2026 is the first year enterprises finalize corporate income tax under the Law on Corporate Income Tax 2025 (Luật Thuế thu nhập doanh nghiệp 2025) and Decree No. 320/2025/ND-CP (Nghị định 320/2025/ND-CP) — two instruments that significantly change how non-deductible expenses for corporate income tax are determined. The non-cash payment threshold has been cut from VND 20 million to VND 5 million per payment, the list of non-deductible expenses has been systematically reorganized in Article 10 of Decree 320/2025/ND-CP, and research and development expenses are deductible at up to 200% of actual cost for the first time.
For FDI enterprises, every expense disallowed from deductible expenses increases taxable income — and the tax payable with it — sometimes by billions of dong, all because of documentation mistakes that look trivial. This article compiles the ten questions chief accountants and finance directors get stuck on most often when reviewing expenses ahead of finalization. Each answer has four layers: the direct answer, the legal basis, further explanation, and the action to take, all under the texts in force as of late September 2026.
1. The Legal Framework to Keep in Mind Before the Individual Questions
Taxable corporate income is determined as revenue minus deductible expenses, plus or minus other adjustments as prescribed. "Deductible expenses" therefore directly decide how much tax is payable: the fewer deductible expenses, the higher the taxable income.
Article 9 of the Law on Corporate Income Tax 2025 sets up two layers of checks. The first layer is the three general conditions in clause 1: the expense must be actually incurred and related to the enterprise's production or business operations; it must be supported by sufficient invoices and documents as prescribed by law; and it must be supported by a non-cash payment voucher as prescribed, except for special cases prescribed by the Government. Only when all three conditions are met simultaneously does an expense move on to the second layer.
The second layer is the list of non-deductible expenses. Clause 2 of Article 9 of the Law frames the disallowed groups, notably including sponsorship (except permitted sponsorships such as for education, healthcare, culture, disaster relief, solidarity housing, and scientific research and innovation), capital-construction investment during the investment phase to form fixed assets, and expenses directly related to increases or decreases in owner's equity. Decree 320/2025/ND-CP elaborates this list in Article 10, with the specific groups analyzed in each question below.
A note on timing: Decree 320/2025/ND-CP was issued on 15/12/2025 and applies from the 2025 corporate income tax year — the finalization enterprises are now performing in 2026. The old rules — typically the VND 20 million threshold for non-cash payment vouchers — are no longer the applicable basis. Enterprises that review 2025 expenses using the habits of previous years will miss a whole series of expenses at risk of disallowance. Mastering these two layers of checks is the only way to determine non-deductible CIT expenses correctly when preparing the finalization return.
2. Frequently Asked Questions
The ten questions below cover the groups of non-deductible CIT expenses enterprises stumble over most often in finalization practice, ordered from the general framework to specific expense groups.
1. What are the three general conditions for an expense to be deductible for CIT purposes?
Short answer: An expense is deductible only if it simultaneously meets three conditions: first, it is actually incurred and related to the enterprise's production or business operations; second, it is supported by sufficient invoices and documents as prescribed by law; third, for purchases of goods or services and other payments of VND 5 million or more per transaction, it is supported by a non-cash payment voucher. Failing any one condition means the expense is disallowed.
Legal basis: Clause 1, Article 9 of the Law on Corporate Income Tax 2025 (67/2025/QH15) and clause 1, Article 9 of Decree No. 320/2025/ND-CP. Decree 320 clarifies that non-cash payment vouchers follow the legal documents on value-added tax — synchronizing with the VND 5 million threshold in Decree No. 181/2025/ND-CP (Nghị định 181/2025/ND-CP) guiding the Law on Value-Added Tax 2024 (Luật Thuế giá trị gia tăng 2024).
