Is the fine for administrative violations deductible upon determination of taxable incomes in Vietnam?

What types of income are subject to corporate income tax in Vietnam?

Pursuant to Article 3 of the Law on Corporate Income Tax 2008, as amended by Clause 1 Article 1 of the Law Amending Various Tax Laws 2014, taxable income includes income from production and business activities related to goods and services, as well as other incomes.

Other incomes include:

- Income from capital transfer and capital contribution rights transfer;

- Income from real estate transfer, investment project transfer, rights to participate in investment projects, exploration, exploitation, and processing of minerals transfer;

- Income from the right to use assets, ownership of assets, including intellectual property rights income as regulated by law;

- Income from asset transfer, lease, liquidation, including transfer of valued papers;

- Income from interest on deposits, loans, foreign currency sales; receipts from previously written-off bad debts now recovered;

- Receipts from unidentified payable debts;

- Business income from previous years not recorded and other incomes.

* For Vietnamese enterprises investing abroad, repatriating income after paying corporate income tax overseas:

In countries with which Vietnam has signed a double taxation avoidance agreement, the provisions of the agreement will apply. In countries without such an agreement with Vietnam, if the corporate income tax rate is lower than Vietnam's, the difference will be collected compared to the corporate income tax calculated under Vietnam's corporate income tax law.

Is the fine for administrative violations deductible upon determination of taxable incomes in Vietnam?

According to Clause 2 Article 9 of the Law on Corporate Income Tax 2008, amended by Clause 5 Article 1 of the Law Amending Corporate Income Tax 2013 it is stipulated as follows:

Deductible and Non-deductible Expenses for Taxable Income Determination

1. Except for expenses prescribed in Clause 2 of this Article, enterprises are allowed to deduct all expenses when determining taxable income if they meet all of the following conditions:

...

2. Expenses that are non-deductible when determining taxable income include:

...

b) Fines for administrative violations;

c) Expenses reimbursed by other funding sources;

...

Fines for administrative violations are non-deductible when determining taxable corporate income.

Is the fine for administrative violations deductible upon determination of taxable incomes? (Image from the Internet)

Which are non-deductible expenses upon determination of taxable incomes in Vietnam?

According to Clause 2 Article 9 of the Law on Corporate Income Tax 2008, the following expenses are non-deductible when determining taxable corporate income:

- Expenses not meeting the conditions specified in Clause 1 Article 9 of the Law on Corporate Income Tax 2008 (amended by Clause 3 Article 1 of the Law Amending Various Tax Laws 2014), except for losses due to natural disasters, epidemics, and other force majeure events not compensated;

- Fines for administrative violations;

- Expenses reimbursed by other funding sources;

- Business management expenses allocated by foreign enterprises to their permanent establishments in Vietnam exceeding the allocation norm set forth by Vietnamese law;

- Expenses exceeding the limits prescribed by law on setting aside reserves;

- Expenses for raw materials, materials, fuel, energy, and goods exceeding the consumption norms set by enterprises, notifying tax authorities and based on actual export prices;

- Interest expenses for loan capital for production and business from non-credit or non-economic organizations exceeding 150% of the basic interest rate announced by the State Bank of Vietnam at the time of borrowing;

- Depreciation of fixed assets not in accordance with the law;

- Provisions set aside in advance not in accordance with the law;

- Salaries, wages of private business owners; remuneration paid to business founders not directly involved in managing production, business; salaries, wages, and other accounting items paid to employees but not actually paid or lacking invoices and documents as prescribed by law;

- Interest payment on loans corresponding to the lack of charter capital;

- Deductible value-added tax already credited, value-added tax paid by the deduction method, corporate income tax;

- Advertising, marketing, promotional, brokerage commission expenses; expenses for reception, formalities, conferences; marketing support expenses, handling support expenses, discount payments; complimentary, giveaway publications by press agencies related directly to production, business activities exceeding 10% of deductible expenses; for newly established enterprises, these exceed 15% in the first three years from establishment.

Total deductible expenses exclude items specified in this point; for commercial activities, deductible expenses exclude purchase costs of goods sold;

- Sponsorships, except for sponsorships for education, health, disaster relief, and housing support for the poor as prescribed by law.