Q: My company works in the service sector, incurs less costs like a manufacturing company. So, for service businesses like us, what expenses can be accepted by tax authorities and included in deductible expenses when calculating corporate income tax?
The accountant replied:
According to Article 4 of Circular 96/2015/TT-BTC dated June 22, 2015 taking effect from August 6, 2015 stipulates:
1. Except for non-deductible expenses mentioned in Clause 2 of this Article, enterprises may deduct all expenses if they fully satisfy the following conditions:
- Actual expenses incurred in connection with production and business activities of the enterprise.
- The expenditure has enough lawful invoices and documents as prescribed by law.
- Expenditures, if there is an invoice for the purchase of goods and services each time with a value of VND 20 million or more (price includes VAT) upon payment must have a non-cash payment voucher.
Meaning: Enterprises may deduct all expenses if: The expenses incurred are related to production and business activities and have legal invoices and documents.
Non-cash payment vouchers comply with the provisions of legal documents on value added tax.
– If the purchase of goods and services each time is worth more than 20 million, but by the time of cost recognition, the enterprise has not yet paid, it will be included in deductible expenses when determining taxable income.
- If there is no non-cash payment voucher at the time of payment, it is required to declare and reduce expenses for the value of goods and services without non-cash payment documents in the tax period incurred. the payment in cash (even in cases where tax authorities and functional agencies have decided to inspect and examine the tax period where this expense is incurred).
- For goods and service purchase invoices that have been paid in cash generated before the effective date of Circular No. 78/2014/TT-BTC, they are not required to be adjusted according to the provisions of this Point.”
For example: In August 2018, DHP Law Company Limited has an input invoice of 30 million but has not yet paid. In 2018, the Company included deductible expenses when determining taxable income. In 2019, the company made payment in cash. Therefore, the company must declare and reduce such expenses in the tax period in which the payment is made in cash (tax period 2019).
– If an enterprise purchases goods and services related to its production and business activities and has an invoice printed directly from the cash register in accordance with the law on invoices, the details are as follows:
- If this invoice has a value of > 20 million, the enterprise shall base it on this invoice and non-cash payment vouchers to calculate deductible expenses when determining taxable income.
- If this invoice is valued at < 20 million dong and has been paid in cash, the enterprise shall base it on this invoice and cash payment documents to calculate deductible expenses when determining taxable income.
For details on the procedures for setting up a business and declaring tax for the business, please contact us:
DHP Law Firm
Address: No. 09.OT06 Landmark 4, Vinhomes Central Park Urban Area, 720A Nguyen Huu Canh, Binh Thanh District, Ho Chi Minh City, Vietnam.