Explanation: These three conditions act as a "gate" — an expense that fully serves production or business operations but is paid in cash at VND 5 million or more is still disallowed; conversely, an expense with full invoices and complete bank transfers but unrelated to production or business operations is also disallowed. In inspection practice, tax authorities usually start with the documentation condition because it is the easiest to verify: without a valid invoice or a bank transfer voucher, there is no need to discuss relevance further.
What to do: Before finalization, review all expenses in exactly the order of the three conditions — filter cash payments of VND 5 million or more, check the completeness of invoices and documents, then assess the business relevance of each remaining expense.
2. Are cash payments of VND 5 million or more per transaction disallowed as deductible expenses?
Short answer: Yes. From the 2025 corporate income tax year, the threshold for mandatory non-cash payment vouchers has been lowered from VND 20 million to VND 5 million per payment. Purchases of goods or services and other payments of VND 5 million or more per transaction settled in cash, without a non-cash payment voucher, will not be counted in deductible expenses.
Legal basis: Point c, clause 1, Article 9 of the Law on Corporate Income Tax 2025 and point c, clause 1, Article 9 of Decree No. 320/2025/ND-CP. Tax authorities at various levels have issued uniform replies: where an enterprise pays salaries to employees of VND 5 million or more per payment without a non-cash payment voucher, the amount is not counted in deductible expenses.
Explanation: This is the change with the broadest impact of Decree 320/2025/ND-CP on expenses, because the VND 5 million threshold covers nearly all routine operating costs — from salaries, office rent, and entertainment expenses to asset purchases. Notably, the new threshold is synchronized between corporate income tax and value-added tax: purchase invoices of VND 5 million or more must also carry a non-cash payment voucher before input VAT can be credited. The authorities have also warned against deliberately splitting transactions to circumvent the threshold, so dividing one payment into several smaller payments is not a safe workaround.
What to do: Move all payments of VND 5 million or more to bank transfers; keep the corresponding payment orders or bank statements for each expense; pay special attention to recurring cash payments such as advances, payments to small suppliers, and salary payments.
3. Can purchases without invoices from direct producers be treated as deductible expenses?
Short answer: Possibly, but the enterprise must prepare a purchase schedule for goods and services signed by its legal representative, who bears responsibility, accompanied by vouchers evidencing payment to the seller. This rule applies only to certain special categories — it is not a general license for all transactions without invoices.
Legal basis: The rules on preparing purchase schedules for goods and services without invoices in Decree No. 320/2025/ND-CP cover: purchases of agricultural, forestry and fishery products from direct producers or fishers; purchases of handicraft products from direct producers; purchases of scrap materials from individuals who collect them directly; and purchases of goods and services from individuals and business households with revenue below the VAT taxable threshold. For transactions of VND 5 million or more, the enterprise must still have a non-cash payment voucher.
Explanation: The purchase schedule only substitutes for an invoice in the special cases listed above, where the seller is an individual not required to issue invoices. If the seller is an enterprise or business household required to issue invoices but fails to do so, the buyer cannot use a purchase schedule to regularize the transaction — the expense remains at risk of disallowance for lack of a valid invoice. A common mistake is preparing purchase schedules for transactions with companies legally able to issue invoices, then seeing the entire amount disallowed at inspection.
What to do: Classify non-invoice suppliers to see whether they fall into the special categories; prepare purchase schedules with complete seller information, items, quantities, and unit prices, signed by the legal representative; keep payment vouchers and pay by bank transfer where the value is VND 5 million or more.
4. Are expenses already recorded but not yet paid by year-end deductible?
Short answer: They remain deductible. This is a business-friendly new point in Decree 320/2025/ND-CP: where purchases of goods or services of VND 5 million or more per transaction remain unpaid at the time the expense is recorded, the enterprise may still count them as deductible expenses in determining taxable income. However, when payment is later made without a non-cash payment voucher, the enterprise must declare and reduce the corresponding expense in the tax period in which the cash payment occurs.
