Vietnam: What are the guidelines for declaring tax invoices for advertising activities on Google under Official Dispatch 296/TCT-CS 2024?
- What are the guidelines for declaring tax invoices for advertising activities on Google in Vietnam under Official Dispatch 296/TCT-CS 2024?
- In Vietnam, as long as VAT invoices are provided, is it allowed to deduct input VAT?
- What are the non-deductible expenditures when determining incomes subject to CIT in Vietnam?
What are the guidelines for declaring tax invoices for advertising activities on Google in Vietnam under Official Dispatch 296/TCT-CS 2024?
On January 24, 2024, the General Department of Taxation in Vietnam issued Official Dispatch 296/TCT-CS 2024 guiding tax policies on declaring tax invoices for advertising activities on Google.
Accordingly, in Official Dispatch 296/TCT-CS 2024, the General Department of Taxation in Vietnam guides the declaration of tax invoices for advertising activities on Google as follows:
- Regarding the VAT declaration and deduction: One of the conditions for input VAT deduction is to have a VAT invoice of the purchased service or VAT payment documents at the import stage or VAT payment documents on behalf of the foreign party. The prepaid invoice issued by Google Asia Pacific Pte. Ltd (Google) to the Company is not a VAT invoice for an organization declaring VAT by deduction method and therefore does not meet the conditions for input VAT deduction as prescribed.
- Regarding the inclusion of deductible expenditures when determining income subject to CIT: In this regard, the General Department of Taxation in Vietnam has Official Dispatch 3149/TCT-CS 2018 responding to the Hanoi Tax Department.
- Regarding tax declaration, deduction, and payment on behalf of foreign suppliers: Ho Chi Minh City Tax Department has issued Official Dispatch 12943/CTTPHCM-TTHT dated 27/10/2023 specifically answering the Company.
- On the determination of foreign suppliers with e-commerce and business activities on digital platforms registered for tax in Vietnam: The General Department of Taxation in Vietnam has publicly posted the list of foreign suppliers who have made tax registration on the portal for foreign suppliers (etaxvn.gdt.gov.vn). The Company may access the portal to look up the tax registration status of foreign supplier Google Asia Pacific Pte. Ltd.
In Vietnam, as long as VAT invoices are provided, is it allowed to deduct input VAT?
Under Clause 1, Article 15 of Circular 219/2013/TT-BTC (amended by Clause 10, Article 1 of Circular 26/2015/TT-BTC) as follows:
Conditions for input VAT deduction
1. Legitimate VAT invoices for purchases or receipts for payment of VAT on imported goods, or receipts for payment of VAT on behalf of foreign organizations that do not have Vietnamese legal status and the organizations and individuals, and the foreigners that do business or earn income in Vietnam.
2. Proofs non-cash payments for the purchases (including imported goods) that cost VND 20 million or more, except for the imports that cost below VND 20 million each, purchases that cost below VND 20 million inclusive of VAT, and imports being gifts, donations from overseas entities.
Receipts for non-cash payments include bank transfer receipts and other receipts for non-cash payments prescribed in Clause 3 and Clause 4 of this Article.
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Thus, in case of providing legitimate VAT invoices for purchases or receipts for payment of VAT on imported goods, or receipts for payment of VAT on behalf of foreign organizations that do not have Vietnamese legal status and the organizations and individuals, and the foreigners that do business or earn income in Vietnam and meeting other conditions as prescribed in Article 15 of Circular 219/2013/TT-BTC, it is allowed to deduct input VAT.
What are the non-deductible expenditures when determining incomes subject to CIT in Vietnam?
Under the provisions of Article 9 of the Law on Corporate Income Tax 2008, amended and supplemented by Clause 5, Article 1 of the Law on Amendments to Law on Corporate Income Tax in 2013, the non-deductible expenditures when determining incomes subject to CIT in Vietnam include:
- The expenditures that fail to meet all conditions in Clause 1, Article 9 of the Law on Corporate Income Tax 2008, except for the loss caused by natural disasters, epidemics, and other force majeure that are not compensated.
- Fines for administrative violations;
- The expenditures that are covered by other budgets;
- The administrative expense allocated by the foreign enterprise to the permanent establishment in Vietnam that exceeds the limit imposed by Vietnam’s law.
- The extra expenditure according to the laws on making provision;
- The expenditure on interest on loans that are not given by credit institutions or economic organizations and exceed 150% of basic interest rates announced by the State Bank of Vietnam when the loan is taken.
- Improper depreciation of fixed assets;
- Improper prepaid expenses;
- Wages and remunerations of owners of private enterprises; wages of founders that do not participate in business management; wages, remunerations, and amounts payables to the employees that are not actually paid or do not have invoices according to law;
- The expenditures on loan interests corresponding to the charter capital deficit;
- Deducted input VAT, VAT paid using the credit-invoice method, corporate income tax;
- The expenditure on advertising, marketing, promotion, commissions, receptions, conferences, support for marketing and expenditures directly related to business that exceed 15% of the deductible amount. The total deductible amount does not include the expenditures in this Point; for commercial activities, the total deductible amount does not include the purchase prices of goods;
- Donations, except for donations for education, health, scientific research, disaster recovery, houses of unity, houses of gratitude, houses for beneficiaries of social policies according to law, donations for extremely disadvantaged areas according to state programs;
- Voluntary payments to retirement funds or social security funds, payments for voluntary retirement insurance for employees that exceed the limits imposed by law;
- Expenditures on businesses: banking, insurance, lottery, securities, and some other special businesses specified by the Minister of Finance.
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