Is corporate income tax deductible for allowance for employees on overseas business trips in Vietnam?

Is corporate income tax deductible for allowance for employees on overseas business trips in Vietnam?

Based on Article 6 of Circular 78/2014/TT-BTC, as amended by Article 4 of Circular 96/2015/TT-BTC, expenses for sending employees on overseas business trips can be deducted when determining taxable corporate income but must meet the following conditions:

- Allowances for employees on business trips, travel expenses, and accommodation costs for employees, if there are complete invoices and documents, are included in deductible expenses when determining taxable income.

- In cases where the enterprise provides a lump-sum allowance for travel, accommodation, and allowances for employees and complies with the financial regulations or internal policy, the lump-sum travel, accommodation, and allowances can be included as deductible expenses.

- For enterprises that send employees on business trips (including domestic and overseas trips) where costs exceed 20 million VND, and the purchase of airline tickets is paid via an individual's bank card, this is considered a non-cash payment method and can be included in deductible expenses if the following conditions are met:

+ There are appropriate invoices and documentation issued by the goods or service provider.

+ The enterprise has a decision or official document assigning the employee to the business trip.

+ The financial or internal policy of the enterprise allows employees to make payments related to business trips and purchase airline tickets using a bank card of which the individual is the cardholder, with these expenses subsequently reimbursed by the enterprise.

- In cases where the enterprise purchases airline tickets via e-commerce websites for employees to facilitate business operations, documentation for deductible expenses includes electronic airline tickets, boarding passes, and non-cash payment proof of the enterprise participating in the transport journey.

- If the enterprise cannot recover the employee's boarding pass, the evidence for deductible expenses includes the electronic airline ticket, the decision or official document assigning the employee to the business trip, and the enterprise's non-cash payment proof for the individual participating in the transport journey.

Is corporate income tax deductible for allowance for employees on overseas business trips in Vietnam? (Image from the Internet)

When is the corporate income tax period in Vietnam?

According to Article 5 of the Corporate Income Tax Law 2008, the corporate income tax period is defined as follows:

- The corporate income tax period is determined based on the calendar year or fiscal year, except for cases where tax is calculated on each occurrence of income applicable to foreign enterprises.

- The tax period calculated on each occurrence of income applies to foreign enterprises, including:

+ Enterprises with a permanent establishment in Vietnam pay tax on taxable income generated in Vietnam even if it is unrelated to the operations of the permanent establishment.

+ Foreign enterprises without a permanent establishment in Vietnam pay tax on taxable income generated in Vietnam.

What incomes are subject to corporate income tax in Vietnam?

According to Article 3 of the Corporate Income Tax Law 2008, as amended and supplemented by Clause 1, Article 1 of the Law Amending and Supplementing a Number of Articles of the Laws on Taxes 2014, taxable income includes income from production, business of goods, services, and other incomes.

Other incomes include:

- Income from the transfer of capital, transfer of the right to contribute capital;

- Income from the transfer of real estate, transfer of investment projects, transfer of the right to participate in investment projects, transfer of the right to explore, exploit, and process minerals;

- Income from the right to use assets, ownership of 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;

- Income from bad debts that have been written off but are now collected;

- Income from liabilities which cannot be identified;

- Income from omitted businesses from previous years and other incomes.

Additionally, Vietnamese enterprises investing abroad that transfer part of their income after paying foreign corporate income tax to Vietnam shall follow the provisions of the Double Taxation Avoidance Agreement if such an agreement exists with Vietnam.

For countries with which Vietnam has not signed a Double Taxation Avoidance Agreement, if the corporate income tax rate in those countries is lower, the difference shall be collected according to Vietnam's Corporate Income Tax Law.