Legal basis: Point c3, clause 1, Article 9 of Decree No. 320/2025/ND-CP. This rule applies even where the tax authority has issued a decision to inspect the tax period in which the expense arose — the enterprise cannot cite "being under inspection" as a reason to defer the adjustment.
Explanation: This provision resolves a major difficulty of previous years, when year-end purchases not yet paid were routinely disallowed in the recording period. But it is not a "free pass" for cash payments: the non-cash payment obligation is only deferred to the actual payment date, not erased. If at payment the enterprise still pays in cash for an amount of VND 5 million or more, the expense will be adjusted downward — and the adjustment is made in the period the payment occurs, not the period the expense was originally recorded.
What to do: Maintain a tracking list of payables of VND 5 million or more outstanding at finalization; ensure actual payment is made by bank transfer with vouchers kept; where cash payment is unavoidable, proactively declare the expense reduction in the correct period to avoid penalties when inspection discovers it.
5. Which salary and bonus payments are most likely to be disallowed?
Short answer: Four groups of employee expenses carry the highest disallowance risk: first, wages, salaries and other payables recorded as expenses but not actually paid or unsupported by payment vouchers; second, wages, salaries and bonuses whose conditions and rates of entitlement are not specifically stated in the labor contract, collective labor agreement, financial regulation or bonus regulation; third, wages and salaries of owners of private enterprises and owners of one-member limited liability companies owned by individuals; fourth, remuneration paid to founders who do not directly participate in management.
Legal basis: Clause 8, Article 10 of Decree No. 320/2025/ND-CP on non-deductible employee expenses. For foreign employees seconded within a group, the sending document of the foreign enterprise is accepted in place of a labor contract in recording the conditions and rates of entitlement.
Explanation: The second group is the most common "trap" in FDI enterprises. Many companies have very clear internal policies on Tet bonuses and performance bonuses, yet never state the specific conditions and bonus rates in any of the four documents listed by the Decree. At inspection, the tax authority does not treat internal emails or verbal decisions of the director as evidence — without a document of the right type, the bonus is disallowed. On the third group, note the rule applies to owners of private enterprises and owners of one-member limited liability companies owned by individuals; where the owner also serves as director receiving a salary in a one-member limited liability company, the enterprise needs to check the regulations and application practice carefully.
What to do: Before finalization, review all labor contracts, collective labor agreements, financial regulations and bonus regulations — ensure every salary, bonus and allowance states its specific conditions and rates of entitlement; reconcile accounting records against actual payment vouchers, and remove immediately any amounts recorded but not yet paid.
6. Are there caps on employee welfare and insurance expenses?
Short answer: Yes, with two layers of caps. The first layer: the portion of direct welfare expenditure for employees exceeding one month of the actual average salary paid in the tax year is not deductible. The second layer: contributions to supplementary retirement insurance, social-security-type funds, voluntary retirement insurance and life insurance purchased for employees are subject to separate caps under point dd, clause 4, Article 10 of Decree No. 320/2025/ND-CP.
Legal basis: Clause 4, Article 10 of Decree No. 320/2025/ND-CP. The list of direct welfare expenses is set out in detail, including: wedding and funeral support for employees and their families; vacation expenses; medical examination and treatment support; support for supplementary study and knowledge; support for families of employees affected by natural disasters, epidemics, accidents or illness; rewards for employees' children with good academic achievements; travel support on holidays and Tet; and accident insurance, health insurance and other voluntary insurance for employees.
Explanation: The one-month actual average salary cap is computed on total welfare expenditure for the year, not on each item separately — many enterprises miscalculate by comparing each vacation or wedding expense against the cap independently. The key distinction is that supplementary retirement insurance, life insurance and voluntary retirement insurance are not folded into the one-month welfare cap but are subject to their own caps; the enterprise must separate the two groups in its computation. In addition, welfare expenses within the cap still need to satisfy all three general conditions, particularly the requirement that they be specifically stated in the regulations and supported by payment vouchers.
