Entertainment expenses are incurred quite frequently when businesses meet with clients, partners, hold meetings, or have meals to support business activities. For accountants, the issue is not just "whether or not there is an invoice," but also determining the correct amount. nature of the expenditure, accounting account, payment records, and tax conditions..
From 2026, businesses applying Circular 99/2025/TT-BTC need to classify entertainment expenses by department. Entertainment expenses related to sales activities can be recorded as follows: Account 6418; items under general management may be recorded in Account 6428. Small and medium-sized enterprises applying Circular 133 will continue to use the accounting system of this regime.
Which account should entertainment expenses be recorded in?
There isn't a single account that applies to all entertainment expenses. The account used depends on the specific needs. nature of the expenditure and the components involved..
If you need to review the general principles before addressing specific situations, you can refer to this article. cost accounting in businesses.
Accounting for entertainment expenses according to Circular 99/2025/TT-BTC
For businesses applying Circular 99, the classification should begin with the source and purpose of the expense:
| Situation | Account | Nature |
|---|---|---|
| Receiving and assisting customers directly in sales activities, customer service, and market development. | Account 6418 | Other cash expenses are part of the cost of sales. |
| Entertaining guests for senior management, general administration, or business operations. | Account 6428 | Other cash expenses are considered business management expenses. |
For more detailed classification, please refer to additional information. cost of sales and business management costs.
Accounting for entertainment expenses according to Circular 133.
For small and medium-sized enterprises (SMEs) currently applying Circular 133/2016/TT-BTC, it is necessary to use the accounting system of this regulation instead of directly applying the accounting system of Circular 99.
| Nature of the expenditure | Accounts according to Circular 133 |
|---|---|
| Serving sales activities | Account 6421 – Selling Expenses |
| Serving business management | Account 6422 – Business Management Expenses |
Circular 133 is still the accounting regime for small and medium-sized enterprises, but its content has been amended. Therefore, businesses should check the correct document and accounting policies they are applying.
Common offsetting accounts
What documents are required for reasonable entertainment expense reimbursement?
A good application isn't about having as many documents as possible. The important thing is that the supporting documents are accurate. It must be consistent with actual transactions, aligned with internal processes, and sufficient to explain the expenditure when audited..
Core Document Group
| File group | Content to be checked |
|---|---|
| Bill | An electronic invoice or other legally valid document corresponding to the actual service rendered. |
| Pay | The document shows how the business or authorized person made the payment. |
| Internal approval | Request for expenditure, expenditure approval, or equivalent documentation if required by company regulations. |
| Purpose of expenditure | The information is sufficient to determine whether the entertainment expenses are part of the business's operations. |
From July 1st, 2026, Decree 254/2026/ND-CP and Circular 91/2026/TT-BTC will form the new legal framework for electronic invoices and electronic documents. Therefore, the old guidelines, which were based solely on Decree 123/2020/ND-CP and Circular 78/2021/TT-BTC, should not be used as the only current legal basis.
Bizzi has a separate compilation about Decree 254 and Circular 91 on electronic invoices if the accountant needs to monitor the process of creating, processing, and managing invoices in more detail.
Can a restaurant bill replace a regular bill?
A bill of order, a payment receipt, or a regular invoice. These primarily reflect order information or the amount to be paid. They can be useful for verification but should not be considered a legitimate receipt.
Conversely, if the restaurant releases Electronic invoice generated from cash register In accordance with current regulations, this is an electronic invoice. Therefore, when employees submit settlement documents, accountants should identify the actual type of document instead of just looking at the "paper printed from the cash register.".
Is an invitation, guest list, or contract required?
A rigid checklist shouldn't be applied to every business entertainment expense. In each situation, client emails, work schedules, restaurant bookings, meeting minutes, attendee lists, or event information can help businesses better demonstrate the business purpose of the expenditure.
When are entertainment expenses deductible from corporate income tax and VAT?
When conducting a tax audit, the conditions for this should be separated. corporate income tax and input VAT. These two mechanisms are related but not the same.
Conditions for corporate income tax
According to the current corporate income tax framework, businesses need to check three groups of conditions: actual expenses related to production and business activities; sufficient invoices and supporting documents as required; and compliance with non-cash payment conditions for transactions within the applicable threshold.
