose, content, and relevance of the training expenditure to the enterprise’s labor utilization needs. 

(ii) Expenses with adequate valid invoices and documents 

This is a critical condition for training expenses to be recognized as deductible. Invoices and supporting documents for training expenses must bear the enterprise’s name and tax code number. 

Pursuant to Clause 1, Article 4 of Decree No. 123/2020/ND-CP (as amended and supplemented by Decree No. 70/2023/ND-CP), if invoices or supporting documents are issued in the name of an individual employee, the enterprise will not be considered the service user. Consequently, such expenses will not be recognized as valid expenses and will not be deductible when calculating CIT. 

In practice, many enterprises may possess internal documents like training agreements, policies on training expense sponsorship, or decisions on awarding professional certificates to personnel, aiming to prove the reasonableness and business-related purpose of training expenses. However, it is important to note that these documents cannot substitute for a valid invoice. An invoice not bearing the enterprise’s name will invalidate the legal basis for deducting such expenses. 

(iii) Non-cash payment documents for individual training invoices valued at VND 20 million or more. 

2. Training expenses from the personal income tax perspective 

Under Point d.6, Clause 2, Article 2 of Circular No. 111/2013/TT-BTC, amounts paid by a company on behalf of an employee for training will not be included in the employee’s taxable income if they fall under one of the following two cases:  

(iii) The training is consistent with the employee’s professional expertise or duties;  

Example: If the enterprise arranges for a legal officer to attend a marketing course, which is not consistent with their professional duties as stipulated in their labor contract, the training expense would still be subject to PIT for that employee. 

(iv) The training is consistent with the employer’s training plan. 

To demonstrate that training expenses are not subject to PIT, enterprises need to maintain comprehensive documentation, including: 

• Labor contracts. 
• Internal company regulations on training expense support/sponsorship. 
• Training agreements and related documents (if any), such as decisions to send employees for training, or commitments regarding obligations after the training course. 
• Invoices issued by the training provider. 
• Non-cash payment documents from the employee to the training provider. Notably, for individual training invoices valued at VND 20 million or more (including VAT), non-cash payment documents are required. 

Thus, even if a training invoice is issued in the employee’s name (which would lead to its non-deductibility for CIT), this expense may still not be subject to the employee’s PIT if the enterprise meets all the aforementioned conditions and maintains the required documentation. 

Date Written: 20/07/2025

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