Are phone expenses for employees considered deductible expenses when calculating CIT in Vietnam?

Are phone expenses for employees considered deductible expenses when calculating CIT in Vietnam?

Based on Official Dispatch 79557/CT-TTHT in 2018 regarding corporate income tax and personal income tax concerning allowances paid to employees, the regulations are as follows:

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- Based on Article 4 of Circular No. 96/2015/TT-BTC dated June 22, 2015, amending and supplementing Article 6 of Circular No. 78/2014/TT-BTC guiding expenses that are deductible and non-deductible when determining CIT taxable income:

“1. Except for non-deductible expenses specified in Clause 2 of this Article, enterprises can deduct all expenses if they meet the following conditions:

a) The expense actually arises and is related to the production and business activities of the enterprise.

b) The expense has sufficient legal invoices and documents as prescribed by law.

c) When the expense involves the purchase of goods or services in individual transactions valued at 20 million VND or more (including VAT), payment must have non-cash payment documents. ...

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

...2.6. Salaries, wages, and bonuses for employees in one of the following cases:

...b) Salaries, bonuses, expenditures for life insurance for employees are not specifically recorded as conditions and benefits in any of the following documents: Labor contract; Collective labor agreement; Financial regulations of the Company, Corporation, Group; Bonus regulations set by the Chairman of the Board, CEO, Director as per the company's financial regulations.

...- In cases where an enterprise signs a labor contract with an employee that records a housing allowance paid by the enterprise, such allowances are considered salaries or wages and have full invoices and documents as prescribed, they can be included in the deductible expenses when determining the taxable corporate income.

...2.9. Travel expenses for vacation leaves not in accordance with the regulations of the Labor Code.

Travel allowances for employees on business trips, travel expenses, and accommodation expenses for employees on business trips if they have full invoices and documents are calculated into deductible expenses when determining taxable income. In cases where the enterprise provides travel, accommodation, and per diem allowances for employees on business trips and follows the company’s financial regulations or internal regulations, the expenses can be included as deductible costs for travel, accommodation, and allowance payments.”

Based on the above regulations, if a Company provides a housing allowance, transportation costs (from home to company at a fixed monthly rate), phone expenses, attendance allowances for employees, recording specific conditions and benefits in one of the following documents: labor contracts; collective labor agreements; financial regulations of the Company, Corporation, Group; or bonus regulations as stipulated by the Chairman of the Board, CEO, Director as per the company’s financial regulations, then:

The housing allowance, transportation, and attendance allowance can be accounted for as deductible expenses in determining corporate taxable income if they meet the provisions of Article 4 of Circular No. 96/2015/TT-BTC and are included in the taxable personal income of the employee.

Regarding the phone allowance: the provision of phone expenses for individuals calculated as deductible when determining taxable corporate income under CIT laws can be deducted when determining taxable personal income.

If the Company provides phone expenses for employees exceeding the stipulated allowance, the excess must be included in taxable personal income.

Thus, if the Company provides phone expenses for employees, specifying the conditions and benefits in documents such as labor contracts; collective labor agreements; or financial regulations of the Company, Corporation, Group... this expense is deductible when calculating corporate income tax.

Are phone expenses for employees considered deductible expenses when calculating CIT in Vietnam? (Image from the Internet)

Vietnam: Is the CIT tax period determined by the calendar year or the fiscal year?

According to Article 5 of the Law on Corporate Income Tax 2008, the CIT tax period is determined by the calendar year or the fiscal year, except in the following case:

The CIT tax period is determined per income occurrence for foreign enterprises as specified at point c and point d of clause 2 of Article 2 Law on Corporate Income Tax 2008.

How is taxable income calculated during the CIT tax period in Vietnam?

According to Clause 1 of Article 7 of the Law on Corporate Income Tax 2008, the taxable income during the CIT tax period is calculated by subtracting exempted income and losses carried forward from previous years from taxable income.