Is sponsorship for purchasing computers for private schools considered a deductible expense for businesses in Vietnam?

Is sponsorship for purchasing computers for private schools considered a deductible expense for businesses in Vietnam?

Pursuant to Article 4 of Circular 96/2015/TT-BTC, the regulation is as follows:

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

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2.22. Sponsorship funding for education (including funding for vocational education activities) that does not meet the designated recipients stipulated in sub-item a of this point or lacks the specified sponsorship documentation outlined in sub-item b below:

a) Sponsorship for education includes: funding for public, semi-public, and private schools within the national education system as per educational law regulations, where the funding is not for capital contribution or share purchase in schools; funding for physical infrastructure to support teaching, learning, and school activities; funding for regular school activities; scholarship funding for students at general education institutions, vocational education institutions, and higher education institutions as specified in the Education Law (direct sponsorship to students or through educational institutions, via agencies or organizations authorized to mobilize sponsorship according to legal regulations); funding for competitions of subjects taught in schools where participants are students; sponsorship to establish educational encouragement funds as per education and training law.

b) Documentation determining sponsorship funding for education includes: A record confirming the sponsorship funds with signatures of the business establishment representative as the sponsor, the legal educational institution representative as the recipient, students (or agencies, organizations authorized to mobilize sponsorships) as the beneficiaries (using form No. 03/TNDN attached to Circular No. 78/2014/TT-BTC); along with invoices, purchase documents (if sponsorship is in kind) or payment vouchers (if sponsorship is in cash).

Hence, according to the regulations, both private and public schools can be included, specifically, sponsorship for education includes: funding for public, semi-public, and private schools within the national education system as per educational law regulations, provided the sponsorship is not for capital contribution or share purchase in schools, while ensuring that the documentation determining the sponsorship funding is specifically outlined as above.

Is sponsorship for purchasing computers for private schools considered a deductible expense for businesses in Vietnam? (Image from the Internet)

Are expenditures on wages and salaries of employees that have not been paid after the annual tax declaration is submitted considered deductible expenses in Vietnam?

Pursuant to Article 4 of Circular 96/2015/TT-BTC, the regulation is as follows:

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

...

2.6. Payment of wages, salaries, bonuses to employees falls into one of the following cases:

a) Payment of wages, salaries, and other amounts payable to employees that the company has accounted for in the production and business expenses during the period but have not actually been paid or do not have payment vouchers as per legal regulations.

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c) Payment of wages, salaries, and allowances payable to employees but by the deadline for submitting the annual tax finalization, the payment has not been made, except where the enterprise has set up a reserve fund to supplement the next year's wage fund. The annual reserve level is decided by the enterprise but should not exceed 17% of the realized wage fund.

The realized wage fund is the total actual wages paid for the tax finalization year by the deadline for submitting the finalization documents as regulated (excluding the amount set aside in the previous year's reserve fund used in the tax finalization year).

The setup of the wage reserve must ensure that after reservation, the enterprise does not incur a loss, if the enterprise incurs a loss, they are not entitled to fully deduct up to 17%.

In case the enterprise set up a wage reserve fund in the previous year and within 6 months from the end of the fiscal year, the enterprise has not used or has not used up the wage reserve fund, they must reduce the expenses of the following year.

In principle, if a company pays wages, salaries, and allowances to employees but the deadline for filing the annual tax finalization has passed and the payment has not been made, they cannot include this in expenses, except in cases where the enterprise has set up a reserve fund to supplement next year's wage fund, it can still be included as a deductible expense.

What is the application to determine sponsorship for building homes for charity, building homes for the poor to include in deductible expenses in Vietnam?

Pursuant to Article 4 of Circular 96/2015/TT-BTC, the regulation is as follows:

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

...

2.25. Sponsorship funding for building homes for the poor that does not match the designated recipients as stipulated in sub-item a of this point; Sponsorship for building homes for charity, building homes for the poor, building solidarity houses as per legal regulations without the specified sponsorship documentation outlined in sub-item b below:

a) For sponsorship funding to build homes for the poor, the recipient must be households classified as poor according to the Prime Minister of the Government of Vietnam. The form of sponsorship: monetary or in-kind support to build homes for poor households, either directly or through agencies, organizations authorized to mobilize sponsorships according to legal regulations.

b) Documentation determining sponsorship for building homes for charity, building homes for the poor, building solidarity houses includes: A record of the sponsorship with signatures of the enterprise representative as the sponsor, and the recipient or the organization with the function to mobilize sponsorship as the recipient (using form No. 06/TNDN issued along with Circular No. 78/2014/TT-BTC); a document confirming the recipient as a poor household by the local authority (for sponsorship to build homes for the poor); invoices, purchase documents (if sponsorship is in-kind) or payment vouchers (if sponsorship is in cash).

In cases where the recipient is an agency or organization with the function to mobilize sponsorship, the documentation to determine sponsorship includes: A record of the sponsorship with signatures of the enterprise representative as the sponsor and the agency or organization authorized to mobilize sponsorship as the recipient; invoices, purchase documents (if the sponsorship is in-kind) or payment vouchers (if sponsorship is in cash).

Hence, documentation to determine sponsorship for building homes for charity, or homes for the poor includes:

- A record confirming the sponsorship funds with signatures of the enterprise representative as the sponsor, and the recipient as the beneficiary (using form No. 06/TNDN attached to Circular No. 78/2014/TT-BTC);

- A document confirming the poor household status by the local authority (for sponsorships to build homes for the poor);

- Invoices, purchase documents (if sponsorship is in-kind) or payment vouchers (if sponsorship is in cash).