If your business is still using the old checklist with a 20 million VND threshold, you should update it. Bizzi has an in-depth article on this topic. non-cash payment voucher To handle specific payment methods and circumstances.
Conditions for deducting input VAT
Regarding VAT, businesses need to consider both the intended use of goods and services for taxable activities, the validity of invoices, and the payment terms. Article 26 of Decree 181/2025/ND-CP stipulates non-cash payment documents for goods and services purchased from 5 million VND or more, including VAT.; Some cases in Article 26 have been amended by Decree 144/2026/ND-CP.
Are entertainment expenses subject to limits like 10% or 15%?
There are no longer separate 10% or 15% caps for entertainment expenses. as the old regulations used to apply.
However, "not subject to percentage restrictions" does not mean that businesses can include all food and entertainment expenses as deductible costs without explanation. The expenses must still be reviewed based on business purpose, documentation, and current tax conditions.
Businesses should still set it up. Internal visitor limit by job title, department, customer, or event type. This is a budget management and internal control tool, not a tax ceiling under Article 15%.
Are invoices for entertaining clients that include alcoholic beverages considered deductible expenses?
A food bill should not be automatically rejected simply because it includes wine or beer.
The accounting and tax points that still need attention are: the actual purpose of the transaction. An expense for food and beverages involving alcohol incurred during a business meeting with a client, which is substantiated to serve business purposes and is fully documented, will differ in nature from an expense for personal consumption unrelated to the business.
- Does the expenditure serve the business's production and operation activities?
- Are the invoices and supporting documents appropriate?
- Were the payment conditions met?
- Does the input VAT meet the deduction requirements based on the actual circumstances?
Having alcohol in your system does not replace checking for the four factors mentioned above.
How to account for entertainment expenses in common situations.
1. Businesses that pay directly.
Assuming the entertainment expenses fall under the sales department and the business applies Circular 99:
If the entertainment expenses are for general management purposes, replace account 6418 with... Account 6428. The important point is not to memorize a fixed accounting entry, but to choose the right account according to the purpose of the transaction.
2. Received the invoice but have not yet paid the restaurant or supplier.
When making a payment:
For transactions that meet the cashless payment requirement, the accounting department needs to continue monitoring the payment conditions instead of assuming that "accounting is complete" means "tax requirements have been met".
3. Businesses advance money to employees for entertaining clients.
When a company gives employees money in advance:
When employees complete their work and submit approved settlement documents:
Any excess or deficit is handled according to the advance payment records and company regulations. If this transaction occurs frequently, further information may be needed. advance payment and reimbursement procedures.
4. Employees use personal funds to pay on behalf of the company.
This case needs to be distinguished from "advance payments". If the business has not yet given the money to the employee before making the payment, it should not automatically transfer the entire transaction to account 141 simply because the payer is an employee.
Regarding VAT, the law stipulates that in cases where goods and services used in taxable activities are authorized for non-cash payment by employees according to financial regulations or internal rules, the enterprise then reimburses the employees using non-cash methods. Therefore, the authorization documents, payment methods, and refund procedures need to be designed consistently.
Bizzi has its own guidelines on Advance payments, advance payment settlements, and cases where employees make payments on behalf of the company..
How should entertainment expenses without invoices be handled?
This is a situation that requires careful handling because “"Having actual cash generated" does not equate to "being eligible for tax."”.
Payment vouchers should not be used to replace invoices.
Payment vouchers, payment requests, meal bills, or internal memos can partially document the transaction and money flow within a business. However, these documents... It does not automatically become an invoice..
If a restaurant or service provider is required to issue an invoice but the business only keeps one bill, the accountant should not conclude that "issuing an additional payment voucher is sufficient documentation.".
Accounting entries and tax conditions must be considered separately.
If an actual expense has been incurred, the business still needs to consider the nature of the transaction to reflect it appropriately in the accounting books according to accounting principles. However, when determining deductible expenses for corporate income tax or VAT deductions, the lack of invoices/documents as required by law is a separate issue and must be assessed on a case-by-case basis.
7 common mistakes when accounting for entertainment expenses.
