Are allowances provided by the Trade Union deductible for determining CIT in Vietnam?

Are allowances provided by the Trade Union deductible in determining CIT in Vietnam?

Pursuant to Clause 2.31 of Article 6 of Circular 78/2014/TT-BTC (amended by Article 4 of Circular 96/2015/TT-BTC, Article 1 of Circular 151/2014/TT-BTC, Clause 4 of Article 3 of Circular 25/2018/TT-BTC), the regulations are as follows:

Deductible and non-deductible expenses when determining taxable income

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2. Non-deductible expenses when determining taxable income include:

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2.30. Expenses not related to taxable revenue, except for the following expenses:

- Actual expenses for HIV/AIDS prevention activities at the enterprise's workplace, including: Expenses for training HIV/AIDS prevention staff of the enterprise, expenses for organizing communication on HIV/AIDS prevention for employees of the enterprise, costs for counseling, HIV testing, expenses supporting HIV-infected employees.

- Actual expenses for executing national defense and security education tasks, training, activities of the self-defense militia, and other national defense and security tasks as stipulated by relevant laws.

- Actual expenses to support the Communist Party of Vietnam, socio-political organizations within the enterprise.

- Expenses for vocational education and training activities for employees include:

+ Costs for teachers, study materials, equipment for vocational education activities, practice materials, other supporting expenses for learners.

+ Training costs for recruited employees at the enterprise

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Additionally, Pursuant to Article 1 of the Trade Union Law 2012, the regulations are as follows:

Trade Union

The Trade Union is a broad socio-political organization of the working class and workers, established voluntarily and a member of the political system of Vietnamese society under the leadership of the Communist Party of Vietnam of Vietnam; representing officials and public employees, workers, and other laborers (hereinafter collectively referred to as workers), along with state agencies, economic organizations, and social organizations to take care of and protect the legitimate and legal rights of workers; participate in state management, socio-economic management, and supervise the operation of state agencies, organizations, units, enterprises; propagandize and encourage workers to enhance their knowledge, skills, comply with the law, and build and protect the Socialist Republic of Vietnam.

Through the above two regulations, it can be seen that the cost of union support is considered support for socio-political organizations within an enterprise and thus, union support cost is deductible for determining CIT.

Are allowances provided by the Trade Union deductible for determining CIT in Vietnam? (Image from the Internet)

What are the conditions for deductible expenses for determining CIT in Vietnam?

Pursuant to Clause 1 of Article 9 of the Enterprise Income Tax Law 2008, amended and supplemented by Clause 5 of Article 1 of the Amended Enterprise Income Tax Law 2013 and Clause 3 of Article 1 of Law No. 71/2014/QH13, deductible expenses for determining CIT must meet the following conditions:

- Actual expenses incurred related to the production and business activities of the enterprise; expenses for vocational education activities; expenses for carrying out defense and security tasks by the enterprise as prescribed by law.

- Expenses with sufficient invoices and documents as prescribed by law. For invoices for goods and services with a single value from 20 million VND or more, there must be non-cash payment documents, except in cases where non-cash payment documents are not required according to legal provisions.

What income is exempt from CIT in Vietnam?

Pursuant to Article 4 of the Enterprise Income Tax Law 2008, amended and supplemented by Clause 3 of Article 1 of the Amended Enterprise Income Tax Law 2013, Clause 2 of Article 1 of Law No. 71/2014/QH13, the types of income exempt from CIT include:

(1) Income from cultivation, livestock production, aquaculture, processing of agricultural products, seafood, salt production by cooperatives; income of cooperatives operating in agriculture, forestry, fishery, and salt production in areas with difficult socio-economic conditions or areas with especially difficult socio-economic conditions; income of enterprises from cultivation, livestock production, aquaculture, processing of agricultural products, seafood in areas with particularly difficult socio-economic conditions; income from fishing activities.

(2) Income from conducting technical services directly serving agriculture.

(3) Income from carrying out scientific research and technological development contracts, products under trial production, and products created from new technology for the first time applied in Vietnam.

(4) Income from the production and business activities of goods and services by enterprises with at least 30% of their average number of employees being disabled people, people after rehabilitation, and people with HIV/AIDS, and with an average number of employees in the year of twenty or more, excluding enterprises operating in finance and real estate.

(5) Income from vocational training activities dedicated to ethnic minorities, disabled people, children with special difficulties, and people with social evils.

(6) Distributed income from capital contributions, joint ventures, and associates in domestic enterprises after paying enterprise income tax as prescribed.

(7) Donations received for use in education, scientific research, culture, art, charity, humanitarian activities, and other social activities in Vietnam.

(8) Income from transferring greenhouse gas emissions reduction certificates (CERs) of enterprises certified for emissions reduction.

(9) Income from the tasks assigned by the State to the Vietnam Development Bank in development investment credit activities, export credit; income from credit activities for the poor and other policy beneficiaries by the Social Policy Bank; income of state financial funds and other state funds operating for non-profit purposes according to legal regulations; income of organizations wholly owned by the State established by the Government of Vietnam to handle bad debts of Vietnamese credit institutions.

(10) Non-distributable income of socialized facilities in education - training, healthcare, and other socialized fields retained for investment according to specialized laws in those fields; non-distributable income forming assets of cooperatives established and operating under regulations.

(11) Income from transferring technology in priority fields transferred to organizations and individuals in areas with particularly difficult socio-economic conditions.