A company has a customer receivable that has been overdue for months. The accounting team proposes setting up a provision for doubtful debts and recording it as an expense to reduce taxable corporate income. Will the tax authority accept this provision? This article answers based on the legal framework in force as of October 2026.
1. Short answer: yes — if the provision is set up correctly
The answer is yes, but with conditions. If a business sets up its provision in accordance with the law, the provision counts as a deductible expense when determining taxable corporate income, thereby reducing the tax payable.
Legal basis:
- Point dd, Clause 2, Article 9 of the Corporate Income Tax Law 67/2025/QH15: provisions set up “incorrectly or in excess of the levels prescribed by law” are non-deductible. Conversely, provisions set up correctly are deductible;
- Clause 1, Article 10 of Decree 320/2025/ND-CP (point 5): lists provisions for doubtful receivables among non-deductible items when set up in breach of the rules.
2. Provision rates by age of overdue debt
Circular 48/2019/TT-BTC remains in force as of October 2026 and sets the following provision rates:
| Age of overdue debt | Provision rate |
|---|---|
| 6 months to under 1 year | 30% of the debt value |
| 1 year to under 2 years | 50% of the debt value |
| 2 years to under 3 years | 70% of the debt value |
| 3 years or more | 100% of the debt value |
Provisions are set up and reversed at the time of preparing the annual financial statements.
3. Two common traps for businesses
Trap 1: assuming any provision amount is deductible
Wrong. Only provisions set up at the correct rates and for eligible debts under Circular 48/2019 are deductible. Any incorrect or excessive portion is entirely disallowed as a deductible expense at final tax settlement — the business loses the expense and may face back taxes and penalties.
Trap 2: confusing Circular 99/2025 with Circular 48/2019
Circular 99/2025/TT-BTC (effective from 1 January 2026) is an accounting regulation and does not replace Circular 48/2019 on provisions for tax purposes. Businesses continue to apply Circular 48/2019 when determining corporate income tax.
4. Pre-provision checklist
- Determine the correct age of each overdue receivable;
- Apply the correct 30% / 50% / 70% / 100% rates under Circular 48/2019;
- Set up and reverse provisions at annual financial statement time;
- Keep full supporting documents: contracts, debt reconciliation minutes, overdue evidence;
- Do not confuse the accounting rules (Circular 99/2025) with the tax rules (Circular 48/2019).
Contact us
FLAT Law Firm advises businesses on corporate income tax, deductible expenses, and compliance with provision rules. Contact: contact us.
Disclaimer: This article is for general information only and does not replace legal advice for your specific case. Laws may change; please consult a lawyer before acting.
Transparency label: This article was prepared with the support of the FLAW AI Legal Council, an AI-assisted legal review system. It is not a legal opinion from a human lawyer who has reviewed your case.