- Record all entertainment expenses in account 642.Entertainment expenses incurred by the sales department and related to sales activities should be classified according to their true nature, rather than being automatically classified as administrative expenses.
- Mistaken account 131 for account 331.Account 131 is accounts receivable from customers; the amount the business still owes to restaurants or suppliers needs to be considered under account 331.
- Continue to apply Circular 200 as the current accounting regime for the fiscal year falling within the scope of Circular 99.Circular 99 takes effect from January 1, 2026 and replaces Circular 200 with respect to the accounting regime for enterprises within its scope of application. Source
- The transfer limit of 20 million VND remains in effect.The tax checklist needs to be updated to the VND 5 million mark in cases falling within the scope of non-cash payment conditions.
- Match the bill of sale with the invoice.Bill helps verify transactions, but it's not always a legally valid electronic invoice.
- Checking only the invoice without checking the purpose of the expenditure.A complete invoice in terms of form still doesn't resolve the question of whether the expense is actually related to business operations.
- The procedures for cash disbursement by staff are not standardized.The payer, payment method, authorization documents, and how the business processes refunds should all reflect the same business nature.
Control entertainment expenses before they arise, instead of just checking them at the end of the month.
Proper accounting is a necessary step, but if the Finance department only starts checking when employees bring in invoices at the end of the month, many risks have already occurred: exceeding limits, lack of approval, incorrect payment methods, or documents that do not meet company policies.
Payment request
Approve
Pay
Bill
Reconciliation
Accounting
An effective hospitality expense management process should integrate the above steps instead of having each department independently record the documents and send them to accounting after the expense has been completed.
Frequently Asked Questions about Entertainment Expenses
Which account should entertainment expenses be recorded in?
If a business applies Circular 99, entertainment expenses for the sales department can be recorded in account 6418; entertainment expenses under general management can be recorded in account 6428. For businesses applying Circular 133, accounts 6421 or 6422 are usually used depending on the nature of the expense.
What documentation is needed for expenses related to meals and entertaining guests?
It is necessary to check the relevant invoices/receipts, payment documents, and records showing expenses incurred for business operations. Depending on regulations and circumstances, additional documents such as expense requests, approvals, advance payment/reimbursement records, or documentation proving the purpose of the meeting may also be required.
Are entertainment expenses exceeding 5 million VND, paid in cash, deductible?
For transactions subject to non-cash payment conditions under the current corporate income tax framework, purchases of goods and services and other payments of 5 million VND or more per transaction require verification of non-cash payment documents. Further comparison of the specific case, payment time, and actual records is necessary.
Are invoices for entertaining clients that include alcoholic beverages eligible for VAT deduction?
Decisions should not be based solely on whether the invoice includes alcoholic beverages. It's necessary to consider whether the expenditure relates to taxable business activities, whether the invoice is valid, and whether the payment conditions are met.
Is the 15% limit still in effect for entertainment expenses?
The previous general 10% or 15% ceiling for entertainment expenses is no longer in effect. However, expenses must still meet current tax conditions, and businesses should still establish internal limits to control their budget.
How are entertainment expenses accounted for differently according to Circular 99 and Circular 133?
Circular 99 uses account 6418 for entertainment expenses of the sales department and account 6428 for entertainment expenses of general management. Circular 133 uses a separate accounting system for SMEs, usually accounts 6421 and 6422 depending on the nature of the expense.
What are the English terms for "entertainment expenses"?
In a business context, it can be used business entertainment expenses, client entertainment expenses or entertainment agents Depending on the reporting purpose and cost policy.
Conclude
Properly accounting for entertainment expenses in 2026 is not just about choosing between account 641 and 642. Accountants need to look at the entire transaction process. Expenditure purpose, generating department, applicable accounting system, invoice, payment method, and conditions related to corporate income tax and VAT..
For businesses applying Circular 99, it is crucial to differentiate between entertainment expenses incurred by the sales department and entertainment expenses under general management. Simultaneously, the tax checklist needs to be updated to reflect non-cash payment thresholds. 5 million VND where applicable.
As spending scales up, digitizing the entire process from request and approval to payment, reconciliation, and accounting will help the Finance and Accounting department reduce its reliance on manual document verification after expenses have been incurred.
