Expatriate and staff costs under Vietnamese CIT: which salaries and benefits a company can deduct

Under Vietnamese corporate income tax (CIT), salaries, bonuses and benefits are deductible when they are actually incurred for the business, provided for in the labour contract, collective agreement or the company's internal regulations, and supported by proper documents, including evidence of payment. For expatriates, the same conditions apply to housing, school fees, home leave and other allowances — the question is rarely whether a benefit is reasonable, and almost always whether it was written down and paid in the way the rules expect.

Payroll is also where CIT and personal income tax (PIT) meet. A benefit that is deductible for the company is usually taxable income for the employee, and an auditor who finds PIT not withheld on a benefit will often question the CIT deduction as well. From the 2025 tax year the CIT rules are those of Law 67/2025/QH15, which revised the lists of deductible and non-deductible items; the practical approach below holds regardless, but check each category against the current text.

The general conditions, applied to payroll

The contractual basis is where most disallowances start. A year-end bonus decided by the regional office and paid without any reference in contracts or internal policy is exactly the kind of item that is added back in an audit.

Salaries and bonuses for local staff

• Base salary and allowances in the labour contract are deductible when paid.
• Bonuses — performance, Tet, thirteenth-month — are deductible when the internal regulations or contracts set out who is entitled and how the amount is determined. The policy does not need to fix an amount; it needs to set the conditions.
• Compulsory social, health and unemployment insurance paid by the employer is deductible.
• Voluntary pension and life insurance for staff may be deductible within caps set by the law, when provided for in contracts or policies.
• Welfare spending — holidays, family support, medical check-ups, events — is generally deductible within the rules, and some categories have been capped; check whether a cap applies in the current law.

Pay by bank transfer wherever possible. Cash payroll is not prohibited, but it makes the proof of payment weaker and often coincides with other documentation gaps.

Expatriate packages: what usually works

Expatriate packages combine salary with a range of benefits. The ones that most often raise questions, and how to keep them deductible:

• Housing. Rent paid by the company for an expatriate's accommodation is generally deductible when the benefit is in the contract or assignment letter and the lease and invoices are in order. If the lease is in the employee's name, keep the reimbursement evidence and the employee's rent receipts.
• Children's school fees. Commonly part of expatriate packages and generally deductible when contractually provided. The PIT treatment has special rules for some categories of expatriate benefits; check the current PIT guidance rather than assuming it follows the CIT treatment.
• Home leave and relocation. Flights and moving costs provided for in the assignment terms are generally deductible, with the same caution on PIT.
• Tax equalisation and net salaries. Where the labour contract states a net salary and the company bears the PIT, the PIT borne has generally been treated as part of salary cost and deductible. The gross-up must be calculated and withheld correctly; a net contract with PIT under-withheld creates both a PIT and a CIT problem.
• Club memberships, private travel and family members' costs not linked to the employment terms are the items most likely to be disallowed.

Two mechanical points also matter. Where parts of a package are denominated or paid in foreign currency, convert them consistently at the rate the accounting and tax rules require and keep the bank records that show the actual payment. And where a benefit is paid directly to a landlord or school rather than to the employee, make sure the invoice is issued to the company, with its correct tax code, so that it can serve as the supporting document for the deduction.

Secondments and costs paid by the parent

Many expatriates remain on the parent company's payroll and are seconded to Vietnam. The parent pays them and recharges the Vietnamese company. This is common and workable, but it needs a clear structure:

1. A written secondment or cost recharge agreement that describes the role, the period and the costs recharged.
2. Evidence that the Vietnamese company directs the work and bears the cost commercially — reporting lines, performance reviews, the employee's role in local management.
3. PIT withheld in Vietnam on the full employment income for the Vietnamese assignment, including amounts paid abroad.
4. A view on foreign contractor tax. Whether a recharge from the parent attracts foreign contractor tax depends on how the arrangement is structured and documented — a pure cost reimbursement is treated differently from a service fee. Take advice on your structure; our sister site KhauTru.com (in Vietnamese) covers payments abroad in more detail.

A recharge invoiced once a year as a lump sum, with no agreement and no PIT withheld locally, is one of the most frequently disallowed items in FIE audits.

Where CIT and PIT meet

Treat every staff benefit as a two-part question:

• CIT: can the company deduct it? Contract basis, documents, payment, caps.
• PIT: is it taxable income for the employee, and was PIT withheld? Salary, most allowances and most benefits in kind are taxable; some items are exempt or treated specially under the PIT rules.

The PIT framework itself was renewed with Decree 253/2026/NĐ-CP guiding the PIT law and Circular 87/2026/TT-BTC detailing PIT, both effective from 1 July 2026; earlier periods were largely governed by Circular 111/2013/TT-BTC and its amendments. From the 2026 tax year, family deductions are VND 15.5 million per month for the taxpayer and VND 6.2 million per month per dependant under Resolution 110/2025/UBTVQH15.

A consistent payroll file — one line per benefit showing its CIT and PIT treatment and the document behind it — answers most audit questions on both taxes at once.

A hypothetical example

Suppose an FIE pays an expatriate general manager a net salary equivalent to VND 150 million per month, rents an apartment for him at VND 45 million per month and pays his two children's international school fees. His assignment letter mentions the salary and housing but not school fees; the school fees were approved by e-mail from the regional office.

• Salary and the PIT borne under the net arrangement: deductible if PIT is correctly grossed up and withheld.
• Housing: deductible, with the lease and invoices on file, and included in PIT under the rules for housing benefits.
• School fees: at risk, because the contractual basis is an e-mail rather than the assignment terms or internal policy. Amending the assignment letter or adopting an expatriate benefits policy before the next payment fixes the basis going forward; it does not retrospectively fix the past.

What to keep, and where to check

• Labour contracts, assignment letters and any amendments.
• Internal regulations on pay, bonuses and benefits, dated and approved.
• Payroll records reconciled to bank payments.
• Invoices and leases for benefits bought from suppliers.
• Secondment and recharge agreements with the parent, and the related invoices.
• PIT withholding returns and annual finalisation.

Accounting documents used directly for bookkeeping and preparing financial statements must be kept for at least 10 years under the Law on Accounting. Your e-tax account shows the PIT returns filed and paid, and the e-invoice portal shows invoices issued to the company for rent, schools and other benefits — useful checks that the documents you rely on are the ones the tax authority can see.