Are expenses for healthcare sponsorship deductible when calculating corporate income tax in Vietnam?

Are expenses for healthcare sponsorship deductible when calculating corporate income tax in Vietnam?

Based on point 2.24, clause 2, Article 6 of Circular 78/2014/TT-BTC, amended by Article 4 of Circular 96/2015/TT-BTC, the provisions on deductible and non-deductible expenses when calculating taxable corporate income are as follows:

Expenses deductible and non-deductible when calculating taxable income

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2. Expenses that are not deductible when calculating taxable income include:

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2.23. Expenses related to healthcare sponsorship that do not comply with specified beneficiaries or lack the documentation stated in section b below:

a) Healthcare sponsorships include: donations to healthcare facilities established in accordance with healthcare laws, where such donations are not for capital contributions or purchasing shares in those hospitals or medical centers; donations of medical equipment, instruments, or pharmaceuticals; sponsorships for regular activities of hospitals or medical centers; and monetary donations to patients through an organization authorized to mobilize sponsorship according to the law.

b) The documentation to determine healthcare sponsorship includes: A record confirming the sponsorship signed by the representative of the sponsoring enterprise, the representative of the recipient entity (or an organization authorized to mobilize sponsorship) according to Form No. 04/TNDN issued with Circular 78/2014/TT-BTC, along with invoices for goods (if sponsored in kind) or payment receipts (if sponsored in cash).

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Thus, healthcare sponsorship expenses can be deducted when calculating corporate income tax if they meet one of the following two conditions:

- They are expenses related to healthcare sponsorship, including: donations to healthcare facilities established under healthcare laws, where the donations are not for capital contributions or purchasing shares in those hospitals or medical centers; donations of medical equipment, instruments, or pharmaceuticals; sponsorships for regular activities of hospitals or medical centers; and monetary donations to patients through an organization authorized to mobilize sponsorship according to the law.

- The documentation to determine healthcare sponsorship includes: A record confirming the sponsorship signed by the representative of the sponsoring enterprise, the representative of the recipient entity (or an organization authorized to mobilize sponsorship) according to Form No. 04/TNDN issued with Circular 78/2014/TT-BTC, along with invoices for goods (if sponsored in kind) or payment receipts (if sponsored in cash).

Are expenses for healthcare sponsorship deductible when calculating corporate income tax in Vietnam? (Image from the Internet)

When is the time for determining revenue to calculate taxable corporate income in Vietnam?

Based on clause 2, Article 5 of Circular 78/2014/TT-BTC, amended by Article 3 of Circular 96/2015/TT-BTC, the regulations for calculating the revenue time to calculate taxable corporate income are as follows:

- For sales activities, it is the time of transferring ownership or use rights of goods to the buyer.

- For service provision activities, it is the time of completing the service provision or completing parts of the service provision for the buyer, except in the cases mentioned in section 3, Article 5 of Circular 78/2014/TT-BTC, section 1, Article 6 of Circular 119/2014/TT-BTC.

- For air transport activities, it is the time of completing the provision of transportation services to the buyer.

- Other cases as provided by the law.

What are regulations on corporate income tax payers in Vietnam?

Based on Article 2 of the Corporate Income Tax Law 2008, as amended and supplemented by clause 1, Article 1 of the Revised Corporate Income Tax Law 2013, the regulations on tax payers are as follows:

- A corporate income tax payer is an organization engaged in the production, trading of goods, or services with taxable income as stipulated by this Law (hereinafter referred to as enterprises), including:

+ Enterprises established under Vietnamese law;

+ Enterprises established under foreign laws (hereinafter referred to as foreign enterprises) having a permanent establishment or no permanent establishment in Vietnam;

+ Organizations established under the Cooperative Law;

+ Established non-business units according to Vietnamese law;

+ Other organizations with production, business activities generating income.

- Enterprises with taxable income as regulated in Article 3 of the Corporate Income Tax Law 2008 must pay corporate income tax as follows:

+ Enterprises established under Vietnamese law are taxed on taxable income generated within Vietnam and taxable income generated abroad;

+ Foreign enterprises with a permanent establishment in Vietnam are taxed on taxable income generated within Vietnam and taxable income generated abroad related to the activities of that permanent establishment;

+ Foreign enterprises with a permanent establishment in Vietnam are taxed on taxable income generated within Vietnam when such income is not related to the activities of the permanent establishment;

+ Foreign enterprises without a permanent establishment in Vietnam are taxed on taxable income generated within Vietnam.

- A permanent establishment of a foreign enterprise is a production or business facility through which a foreign enterprise partly or wholly conducts production or business activities in Vietnam, including:

+ Branch, executive office, factory, workshop, means of transport, oil well, gas well, mine, or any other site of natural resource extraction in Vietnam;

+ Construction site, construction, installation, or assembly work;

+ Service supply facility, including consultancy services through employees or other organizations or individuals;

+ Agent for the foreign enterprise;

+ Representative in Vietnam authorized to sign contracts in the name of the foreign enterprise, or a representative not authorized to sign contracts in the name of the foreign enterprise but regularly engaged in delivering goods or providing services in Vietnam.