Salary Expenses Not Deductible as Legitimate Costs

Article 4 of Circular 96/2015 stipulates that salary, wages, and other payable amounts (referred to as salary expenses) for labor are not deductible as legitimate costs when determining Corporate Income Tax (CIT) if:

1. Salary, bonuses, and life insurance premiums are not recorded in any of the following documents: Employment contract; Collective labor agreement; Financial regulations, or bonus scheme. Innovation or improvement bonuses without regulations or a review board are not deductible.

2. Salary expenses are recorded in the accounts but not paid or lack supporting documentation.

3. Salary paid to the owner of a sole proprietorship (DNTN), the owner of a one-member limited liability company (TNHH 1 TV), or payments to founders or members of the advisory and management boards who do not directly manage production and business operations.

4. Mandatory insurance contributions based on salaries that exceed the prescribed limits.

5. Salary expenses have not been paid by the due date for tax filings, unless a reserve salary fund for the following year has been set aside. If, after 6 months from the end of the year, the salary fund is not fully used or is not used at all, it must be deducted from the expenses of the following year.

6. Clothing expenses in kind without invoices or in cash exceeding 5 million VND per person per year. For industries with specific characteristics, these expenses are regulated by the Ministry of Finance.

7. Transportation allowances for vacation leave not in accordance with the Labor Code.

8. Allowances for employees on business trips, travel expenses, and accommodation expenses without invoices or supporting documents. (If there is a fixed amount for travel, accommodation, or business trip allowances according to the company's financial regulations, these are deductible.)

9. Contributions exceeding 1 million VND per person per month for voluntary retirement funds or purchasing voluntary retirement insurance for employees are not deductible if mandatory insurance is not provided for employees, including cases of outstanding mandatory insurance.

10. Severance pay for employees not in accordance with current regulations.

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