What to do: Aggregate all welfare expenses for the year, compute one month of actual average salary to identify the excess to be disallowed; separate supplementary retirement insurance, life insurance and voluntary retirement insurance contributions to check the separate caps against the original text; ensure welfare expenses are provided for in the financial regulation or collective labor agreement.
7. Are administrative-violation fines and late-payment interest deductible?
Short answer: No. Fines for administrative violations in all fields — including violations of tax, accounting, invoice and traffic law and other fields — are not deductible in determining taxable corporate income. Similarly, late-payment interest under tax administration law is on the non-deductible list.
Legal basis: The rules on fines for administrative violations in Article 10 of Decree No. 320/2025/ND-CP and the rules on late-payment interest in clause 12, Article 10 of the same Decree. This is an absolutely disallowed group, with no exceptions or workarounds.
Explanation: The logic is clear — the law does not allow enterprises to use fines to reduce tax liability, because the state would then both impose the fine and "share" part of it through reduced tax. In practice, many enterprises record traffic fines for company cars, late-filing fines or invoice-related administrative fines in general management expenses and forget to disallow them at finalization. At inspection, the tax authority only needs to reconcile the detailed fine account to spot them immediately.
What to do: Record administrative-violation fines and late-payment interest in a separate tracking account, not merged with general management expenses; when preparing the CIT finalization return, disallow all of them from deductible expenses in the section adjusting taxable income upward.
8. Is CIT paid on behalf of a foreign contractor deductible for the Vietnamese party's CIT?
Short answer: It depends on the price term in the contract. If the contract with the foreign contractor provides that the revenue the contractor receives excludes corporate income tax — the Vietnamese party bears the tax in its place on a net-price basis — then the CIT paid on behalf counts as a deductible expense. Conversely, if the contract already states a tax-inclusive (gross) price, the tax paid on behalf is treated as embedded in the service price and may not be deducted a second time.
Legal basis: Clause 12, Article 10 of Decree No. 320/2025/ND-CP. The same clause provides that input VAT already credited or refunded may not be included in deductible expenses — the anti-double-counting principle: a tax already credited under VAT may not be pushed into CIT expenses.
Explanation: The crux lies in how the price term is drafted in the contract with the foreign counterparty. Many FDI enterprises sign net-price contracts with parent companies or foreign suppliers, with the Vietnamese party automatically bearing all foreign contractor tax, yet the contract never states expressly that "revenue excludes corporate income tax" — in which case the tax authority has grounds not to accept the tax paid on behalf as a deductible expense. Conversely, with gross-price contracts, enterprises sometimes still book the tax paid on behalf into expenses, causing double counting. Both mistakes stem from loosely drafted contract terms, not from the tax computation itself.
What to do: Review all contracts with foreign contractors, supplementing terms that state clearly whether the price is net or gross and each party's tax-bearing responsibility; claim the CIT paid on behalf as a deductible expense only where the contract meets the net-price condition; see the in-depth analysis of foreign contractor tax on parent company management fees.
9. Are accrued expenses such as major repairs of fixed assets deductible in the accrual period?
Short answer: No, if the expense has not actually been incurred by the end of the tax period. Non-deductible accruals include: accrued major-repair costs for fixed assets not performed in the period; contract costs where the enterprise has recognized revenue but still has performance obligations; and other accrued expenses not yet performed in the tax period.
Legal basis: The rules on provisions accrued into expenses contrary to regulations in Article 10 of Decree No. 320/2025/ND-CP. The governing principle is the "actually incurred" condition in Article 9: an accrual is an anticipated future expense, not an expense actually incurred in the period, so it fails the deductibility condition.
Explanation: This rule prevents enterprises from using accruals to smooth profits and reduce tax liability — accruing a large expense in a highly profitable year while the actual repair happens the following year. When the expense is actually incurred in a later period and meets all three general conditions, the enterprise counts it as a deductible expense of that period. Accruals must be distinguished from provision accounts: provisions for inventory devaluation, doubtful debts or product warranties are deductible if made correctly and within the provisioning limits prescribed by law; only improperly made or excessive portions are disallowed.
