Shall sponsorship expenses for a clinic in Vietnam be included as deductible expenses when calculating corporate income tax if there is no signature from the clinic's representative?

Shall sponsorship expenses for a clinic in Vietnam be included as deductible expenses when calculating corporate income tax if there is no signature from the clinic's representative?

Pursuant to Clause 2, Article 6 of Circular 78/20214/TT-BTC (amended and supplemented by Clause 2, Article 4 of Circular 96/2015/TT-BTC) which stipulates as follows:

Deductible and non-deductible expenses when determining taxable income

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

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2.23. Sponsorship for healthcare not in accordance with the subjects specified in sub-point a of this point or lacking the documentation to determine the sponsorship as specified in sub-point b below:

a) Healthcare sponsorship includes: sponsorship for healthcare facilities established under legal provisions on healthcare where such sponsorship is not for equity contribution or stock purchase in those hospitals and medical centers; sponsorship of medical equipment, medical tools, and medicine; sponsorship of regular activities of hospitals and medical centers; monetary sponsorship for patients through an agency or an organization authorized to mobilize sponsorship according to law.

b) Documentation to determine healthcare sponsorship includes: Minute of sponsorship confirmation with the signature of the corporate representative as the sponsor, representative of the beneficiary unit (or agency, organization authorized to mobilize sponsorship) according to Form No. 04/TNDN issued with Circular No. 78/2014/TT-BTC, accompanied by invoices, proof of purchase (if sponsoring in kind), or proof of payment (if sponsoring in cash).

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According to the above regulations, healthcare sponsorship expenses that are either not in compliance with the specified subjects or lack proper sponsorship documentation such as a sponsorship confirmation minute with signatures from the corporate representative as the sponsor and the representative of the beneficiary unit, cannot be included as deductible expenses when calculating corporate income tax.

Thus, if the sponsorship confirmation only has the enterprise's signature without the accompanying signature of the clinic's representative, the sponsorship for this clinic will be excluded from deductible expenses when calculating corporate income tax.

Which income is exempted from corporate income tax in Vietnam?

Pursuant to Article 4 of the 2008 Law on Corporate Income Tax, as amended and supplemented by Clause 3, Article 1 of the Law Amending the Law on Corporate Income Tax 2013, and Clause 2, Article 1 of Law No. 71/2014/QH13, the following incomes are exempt from corporate income tax:

(1) Income from cultivation, husbandry, aquaculture, processing of agricultural and aquatic products, and salt production by cooperatives; income of cooperatives operating in agriculture, forestry, fishery, and salt production in areas with difficult or extremely difficult socio-economic conditions; income of enterprises from cultivation, husbandry, aquaculture, processing agricultural, and aquatic products in areas with extremely difficult socio-economic conditions; income from marine fishing activities.

(2) Income from direct technical services in support of agriculture.

(3) Income from the execution of scientific research and technological development contracts, products under trial production, products made from new technology applied for the first time in Vietnam.

(4) Income from production and business activities of enterprises with 30% or more of their average annual workforce being persons with disabilities, rehabilitated persons, or individuals infected with the HIV/AIDS virus, with an average annual workforce of 20 or more, excluding enterprises operating in finance, real estate business.

(5) Income from vocational training activities exclusively for ethnic minorities, persons with disabilities, children with extremely difficult circumstances, and social evils subjects.

(6) Profit from capital contributions, joint ventures, or associates with domestic enterprises, after corporate income tax has been paid as prescribed.

(7) Donations received for use in educational, scientific research, cultural, artistic, charitable, humanitarian, and other social activities in Vietnam.

(8) Income from the transfer of certified emission reductions (CERs) by enterprises granted emission certificates.

(9) Income from the execution of tasks assigned by the State to the Vietnam Development Bank in investment credit and export credit activities; income from credit activities for the poor and other policy beneficiaries of the Vietnam Bank for Social Policies; income of state financial funds and other state funds operating not for profit as prescribed by law; income of organizations fully owned by the State established by the Government of Vietnam to handle bad debts of Vietnamese credit institutions.

(10) Undivided income of institutions implementing socialization in education-training, healthcare, and other socialized sectors, used for reinvestment in development as prescribed by specialized laws on education-training, healthcare, and other socialized sectors; undivided income forming assets of cooperatives established and operating according to regulations.

(11) Income from technology transfer in prioritized areas to organizations or individuals in regions with extremely difficult socio-economic conditions.

Are rental payments for assets leased from individuals considered deductible expenses if the cost is from 10 million VND/month?

Pursuant to Clause 2, Article 6 of Circular 78/20214/TT-BTC (amended and supplemented by Clause 2, Article 4 of Circular 96/2015/TT-BTC) stipulates as follows:

Deductible and non-deductible expenses when determining taxable income

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

...

2.5. Rental expenses for assets of individuals without the complete documentation below:

- In cases where enterprises lease assets from individuals, the documentation for determining deductible expenses is a lease contract and evidence of rental payment.

- Where the rental agreement stipulates the enterprise pays tax on behalf of the individual, the documentation to determine deductible expenses includes the lease contract, evidence of rental payment, and proof of tax payments on behalf of the individual.

- Where the rental agreement stipulates that the rental price excludes tax (VAT, PIT) and the enterprise pays taxes on behalf of the individual, the enterprise can include in deductible expenses the total rental payment, including tax paid on behalf of the individual.

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Thus, current regulations on deductible expenses when paying for asset rental from individuals do not consider the rental amount; to include costs in deductible expenses, necessary documentation such as a lease contract and evidence of rental payment must be ensured.