Is provision of typhoon recovery aid considered deductible expenses for enterprises in Vietnam?

Is provision of typhoon recovery aid considered deductible expenses for enterprises in Vietnam?

Based on Article 4 Circular 96/2015/TT-BTC, the provisions are as follows:

Amendments and supplements to Article 6 of Circular No. 78/2014/TT-BTC (amended and supplemented by Clause 2, Article 6 of Circular No. 119/2014/TT-BTC and Article 1 of Circular No. 151/2014/TT-BTC) as follows:

Deductible and non-deductible expenses when determining taxable income

1. Except for the non-deductible expenses mentioned in Clause 2 of this Article, businesses are allowed to deduct all expenses if they meet the following conditions:

a) The expense actually incurred is related to the business activities of the enterprise.

b) The expense has sufficient legal invoices and documents according to the provisions of law.

c) If an expense has an invoice for the purchase of goods or services with a value of 20 million VND or more (VAT-inclusive), payment must be made via non-cash payment documents.

Non-cash payment documents are performed according to the regulations of legal documents on value-added tax.

...

2.24. Sponsorship expenses for mitigating the consequences of natural disasters not in accordance with the specified entities in subsection a of this point or without support for the sponsorship as specified in subsection b below:

a) Sponsorship for mitigating the consequences of natural disasters includes monetary or in-kind support directly to organizations established and operating according to the provisions of law; individuals affected by natural disasters through an agency or organization with the function of mobilizing support according to the provisions of law.

b) The documents determining sponsorship for mitigating the consequences of natural disasters include: the minutes of confirmation of the sponsorship signed by the representative of the sponsoring enterprise, the representative of the organization affected by the natural disaster (or the agency or organization with the function of mobilizing support) as the recipient unit (according to form No. 05/TNDN issued together with Circular No. 78/2014/TT-BTC) attached to invoices and documents for purchasing goods (if sponsored in kind) or payment documents (if sponsored in cash).

Therefore, sponsorship for typhoon and natural disaster recovery is still considered reasonable expenses, provided that the above conditions are met, such as sponsorship in cash or in-kind to directly mitigate the effects of natural disasters to organizations established and operating according to the law; and individuals affected by natural disasters through an agency or organization with the function of mobilizing sponsorship according to the law.

Is provision of typhoon recovery aid considered deductible expenses for enterprises in Vietnam? (Image from the Internet)

Vietnam: What are non-deductible expenses when calculating taxable income with regard to travel allowance for vacations?

Based on Article 4 Circular 96/2015/TT-BTC, the provisions are as follows:

2.9. Travel allowances for vacations that do not conform to the provisions of the Labor Code.

Travel allowances for employees on business trips, travel expenses, and accommodation expenses for employees on business trips, if fully supported by invoices and documents, are considered deductible expenses when determining taxable income. If the enterprise covers travel expenses, accommodation expenses, and allowances for employees on business trips in accordance with the financial regulations or internal policies of the enterprise, these expenses are considered deductible.

In the case of the enterprise sending employees on a business trip (including domestic and international trips) if expenses amounting to 20 million VND or more arise, and the expenses for purchasing airline tickets are paid using the individual's bank card, those expenses qualify as non-cash payments and are considered deductible if they meet the following conditions:

- There are suitable invoices and documents provided by the supplier of goods or services.- The enterprise has a decision or document dispatching the employee on a business trip.- The financial or internal policies of the enterprise allow employees to pay for business trip expenses, purchase airline tickets using a personal bank card, and these expenses are subsequently reimbursed by the enterprise.

If the enterprise purchases airline tickets through an e-commerce website for employees to travel for business purposes, the documents used as a basis for deductible expenses include electronic flight tickets, boarding passes, and non-cash payment documents from the enterprise for the individual involved in the transportation. If the enterprise fails to retrieve the boarding pass from the employee, the documents used as a basis for deductible expenses include electronic flight tickets, the decision or document dispatching the employee on a business trip, and non-cash payment documents from the enterprise for the individual involved in the transportation.

Does the enterprise need ownership documents for leased fixed assets to be considered deductible expenses in Vietnam?

Based on Section 2.2b Article 4 Circular 96/2015/TT-BTC, the provisions are as follows:

2.2. Depreciation expenses for fixed assets under the following circumstances:

a) Depreciation expenses for fixed assets not used for the production, business activities of goods and services.

Fixed assets specifically used for employees working at the enterprise such as: mid-shift restrooms, mid-shift dining rooms, changing rooms, restrooms, medical rooms or stations for medical examinations, training facilities, vocational training centers, libraries, nurseries, sports areas, and equipment, and furnishings classified as fixed assets installed in the aforementioned facilities; clean water tanks, parking lots, transportation vehicles for employees, direct accommodation for employees; construction costs for physical facilities, costs of purchasing machinery and equipment that classify as fixed assets used for vocational education activities are included in deductible expenses when determining taxable income.

b) Depreciation expenses for fixed assets that do not have documents proving ownership by the enterprise (except for financial leased fixed assets).

c) Depreciation expenses for fixed assets that are not managed, monitored, and accounted for in the bookkeeping of the enterprise according to current fixed asset management, monitoring, and accounting policies.

d) The depreciation amount exceeds the current regulations of the Ministry of Finance on the policies for management, use, and depreciation of fixed assets.

Enterprises must notify the tax authorities directly managing them of the method of fixed asset depreciation chosen before implementing the depreciation (e.g., notifying the choice of the straight-line depreciation method...). Annually, enterprises must depreciate fixed assets according to the current regulations of the Ministry of Finance on policies for management, use, and depreciation of fixed assets, including accelerated depreciation (if conditions are met).

Therefore, depreciation for fixed assets without ownership documents proving the enterprise's ownership (except for financial leased fixed assets) is not included in deductible expenses. However, financial leased fixed assets are not required to have ownership documentation.