News
Starting from the 2025 Corporate Income Tax (CIT) period, paying salaries in cash of VND 5 million or more per payment is no longer considered an internal managerial choice of enterprises.
Pursuant to Decree No. 320/2025/ND-CP, salary expenses that are not paid via non-cash payment methods shall not be recognized as deductible expenses when finalizing Corporate Income Tax (“CIT”). This regulation is having a significant impact on payroll practices, financial management, and tax compliance of enterprises.
According to Point c, Clause 1, Article 9 of Decree No. 320/2025/ND-CP, enterprises may only include expenses as deductible costs if all statutory conditions are fully satisfied. Among these, the payment method requirement is the most critical change.
Specifically, the law clearly stipulates that:
Expenses incurred per transaction of VND 5 million or more
Including purchases of goods, services, and other payments
Must be supported by non-cash payment vouchers
Non-cash payment documents must comply with regulations on Value Added Tax (VAT)
The key phrase here is “other payments”, and according to official guidance from the Tax Authority, salary and wage payments fall within this category.
At the 2025 Dialogue Conference between the Ministry of Finance and taxpayers, many enterprises raised questions regarding cash salary payments. The responses from the Tax Authority demonstrated a consistent and unified interpretation nationwide.
The Tax Authority affirmed that:
Salaries and wages are classified as “other payments.”
If each payment is VND 5 million or more but is made in cash or in kind, it does not qualify as a deductible expense for CIT purposes.
This rule applies regardless of:
Whether the employee is Vietnamese or foreign
Whether payment is made in VND or foreign currency (after conversion)
Whether the underlying transaction is subject to VAT, non-taxable, or subject to a 0% VAT rate
Paying salaries in cash exceeding VND 5 million per payment may result in direct and serious tax consequences during tax finalization.
Enterprises may face the following risks:
Salary expenses being excluded from deductible costs
A corresponding increase in taxable CIT income
Higher CIT payable than the enterprise’s actual economic profit
Risks of tax arrears, penalties, and reassessment if misrecorded
In other words, cash salary payments are not illegal, but they may cause significant tax disadvantages for enterprises once the VND 5 million threshold is exceeded.
For salary expenses to be accepted as deductible for CIT purposes, enterprises must simultaneously satisfy all of the following conditions:
The expense actually arises and relates to production or business activities
There are labor contracts, collective labor agreements, or internal financial regulations
Non-cash payment evidence (bank transfer, payment order, etc.) is available for payments of VND 5 million or more per transaction
The expense is not listed as a non-deductible expense under Article 10 of the Corporate Income Tax Law
Failure to meet any single condition may result in the entire salary expense being disallowed upon tax inspection.
Under the 2019 Law on Tax Administration, the deadline for submitting CIT finalization dossiers is clearly stipulated.
Specifically:
No later than the last day of the third month
Following the end of the calendar year or fiscal year
Example: If the fiscal year ends on 31 December 2025, the CIT finalization deadline is 31 March 2026.
Late submission may lead to administrative penalties, even if no CIT is payable.
According to Decree No. 125/2020/ND-CP (as amended), penalties are imposed based on the number of days overdue.
Notable penalty levels include:
1–5 days late: Warning
1–30 days late: Fine from VND 2–5 million
31–60 days late: Fine from VND 5–8 million
61–90 days late: Fine from VND 8–15 million
Over 90 days with tax payable: Fine of up to VND 25 million
In addition to fines, enterprises must fully pay the outstanding tax and late payment interest as prescribed.
In light of the new regulations, enterprises should proactively review and adjust their payroll practices.
Immediate actions include:
Switching all salary payments of VND 5 million or more per transaction to bank transfers
Assisting employees in opening bank accounts
Reviewing internal financial regulations and labor contracts
Re-checking salary expenses incurred in 2025 before CIT finalization
Properly retaining all non-cash payment documents
Early preparation helps enterprises avoid mass disallowance of expenses during tax finalization.
CIT regulations are becoming increasingly stringent, particularly regarding salary and wage expenses. A minor mistake in payment method may result in substantial tax losses for enterprises.
GIVLAW provides support in:
Reviewing salary and bonus expenses prior to tax finalization
Advising on compliant salary payment methods
CIT, VAT, and tax risk management consulting
Representing and explaining matters with tax authorities
Contact GIVLAW for advice that is lawful, timely, and solution-oriented.