What to do: Maintain a detailed tracking schedule for each accrual, reconciled against actual performance progress by year-end; adjust taxable income upward for accruals not yet performed at finalization; review existing provisions to ensure they cover the right subjects and stay within prescribed limits.
10. What are the conditions for R&D expenses to be deductible at up to 200% of actual cost?
Short answer: This is a new incentive in the Law on Corporate Income Tax 2025, allowing enterprises to count in deductible expenses up to 200% of actual research and development costs incurred in the period — but three conditions must be met: first, the base excludes amounts offset by other funding sources and amounts paid from the enterprise's Science and Technology Development Fund; second, after applying the additional deduction, the enterprise is not in a loss; third, the actual R&D costs are determined in accordance with the laws on science, technology and innovation.
Legal basis: Point a, clause 1, Article 9 of Decree No. 320/2025/ND-CP, guiding point a, clause 1, Article 9 of the Law on Corporate Income Tax 2025.
Explanation: 200% is the ceiling, not the default — the enterprise may choose an appropriate additional deduction rate not exceeding 200% of actual cost. The "not in a loss after applying" condition is the key limit: if the additional deduction would turn the business result from profit to loss, the enterprise may only apply it within the boundary of not creating a loss. Moreover, not every cost labeled "research" qualifies — the costs must be identified as research and development costs under the laws on science, technology and innovation, i.e. tied to R&D activities with scientific and technological content, not ordinary improvement costs or disguised marketing expenses.
What to do: Classify and document R&D activities in accordance with the laws on science, technology and innovation from the moment costs arise; compute the impact of the additional deduction in advance so as not to breach the no-loss condition; separate amounts offset from other sources or paid from the Science and Technology Development Fund to exclude them from the 200% base.
Conclusion: Three Things to Do Before the 2025 CIT Finalization
First, review all expenses through exactly the two layers of checks: whether they simultaneously meet the three conditions in Article 9, and whether they fall into the non-deductible list in Article 10 of Decree No. 320/2025/ND-CP — particularly cash payments of VND 5 million or more, salaries and bonuses lacking supporting documents, and unperformed accruals. Second, restandardize contracts and internal regulations: the net-or-gross price term in contracts with foreign contractors, the conditions and rates of salary and bonus entitlement in labor contracts and bonus regulations, and the welfare expense list in the financial regulation. Third, make proper use of the new incentives the Law grants to compliant enterprises, typically the 200% deduction mechanism for research and development expenses — but only with a complete science-and-technology dossier and a computation respecting the no-loss limit.
Each enterprise has a different expense structure, and each expense needs to be checked against the original texts before deciding whether to disallow or keep it, so the analysis above should be applied flexibly to the specific file. Determining non-deductible CIT expenses correctly at the internal review stage will help enterprises avoid additional tax assessments and penalties at inspection, rather than adjusting passively after an inspection conclusion. If your company is preparing the 2025 corporate income tax finalization and needs a full review of expenses at risk of disallowance, FLAT's lawyers can assist in checking the documentation set, assessing the risk of each expense group, and redesigning internal regulations to fit the new legal framework — contact the hotline 0988424851 for advice on your company's specific situation.
Language Versions
References
- Expenses of VND 5 million or more unpaid still deductible for CIT from 15/12/2025 — thuvienphapluat.vn
- R&D expenses deductible at up to 200% of actual cost for CIT — thuvienphapluat.vn
- Over-limit expenses non-deductible for CIT from 15/12/2025 — thuvienphapluat.vn
- New rules on input VAT not deductible for CIT under Decree 320/2025 — thuvienphapluat.vn
- Summary of employee expenses non-deductible for CIT — thuvienphapluat.vn
