What are the guidelines on determining deductible and non-deductible expenses when calculating corporate taxable income (CIT) in Vietnam?
What are the expenses deducted when determining CIT in Vietnam?
Pursuant to Clauses 1 and 2, Article 4 of Circular 96/2015/TT-BTC stipulates as follows:
“Article 4. Article 6 of Circular No. 78/2014/TT-BTC (amended in Clause 2 Article 6 of Circular No. 119/2014/TT-BTC and Article 1 of Circular No. 151/2014/TT-BTC) is amended as follows:
“Article 6. Deductible and non-deductible expenses when calculating taxable income
1. Except for the non-deductible expenses prescribed in Clause 2 of this Article, every expense is deductible if all of these following conditions are satisfied:
a) The actual expense incurred is related to the enterprise’s business operation.
b) There are sufficient and valid invoices and proof for the expense under the regulations of the law.
c) There is proof of non-cash payment for each invoice for purchase of goods/ services of VND 20 million or over (including VAT).
The proof of non-cash payment must comply with regulations of law on VAT.
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2. The expenses below are not deductible when calculating taxable income:
2.1. Expenses that do not meet all of the conditions in Clause 1 of this Article.
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2.4. Expenditures on purchases of goods/services (without invoices, listed on statement of purchases No. 01/TNDN enclosed with Circular No. 78/2014/TT-BTC) without statements enclosed with receipts for payments to sellers/service providers in the cases below:
- Purchase of agricultural products, forestry products, aquaculture products directly sold by growers or catchers;
- Purchase of handicraft products made of dried jute, sedge, leaves, rattan, bamboo, straw, coconut shell, or aquaculture by-products directly by craftsmen.
- Purchase of earth, stones, sand, gravel directly sold by the excavating people;
- Purchase of scrap from collectors;
- Purchase of items, property, services from non-business households and non-business individuals;
- Purchase of goods/services from business households and business individuals (except for the cases mentioned above) whose revenue is below the level subject to VAT (VND 100 million per year).
A statement of purchases of goods/services signed by the enterprises’ legal or authorized representative, who takes legal responsibility for its accuracy. The enterprise that buys goods/services may make a statement and include them in deductible expenses. Proof of non-cash payment is not required for such expenses. If the buying prices for goods/services on the statement are higher than market prices at that time, the tax authority shall recalculate the deductible expenses according to the market prices for similar goods/services...."
Accordingly, the determination of expenses of enterprises that will be deducted when calculating CIT will be determined according to the above provisions.
What are the guidelines on determining deductible and non-deductible expenses when calculating corporate taxable income (CIT) in Vietnam? (Image from the internet)
What are the regulations on applying e-invoices for selling goods or providing services in Vietnam?
Pursuant to Article 13 of Decree 123/2020/ND-CP stipulates as follows:
“Article 13. Use of e-invoices in sale of goods and provision of services
1. Entities using e-invoices shall comply with the provisions in Article 91 of the Las on Tax Administration No. 38/2019/QH14. Cases of high tax risk shall comply with specific regulations of the Minister of Finance.
2. Issuance and tax declaration upon tax authority’s separate provision of authenticated e-invoices:
a) Types of invoices to be issued provided separately
a.1) Authenticated e-invoices that are sales invoices are provided separately in the following cases:
- Household and individual businesses specified in Clause 4 Article 91 of the Law on Tax Administration No. 38/2019/QH14 that are not qualified to use authenticated e-invoices but need to provide invoices for their clients;
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b) Enterprises, business entities, other organizations, household businesses and individual businesses eligible for separate provision of authenticated e-invoices shall submit the application for provision of authenticated e-invoices (using form No. 06/DN-PSDT in Appendix IA enclosed herewith) to the tax authority and enter the tax authority’s e-invoice system to generate e-invoices.
After the applicant has fully declared and paid VAT, personal income tax, corporate income tax, other taxes and fees (if any), the tax authority shall authenticate the e-invoices generated by the applicant.
The applicant shall be held responsible for the accuracy of information on the e-invoices authenticated separately by the tax authority.
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Thus, the application of e-invoices to individuals, business households and enterprises when selling goods and providing services will be implemented in accordance with the above provisions.
How to determine the deductible expenses for businesses when buying honey from individuals in Vietnam?
Pursuant to Official Dispatch 31557/CTHN-TTHT in 2022 of Hanoi Tax Department, there are guidelines on tax policy for determining deductible expenses of enterprises as follows:
“Based on the above provisions, in case the Company buys honey from an individual (not a business household), if the above expenditure meets the conditions in Article 4 of Circular 96/2015/TT-BTC above, it is determined to be deductible expenses when determining income subject to corporate income tax.
In case business households and individuals fully satisfy the conditions specified in Article 13 of Decree No. 123/2020/ND-CP of the Government above, they will be eligible to apply e-invoices when selling goods or providing services,
In the process of implementing tax policy, in case there are still problems, the Company can refer to the guiding documents of the Hanoi Tax Department posted on the website http://hanoi.gdt.gov.vn or contact Contact the Tax Inspection Department No. 9 for assistance in solving.”
Accordingly, the determination of deductible expenses for businesses when buying honey from individuals (not business households) is done according to the above guidance of the Tax Department of Hanoi City.
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