Deductible Cash Payment Expenses under Decree No. 320/2025/ND-CP

In business operations, correctly determining deductible expenses for Corporate Income Tax (CIT) purposes is a key factor in ensuring compliance with the law and optimizing tax obligations. One of the important issues frequently examined by tax authorities is the requirement for non-cash payment documents. Under Decree No. 320/2025/ND-CP, expenses valued at VND 5 million or more must, in principle, be supported by non-cash payment documents. However, there are practical cases where enterprises make cash payments and still be recognized to be deductible.

This article, prepared by TNTP’s lawyer, provides a detailed analysis of the regulations on cash payment conditions under Decree No. 320/2025/ND-CP to help enterprises apply them correctly and minimize tax risks.

1.General principle on payments as basis for deductible Expenses

According to Clause 1, Article 9 of Decree No. 320/2025/ND-CP, for purchases of goods, services, and other payments valued at VND 5 million or more per transaction, enterprises must, in principle, make non-cash payments.

Non-cash payment include: bank transfer, payment order, card payment, or other lawful electronic payment methods. If an enterprise makes cash payments for expenses of VND 5 million or more, such expenses are considered to be deductible, except for specific cases permitted by law.

2.Cases where cash payments are still accepted as deductible expenses

2.1Expenses under VND 5 million per transaction

Enterprises are not required to have non-cash payment vouchers for purchases of goods or services valued under VND 5 million per transaction. In such cases, cash payments are still deductible if they have valid invoices and documents.

However, pursuant to Point c, Clause 1, Article 9 of Decree No. 320/2025/ND-CP and Article 26 of Decree No. 181/2025/ND-CP guiding the VAT Law, the VND 5 million threshold includes VAT. If multiple purchases are made from the same seller on the same day and the total amount reaches VND 5 million or more, non-cash payment is still required.

2.2Purchases of specific goods/services recorded by a Purchase Statement (without invoices)

According to Point b, Clause 1, Article 9 of Decree No. 320/2025/ND-CP, for expenses where invoices cannot be obtained (e.g., direct purchases from non- business or household individuals), enterprises may pay in cash and prepare a Purchase Statement. Typical cases include:

• Purchasing agricultural, aquatic, or marine products from direct producers or fishermen;
• Purchasing handicraft products made from jute, rush, bamboo, rattan, leaves, etc. from non-business individual producers;
• Purchasing scrap materials from individuals who collect them directly.

Note: Such expenses recorded by Purchase Statements are deductible for CIT purposes but are not eligible for input VAT deduction due to the absence of valid VAT invoices.

2.3Expenses of VND 5 million or more not yet paid at the time of expense recognitio

According to Point c3, Clause 1, Article 9 of Decree No. 320/2025/ND-CP, if an enterprise purchases goods/services valued at VND 5 million or more but has not yet made payment at the time of expense recognition, the expense may still be temporarily deductible.

However, enterprises must use non-cash methods when paying. If that payment is made in cash, the expense will be disallowed upon tax inspection.

2.4Employees are authorized to make payments on behalf of the enterprise

According to Point c2, Clause 1, Article 9 of Decree No. 320/2025/ND-CP, when an enterprise authorizes or assigns employees to purchase goods/services for business purposes, the payment conditions depend on transaction value:

(i)Expenses under VND 5 million per transaction

Cash payments made by employees and reimbursed by the enterprise are deductible if supported by valid invoices/document and serving business purposes.

(ii)Expenses of VND 5 million or more per transaction

Such expenses are deductible only if all of the following conditions are met:

• Employees make non-cash payments (bank transfer, card, lawful electronic payment);
• Obtain valid invoices and document;
• The enterprise has financial/internal regulations or authorization document allowing employees to pay on their behalf;
• The enterprise directly reimburses the employee.

If all the above conditions are met, the law recognizes the employee’s payment method as a non-cash payment method by the enterprise; therefore, the expense qualifies as a deductible expense when determining corporate income tax.

Conversely, if the employee pays in cash for expenses of 5 million VND or more, the expense will not meet the non-cash payment requirements and may be disallowed by the tax authorities during inspection.

In conclusion, expenses under VND 5 million may be paid in cash and remain deductible if supported by valid invoices/documents. Expenses of VND 5 million or more are deductible only if paid by non-cash methods, including cases where employees pay on behalf of the enterprise under authorization.

3.Required documents for Deductible Cash Payments

To minimize the risk of expense disallowance, enterprises must prepare adequate documentation for each case, including:

• For expenses under VND 5 million: valid sales invoices or VAT invoices; cash payment documents signed by the recipient.
• For purchases of agricultural products, scrap, or specific goods: Purchase Statement (as per prescribed form, with seller’s details); cash payment documents; delivery minutes (if any).
• For business trip expenses or payments made by individuals on behalf of the enterprise: decision on business trip or authorization document; financial/internal regulations; individual’s non-cash payment documents and enterprise’s reimbursement documents.

Although Decree No. 320/2025/ND-CP tightens the requirement for non-cash payments for expenses of VND 5 million or more, it still provides necessary legal flexibility for enterprises to handle practical business situations. Clearly distinguishing which expenses must be paid by non-cash methods and which may be paid in cash, along with preparing complete documentation from the outset, will help enterprises reduce tax risks and be proactive during inspections.

This article, “Deductible cash payment expenses under Decree No. 320/2025/ND-CP” was prepared by TNTP’s lawyer. TNTP hopes it will be useful for enterprises and valued readers.