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

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

Based on point 2.6, clause 2, Article 6 of Circular 78/2014/TT-BTC, as amended by Article 4 of Circular 96/2015/TT-BTC, which stipulates deductible and non-deductible expenses in determining taxable income as follows:

Deductible and non-deductible expenses in determining taxable income

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

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2.7. Uniform expenses in kind for employees without invoices or documents. Uniform expenses in cash for employees exceeding 5 million dong/person/year.

In cases where enterprises have both cash and in-kind uniform expenses for employees, to count them as deductible expenses, the maximum cash expense must not exceed 5 million dong/person/year, and in-kind expenses must have invoices and documents.

For industries with specific characteristics, these expenses are executed according to specific regulations by the Ministry of Finance.

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From the above regulations, it can be seen that uniform expenses for employees are deductible when calculating corporate income tax if they meet the following conditions:

- Uniform expenses in kind for employees must have invoices and documents;

- Cash uniform expenses for employees must not exceed 5 million dong/person/year.

- In cases where enterprises have both cash and in-kind uniform expenses for employees, the maximum cash expense allowable is 5 million dong/person/year, and in-kind expenses must have invoices and documents.

Additionally, for industries with specific characteristics, these expenses are executed according to specific regulations by the Ministry of Finance.

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

What incomes are subject to corporate income tax in Vietnam?

According to the regulation at Article 3 of the Enterprise Income Tax Law 2008 as amended and supplemented by clause 1, Article 1 of the Law amending and supplementing some articles of the laws on tax 2014, taxable income includes income from goods and services production and business activities and other income.

Among these, other income includes:

- Income from capital transfers, contribution rights transfers;

- Income from real estate transfer, investment project transfer, participation rights in investment projects, exploration, mining, and processing rights transfer;

- Income from the use of assets, ownership rights over assets, including income from intellectual property rights as prescribed by law;

- Income from the transfer, lease, liquidation of assets, including valuable papers;

- Income from interest on deposits, loans, foreign exchange sales;

- Collections from bad debts written off but now collected;

- Collections from liabilities with unidentified creditors;

- Income from business activities of previous years that were omitted and other income.

Additionally, if a Vietnamese enterprise invests abroad and repatriates the income after paying corporate income tax abroad, according to agreements to avoid double taxation that Vietnam has signed, it shall comply with the agreement;

For countries with which Vietnam has not signed agreements to avoid double taxation, if the corporate income tax rate in countries where the income is repatriated is lower, collect the difference compared to the corporate income tax calculated according to Vietnam's Enterprise Income Tax Law.

Where do enterprises pay corporate income tax in Vietnam?

Based on Article 12 of Decree 218/2013/ND-CP, the regulation on where enterprises pay corporate income tax is as follows:

- Enterprises pay tax at the locality where the headquarters are based. If enterprises have dependent accounting production facilities in provinces or cities directly under the Central Government different from where the headquarters are, the tax is calculated and paid at the headquarters location and where the production facilities are based.

- The amount of corporate income tax to be paid in provinces or cities directly under the Central Government where dependent accounting production facilities are based is determined by the total corporate income tax payable in the period multiplied by the ratio of expenses incurred at the dependent accounting production facility to the total expenses of the enterprise.

- The above tax payment rule does not apply to projects, project items, or construction facilities that do dependent accounting.

- The decentralization, management, and use of corporate income tax revenue enforcement according to the provisions of the State Budget Law 2015.

- Dependent units that conduct industry-wide accounting and have income outside the main business activities pay tax at the province or city directly under the Central Government where such business activity takes place.

- The Ministry of Finance provides guidance on where to pay taxes.