When determining taxable income in Vietnam, can the expense of printing calendars used to make goods for customers be deductible?
Can the expense of printing calendars used to make goods as gifts for customers be deductible for determining taxable income in Vietnam?
According to the provisions of Clause 1, Article 6 of Circular 78/2014/TT-BTC (amended and supplemented by Clause 2, Article 6 of Circular 119/2014/TT-BTC) on deductible and non-deductible expenses for determining income subject to corporate income tax as follows:
Deductible and non-deductible expenses for determining taxable income in Vietnam
1. Except for the expenses prescribed in Clause 2 this Article, every expense incurred by the enterprise shall be deducted if all of these following requirements are satisfied:
a) The actual expenses incurred are related to the production and business activities of the enterprises;
b) There are sufficient valid invoices for and proof of the expenses under the regulations of the law.
c) There is proof of non-cash payment for each invoice for goods and services of at least VND 20 million (including VAT).
The proof of non-cash payment must comply with regulations of law on VAT.
In case of any invoice for goods and services that are worth at least VND 20 million but has not been settled and had the proof of non-cash payment at the time the expenses are recorded, the taxpayer may include such purchase in deductible expenses when determining taxable income. If enterprises have proof of non-cash payment for such payment, they shall make a declaration and reduce expenses proportional to the value of goods or services without proof of non-cash payment in the tax period in which the enterprises makes the cash payment (even when tax authorities and other authorities have issued Decision on inspection of the tax period in which such expenses arise).
Thus, in case the company gives customers a printed calendar with a brand image and has legal invoices and documents (purchase invoices worth from VND 20 million must have non-cash payment vouchers), then Calendar printing expense will be included in deductible expenses for determining taxable income.
Specifically, Official Dispatch 12657/CT-TTHT in 2016 issued by the Ho Chi Minh City Tax Department issues guidance on the application of tax policy for similar cases as follows:
- In case the Company, according to the presentation in 2015 and 2016 has printed calendars to give to customers and partners, when making gifts or gifts, the Company must issue invoices and calculate value-added tax like selling goods. The cost of printing calendars if there are legal invoices and documents (purchase invoices valued at VND 20 million must have non-cash payment vouchers) shall be included in deductible expenses when determining taxable income.
When determining taxable income in Vietnam, can the expense of printing calendars used to make goods for customers be deductible?
Does the calendar given to customers need to issue an invoice?
According to the provisions of Clause 1, Article 4 of Decree 123/2020/ND-CP on issuing invoices for the gifting of calendars to customers as follows:
Rules for issuance, management and use of invoices and records
1. When selling goods or providing services, the seller shall issue and send invoices to buyers (including goods/services used for sales promotion, advertising or as samples, goods/services gifted, donated, exchanged or used as salary payment to employees and internal use (except goods which are internally rotated in production process), and goods rented, lent or returned). Such invoices shall have adequate contents written according to the provisions in Article 10 hereof, except e-invoices which must follow the standard format prescribed by tax authorities as prescribed in Article 12 hereof.
Thus, in principle, when the seller provides goods and services to the buyer, an invoice must be issued, even in the case of goods and services used for gifting or gifting. Therefore, in case the company prints a calendar with the company's brand image and goods to give to customers, it still has to issue an invoice.
How are the value-added tax prices for printed calendars for customers determined?
According to the provisions of Clause 3, Article 7 of Circular 219/2013/TT-BTC on determining the value-added tax prices for calendars printed as gifts for customers as follows:
Taxable prices
...
3. Taxable prices of the goods and services (whether bought externally or not) used as gifts, donations, or substitute for wages are the taxable prices of the same kinds or equivalent goods and services at the same time.
Example 22: Unit A manufactures electric fans and exchange 50 fans with company B for steel. The selling price (tax-exclusive) is 400,000 VND/fan. Taxable price = 50 x 400,000 VND = 20,000,000 VND.
Taxable prices of the invitations (complimentary) to art performances, fashion shows, beauty pageants, and sports competitions permitted by competent authorities are zero (0). The organizer of the show or competition is responsible for the quantity of invitations and recipients before the show or competition takes places if the organizer charges these invitations, the organizer shall incur penalties prescribed by tax laws.
According to the above regulations, if a calendar printed with the company's brand image is used as a gift to customers, the value-added taxable price of goods and services of the same or equivalent type at the time of arising these activities.
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