Are documents proving charitable donations required for personal income tax reduction in Vietnam?

What are the charitable and humanitarian contributions eligible for personal income tax reduction in Vietnam?

Based on Clause 1, Article 20 of the 2007 Personal Income Tax Law, which repeals regulations related to determining taxes for individual businesses by Clause 4, Article 6 of the 2014 Amendment Law on Tax Laws, the charitable and humanitarian contributions eligible for personal income tax reduction include:

- Contributions to organizations or institutions caring for or raising children with exceptionally difficult circumstances, people with disabilities, and the elderly without support.

- Contributions to charitable funds, humanitarian funds, and scholarship funds.

Are documents proving charitable donations required for personal income tax reduction in Vietnam?

Based on Official Dispatch 3569/TCT-DNNCN in 2020 from the General Department of Taxation guiding the lawful collection of documents when contributing to charity and humanitarian actions, the following is stated:

Firstly, based on subsection a.2, point a, Clause 3, Article 9 of Circular 111/2013/TT-BTC which regulates dependants reductions for charitable, humanitarian, and scholarship contributions as follows:

Deductions

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3. Deductions for charitable, humanitarian, and scholarship contributions

a) Charitable, humanitarian, and scholarship contributions are deductible from taxable income for income from business, salaries, and wages before calculating the tax of resident taxpayers, including:

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a.2) Contributions to charitable funds, humanitarian funds, scholarship funds established and operated under the provisions of Decree No. 30/2012/ND-CP dated April 12, 2012, of the Government of Vietnam on the organization and operation of social funds, charitable funds, operating for charity, humanitarian, scholarship purposes, not for profit and regulations in other related documents on the management, use of sponsorship sources.

Documentary proof for charitable, humanitarian, and scholarship contributions is legally recognized receipts issued by central or provincial organizations and funds.

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Secondly, based on Clause 1, Article 2 of Decree 93/2021/ND-CP which regulates organizations and individuals soliciting, receiving, and distributing voluntary contributions as follows:

Applicable subjects

1. Organizations and individuals soliciting, receiving, and distributing voluntary contributions:

a) The Vietnam Fatherland Front Committee calls, solicits; the Mobilization, receiving and distributing board of voluntary contributions (an organization established by the Standing Committee of the same level Vietnam Fatherland Front Committee - hereinafter referred to as the Mobilization board) receives and distributes voluntary contributions to overcome difficulties caused by natural disasters, epidemics, incidents;

b) The Vietnam Red Cross Society solicits, receives, and distributes voluntary contributions to overcome difficulties caused by natural disasters, epidemics, incidents;

c) Ministries, ministry-equivalent agencies, agencies under the Government of Vietnam, provincial People's Committees, district-level People's Committees solicit, receive, and distribute voluntary contributions to overcome difficulties caused by natural disasters, epidemics, incidents. Commune-level People's Committees receive and distribute voluntary contributions when authorized by the district-level People's Committee as per legal regulations;

d) The national steering committee for disaster prevention solicits, receives international voluntary contributions in emergency situations of natural disasters;

đ) Mass media agencies, medical facilities solicit, receive and support patients with severe illnesses;

e) Charitable funds as regulated in Decree No. 93/2019/ND-CP dated November 25, 2019, of the Government of Vietnam on the organization and operation of social funds, charitable funds (hereinafter referred to as charitable funds) solicit, receive, distribute voluntary contributions to overcome difficulties caused by natural disasters, epidemics, incidents, support patients with severe illnesses;

g) Businesses, cooperatives, and other organizations having legal personality participate in soliciting, receiving, and distributing voluntary contributions to overcome difficulties caused by natural disasters, epidemics, incidents, support patients with severe illnesses;

h) Individuals with full civil capacity participate in soliciting, receiving, distributing voluntary contributions to overcome difficulties caused by natural disasters, epidemics, incidents, support patients with severe illnesses.

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Thirdly, based on Article 2, Clause 3, Article 3, Article 16 of the 2015 Accounting Law regulating accounting documents and Article 8 of Circular 15/2024/TT-NHNN regulating non-cash payment services.

Thus, based on the above legal grounds and guidance in Official Dispatch 3569/TCT-DNNCN in 2020, when contributing to charitable funds, taxpayers must collect documents to receive the reduction in personal income tax. Specific documents include:

- Transfer documents confirmed by the Branch Bank Manager.

- Copy of the "Credit Advice" from the bank transfer transaction by the bank issuing the Central or provincial organization or fund’s account.

Is it necessary to collect documents to receive personal income tax reduction when contributing to charitable funds? (Image from the Internet)

Which entity is the personal income taxpayer in Vietnam?

Based on Article 2 of the 2007 Personal Income Tax Law which defines personal income taxpayers as follows:

- Resident individuals with taxable income generated within and outside the Vietnamese territory.

- Non-resident individuals with taxable income generated within the Vietnamese territory.

Furthermore, residents and non-residents are defined as follows:

- A resident individual is someone who meets one of the following conditions:

+ Present in Vietnam for 183 days or more within a calendar year or for 12 consecutive months from the first day of presence in Vietnam;

+ Having a permanent residence in Vietnam, including having a registered permanent residence or renting a house to live in Vietnam under a lease contract.

- A non-resident individual is someone who does not meet the conditions specified in Clause 2, Article 2 of the 2007 Personal Income Tax Law.