Costs of Purchasing Goods but Losses Due to Floods: Are They Deductible When Calculating CIT?

Based on the provisions of Article 4 of Circular 96/2015/TT-BTC:

In cases where an enterprise incurs costs related to the value of losses due to natural disasters, epidemics, fires, and other force majeure events that are not compensated, these costs are deductible when determining taxable income.

In reference to your company's case, due to floods, the entire amount of rice being transported was damaged and not compensated. Therefore, the cost of purchasing this rice is determined to be a reasonable expense and deductible when calculating corporate income tax.

Note: Your company must clearly determine the total value of the loss due to floods in accordance with the law.

The value of losses due to natural disasters, epidemics, fires, and other force majeure events that are not compensated is determined by the total value of the loss minus the amount that the insurer or other organizations and individuals are required to compensate according to the law.

The documentation for assets and goods lost due to natural disasters, epidemics, and fires to be included in deductible expenses is as follows:

- Minutes of inventory of the value of assets and goods lost, prepared by the enterprise.

The minutes of inventory of the value of assets and goods lost must clearly specify the value of the lost assets and goods, the cause of the loss, the responsibility of organizations and individuals for the losses; the type, quantity, and value of recoverable assets and goods (if any); and the inventory list of the lost goods certified by the legal representative of the enterprise, who will be responsible before the law.

- Documentation of the damage compensation accepted by the insurance agency (if any).

- Documentation specifying the responsibility of organizations and individuals required to compensate (if any).

Your enterprise should comply with these regulations to ensure the necessary documents and paperwork.

Sincerely!