In the competition to attract and retain personnel, businesses are increasingly shifting their focus from salaries to welfare policies. Tuition support for employees’ children is one of the policies that are quite commonly applied, especially in foreign-invested enterprises or employing a lot of high-quality workers. From a management perspective, this is considered an investment to improve talent retention. However, from a tax perspective, the story is not so simple.
What needs to be determined first of all is the nature of the expenditure recognized by law and how it is related to production and business activities.
Many businesses believe that if the expenditure serves employees, it is naturally included in the deductible expenses when determining income subject to corporate income tax (CIT). It is only when inspecting and examining taxes that many businesses realize that the same tuition fee for employees’ children but in some cases it is accepted, some cases are only partially accepted, and there are also cases that are completely excluded from the deductible costs. This difference does not lie in the amount of money spent, but in the way the law views the nature of the expenditure.
Tax law does not look at "tuition fees"
This is probably the most confusing point in practice.
When considering whether an expense is included in the deductible expenses, the tax authority does not start with the question of what the business has spent the money on. What needs to be determined first of all is the nature of the expenditure recognized by law and how it is related to production and business activities.
If the expenditure is directly associated with the demand for labor to serve production and business activities, the law will tend to recognize this as an expense of the enterprise. Conversely, if the expenditure is primarily intended to benefit the individual employee or their family, the law will take a more cautious approach to prevent personal expenditures from being converted into deductible expenses.
It is from this approach that the same tuition fee for employees’ children, but the tax law builds two completely different handling mechanisms.
A separate mechanism for specific labor cases
According to current regulations, enterprises are included in the expenses to deduct tuition fees for children of foreign employees studying in Vietnam or children of Vietnamese employees sent by enterprises to work abroad, if this expense is specified in the labor contract or internal documents of equivalent value and fully meets the requirements conditions of the tax law.
At first glance, this regulation may give the impression that the law is giving priority to foreign workers or Vietnamese workers sent to work abroad. However, from the perspective of tax policy, this design has a reasonable basis.
In international practice, the cost of education for children is often a component of the remuneration package for foreign professionals. For many managerial or technical expert positions, this is even an important condition for workers to accept to work in another country. When businesses pay this tuition fee, the goal is not to support their personal lives but to create conditions for businesses to recruit, mobilize and maintain human resources for business activities. In other words, the law recognizes the tuition fee in this case as part of the cost of employment, not just as a benefit.
Vietnamese workers: The story is no longer about tuition fees
For Vietnamese workers working in the country, the approach of the law is different.
The current law does not design a separate cost mechanism for this case like some specific labor cases - cross-border work. Instead, if the enterprise supports this expense, the tuition fee will be considered from the perspective of direct welfare expenditure for employees in accordance with the provisions of the CIT law.
This difference reflects a fairly clear legislative mindset. Unlike the case of transferring international experts, the current law does not provide for the case of Vietnamese workers working in the country a similar separate expense mechanism. Therefore, this support must be considered within the framework of welfare expenditures for employees. In essence, this is still a benefit that businesses give to employees to improve their lives and increase their ability to stick with the business. Therefore, the expenditure is no longer independently assessed but becomes part of the welfare policy.
This also means that businesses cannot only consider tuition fees alone. According to current regulations, the total welfare expenses included in the deductible expenses must not exceed one month of the actual average salary realized in the tax year[1]. Tuition fees are therefore only a part of the total welfare budget that businesses need to manage.
It can be said that, for Vietnamese workers, the problem is no longer whether tuition fees are deducted or not, but how businesses are designing and managing their welfare policies.
The risk usually does not come from the money
In the practice of tax inspections, disputes related to tuition fees for employees’ children rarely stem from the value of the expenditure. The greater risk often lies in the way businesses formulate policies and prepare documents.
Many businesses only issue support regulations after the expenses have been incurred or only save tuition invoices without any basis to show that this is a policy applied to employees. There are cases where businesses support some individuals but do not define clear selection criteria, causing the expenditure to be seen as an individual benefit instead of an HR policy of the business. This is also a point that shows the difference between human resource management thinking and tax management thinking.
For the HR department, the goal is to develop a policy that is attractive enough to retain workers. Meanwhile, from the perspective of the tax authority, what needs to be proven is that the expenditure is implemented on the basis of a transparent policy, with clear criteria, uniformly applied and fully meeting the conditions prescribed by law.
In other words, an internal policy clearly cannot change the legal nature of the expenditure, but it is important in proving that the expenditure was made according to a well-founded, consistent personnel policy and met the applicable conditions. Conversely, if it is only an individual support decision, the expense is very easy to be considered a personal benefit and does not meet the conditions for deduction.
Nguồn: Google Images
From HR policy to tax administration
In the context of businesses increasingly focusing on employee experience, welfare policies will continue to be expanded in both scope and value. That means that tax issues for these expenses will also become increasingly important.
If in the past, businesses used to develop HR policies and then assign the accounting department to handle taxes, now this approach is no longer suitable. A remuneration policy is only really effective when it is designed simultaneously from the perspective of HR, legal and tax from the beginning.
The tuition fee for employees’ children is a good example. This is not only a decision on welfare but also a decision on tax risk management. Determining the right nature of expenditures, choosing the right legal mechanism and building a full internal basis will help businesses both achieve the goal of retaining talents and limit disputes that may arise in the process of tax inspection and examination.
Conclusion
The story of tuition fees for employees’ children shows a remarkable feature of Vietnam's tax law. The law does not assess an expenditure based on its name or human significance, but on its economic and legal nature. Therefore, it is the same business that pays tuition fees, but the way of handling taxes can be completely different depending on the purpose of the expenditure and the regulatory legal mechanism.
For businesses, this is also an important message. In today's business environment, a good welfare policy not only needs to be attractive enough to attract and retain workers, but also must be designed tightly enough to meet the requirements of tax laws. When HR policy and tax administration are built on the same foundation, the new tuition fee truly becomes an investment in the sustainable development of the business, rather than becoming a risk that is only identified once the tax audit has begun.
Lawyer Nguyen Van Phuc
HM&P Law Firm
Read more: Học phí cho con người lao động: Chi phí nhân sự hay khoản phúc lợi
[1] Article 10 of Decree 320/2025/ND-CP guiding the implementation of the Law on CIT 2025.
