Authorization for employees to receive wages: Key considerations for enterprises

In the course of business operations, many enterprises encounter situations where employees do not have bank accounts or, for objective reasons, are unable to receive their wages in person and request that their wages be transferred to another person on their behalf. Although the labor law permits employees to authorize another person to receive their wages, failure to comply with the applicable legal requirements may give rise to risks relating to payment documentation and affect the deductibility of wage expenses for corporate income tax (“CIT”) purposes. This article analyzes the current legal framework and highlights several key issues that enterprises should take into consideration when implementing the wage authorization mechanism. 

1. Legal framework governing the authorization to receive wages

Under applicable law, employers are required to pay wages directly, in full, and on time to their employees. However, where an employee is unable to receive the wages directly, the employer may pay the wages to a person lawfully authorized by the employee.3 Accordingly, an enterprise is not prohibited from transferring an employee’s wages to another person’s bank account, provided that the authorization is validly established in accordance with the Labor Code 2019 and the civil law. In practice, this mechanism is commonly applied where an employee does not have a bank account or is otherwise objectively unable to receive the wages in person. 

In addition to the labor law requirements, enterprises should also pay attention to the CIT regulations. Specifically, for payments of VND 5 million or more, an enterprise must possess non-cash payment documents in order for the relevant expense to qualify as a deductible expense when determining taxable income for CIT purposes.4 On this basis, Official Letter No. 654/TNI-QLDN1 issued by the Tay Ninh Tax Department dated 4 February 2026 provides that where an employee does not have a bank account and lawfully authorizes another individual to receive the wages on the employee’s behalf, the enterprise may transfer the wages to the bank account of the authorized person (“Official Letter No. 654/TNI-QLDN1”). Accordingly, provided that all prescribed conditions are satisfied, such wage payment may still be treated as a deductible expense for CIT purposes. 

2. Conditions for wage expenses to be recognized as deductible

Although the law permits wage payments through an authorized person, enterprises should maintain adequate documentation to substantiate the legitimacy of such payments, particularly during tax audits or inspections. Based on the guidance set out in Official Letter No. 654/TNI-QLDN1, wage payments made through an authorized person should satisfy the following conditions: 

Firstly, the enterprise should maintain a complete set of employment records, including the employment contract, attendance records, payroll records, and other documents evidencing that the wage expense was actually incurred for the enterprise’s business operations. 

Secondly, the enterprise should prepare an authorization document (the Authorization contract or Power of attorney) clearly specifying the authorization for another person to receive the employee’s wages. Such document should include the identities of both the principal and the authorized person, the scope of authorization, the authorization period, and the bank account details of the authorized recipient. Notably, under Official Letter No. 654/TNI-QLDN1, the tax authority requires that the Authorization contract or Power of attorney be executed in accordance with the civil law and be notarized or certified in order to ensure the legal validity of the authorization. 

Thirdly, for wage payments of VND 5 million or more, the enterprise must make payment through non-cash payment methods. Where the wages are transferred to the bank account of the authorized person, the payment document should clearly indicate that the transfer is made as payment of wages for the relevant employee pursuant to the corresponding authorization document, which helps ensure consistency among the employment records, authorization documents, and banking records. 

3. Key considerations for enterprises

An enterprise is not entitled to transfer an employee’s wages to the bank account of a family member or any other individual solely because the employee does not have a bank account, unless the employee has lawfully authorized such person to receive the wages on the employee’s behalf. In addition, enterprises should distinguish between statutory provisions and administrative guidance issued by the tax authorities. While the Labor Code 2019 only requires that the authorization be lawful, Tay Ninh Tax Department in Official Letter No. 654/TNI-QLDN1 imposes more specific documentary requirements for authorization documents as evidence supporting the deductibility of wage expenses for CIT purposes. Accordingly, to mitigate tax risks during tax finalization, enterprises are advised to proactively consult with their managing tax authority and prepare the relevant documentation in accordance with the guidance provided by such authority when making wage payments through an authorized person. 

It can therefore be seen that the wage authorization mechanism provides flexibility for both enterprises and employees, particularly where employees are unable to receive their wages directly or do not have bank accounts. Nevertheless, to ensure that wage expenses remain deductible for tax purposes and to minimize potential disputes, enterprises should establish a clear payment process and maintain complete employment records, authorization documents, and non-cash payment evidence in accordance with applicable law. Compliance with these requirements will help enterprises safeguard employees’ rights while minimizing legal and tax risks in the course of their operations. 

(3) Article 94.1 of the Labor Code 2019.

(4) Article 9.1.c of Decree No. 320/2025/ND-CP and with reference to Official Letter No. 01/TCS14-QLDN1 issued by Tax Sub-Department No. 14 of Ho Chi Minh City regarding tax policy dated 5 January 2026.

Submission date: 05/7/2026

Related posts

  1. Method of recording product-based wages in lobor contracts
  2. Salary expenses for foreign employees without a work permit
  3. Unpaid enterprise managers also required to pay social insurance from July 1, 2025
  4. Regulations on mandatory social insurance participation for non-salaried enterprise managers

Disclaimers:

This article is for general information purposes only and is not intended to provide any legal advice for any particular case. The legal provisions referenced in the content are in effect at the time of publication but may have expired at the time you read the content. We therefore advise that you always consult a professional consultant before applying any content.

For issues related to the content or intellectual property rights of the article, please email cs@apolatlegal.vn.

Apolat Legal is a law firm in Vietnam with experience and capacity to provide consulting services related to Employment and contact our team of lawyers in Vietnam via email info@apolatlegal.com.



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