How to Deduct Utility Expenses from CIT When Renting a Personal Factory?
Based on the provisions stipulated in Article 4 of Circular 96/2015/TT-BTC, amending and supplementing Article 6 of Circular 78/2014/TT-BTC:
“Article 6. Deductible and non-deductible expenses when determining taxable income:
- Non-deductible expenses when determining taxable income include:
2.15. Payment for electricity and water under contracts where the owner is a household or an individual leasing production and business premises, directly signed with the electricity and water supply units, lacking sufficient documentation in the following cases:
a) In case the enterprise renting the production and business premises directly pays for electricity and water to the supplier without invoices for electricity and water payment and the lease contract for the production and business premises.
b) In case the enterprise renting the production and business premises pays for electricity and water to the owner leasing the premises without payment documents corresponding to the actual consumed electricity and water and the lease contract for the production and business premises..."
According to the information you provided, your company rents a warehouse from an individual and wants to include the electricity and water expenses as deductible expenses when calculating corporate income tax. In this case, the individual cannot issue an invoice for the company. Therefore, to include the electricity and water expenses when renting the premises (Electricity and water bills are in the landlord's name) in the deductible expenses, the required documents will differ based on specific scenarios:
- If the company directly pays the supplier: Lease contract; Electricity and water invoices; Payment documents.
- If the company pays the landlord: Lease contract; Electricity and water invoices; Actual consumed electricity and water payment documents with the landlord.
Note: The lease contract between your company and the lessor should clearly state the agreement as to who is responsible for paying these electricity and water costs to the supplier to easily determine each party’s obligations.
Respectfully!
