Vietnam: Are all philanthropy and social support expenses all deductible when determining corporate income taxable income?
- What expenses will be deducted when calculating corporate income taxable income in Vietnam?
- What charity and sponsorship expenses will not be deducted when determining taxable income in Vietnam?
- Guidance on determining the expenses that are deductible and non-deductible from corporate income taxable income when performing charitable and supporting activities in Vietnam?
What expenses will be deducted when calculating corporate income taxable income in Vietnam?
Pursuant to Clause 1, Article 4 of Circular 96/2015/TT-BTC stipulating deductible expenses when determining taxable income:
“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.
In case of a purchase of goods and services that are worth VND 20 million or over according to the invoice which is yet to be paid for by the enterprise when the expense is accounted for, such expense will be deductible when calculating taxable income. If the enterprise does not have proof of non-cash payment, the enterprise must remove the value of goods/services without proof of non-cash payment from expenses in the tax period in which cash payment is made (even when the tax authority and other authorities have issued a decision on tax inspection of the tax period in which such expense is incurred).
The invoices for goods and services paid in cash before the effective date of Circular No. 78/2014/TT-BTC shall not be adjusted under the regulations of this Point.”
Accordingly, the expenses that will be deducted when determining taxable income is made in accordance with the above provisions.
Vietnam: Are all philanthropy and social support expenses all deductible when determining corporate income taxable income?
What charity and sponsorship expenses will not be deducted when determining taxable income in Vietnam?
Pursuant to Clause 2, Article 4 of Circular 96/2015/TT-BTC stipulating expenses that are not deductible when determining income subject to corporate income tax:
"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:
...
2. The expenses below are not deductible when calculating taxable income:
...
2.24. Provision of disaster recovery aid for illegitimate subjects according to Point (a) or without documentation mentioned in Point (b) below:
a) Disaster recovery aid includes: direct provision financial aid or in-kind aid serving disaster recovery for an organization established and operating under the law, for individuals suffering from the disaster via an organization permitted to call for aid as prescribed by law.
…
2.26. Provision of sponsorship for scientific research against the law; provision of sponsorship for beneficiaries of incentive policies against the law; provision of sponsorship for extremely disadvantaged areas State programs.
…
2.32. Provision of sponsorship for local governments; sponsorships for associations, social organizations; charitable expenses (except for sponsorships for education, healthcare, disaster recovery, construction of houses for poor people, scientific research, beneficiaries of incentive policies, extremely disadvantaged areas under state programs mentioned in Points 2.22, 2.23, 2.24, 2.25, 2.26 in Clause 2 of this Article).”
Accordingly, the expenses for sponsorship, support and charity of enterprises will be deducted when determining taxable income according to the above provisions.
Guidance on determining the expenses that are deductible and non-deductible from corporate income taxable income when performing charitable and supporting activities in Vietnam?
Pursuant to Official Dispatch 31943/CTHN-TTHT in 2022 of the Hanoi Tax Department, there are instructions on how to determine deductible and non-deductible expenses from taxable income when carrying out activities from support:
“- For funding for education, health care, disaster recovery, building houses of gratitude, building houses for the poor, building houses of great solidarity, sponsoring scientific research, sponsoring for policy beneficiaries as prescribed by law, funding under the State's program for localities in areas with extremely difficult socio-economic conditions through agencies and organizations with With the function of mobilizing funding in accordance with the law, the Company is allowed to account it as a deductible expense when determining taxable income if the expenditure is for the right object and there are sufficient documents to determine the funding according to regulations. specified in Item a, Item b, Point 2.22, 2, 23, 2.24, 2.25, 2.26 Clause 2 Article 6 of Circular 78/2014/TT-BTC (amended and supplemented in Article 4 of Circular 96/2015/TT-BTC) BTC) above.
- Expenses to support mass organizations, social organizations, and charity expenditures that do not meet the conditions specified in Article 4 of Circular 96/2015/TT-BTC shall not be included in the deductible expenses. determine taxable income.
The Company is requested to base on the actual situation of expenses and compare with the principle of determining deductible expenses according to the above regulations to implement."
Accordingly, the determination of expenditures to finance and support education, health care, disaster recovery, etc. of the enterprise will be deducted from the taxable income of the enterprise when such expenditures are used. be used for the right audience and have sufficient documents to determine the funding as prescribed by law.
In case the expenses for sponsorship, support, and charity for mass organizations and social organizations do not meet the conditions prescribed by law, they will not be deducted when determining taxable income.
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