Deductible expenses when calculating Corporate Incomes Tax

To ensure the interests of enterprises when calculating tax: When calculating income subject to CIT, accountants need to determine the deductible and non-deductible expenses to ensure the correct tax amount. Below are the deductible expenses when calculating CIT.

1. Deductible expenses when calculating corporate income tax

Under Article 4 of Circular 96/2015/TT-BTC, except for non-deductible expenditures, enterprises are entitled to deduct all expenditures if they fully meet the following conditions:

(1) Actual expenses incurred related to production and business activities of the enterprise.

(2) The expenditure has sufficient lawful invoices and documents as prescribed by law.

(3) If there is an invoice for the purchase of goods and/or services each time with a value of VND 20 million or more (price including value-added tax) upon payment, there must be non-cash payment documents.

Thus, enterprises are entitled to deduct all expenses if actual expenditures arise related to production and business activities and have sufficient invoices and documents as prescribed by law.

 

Non-cash payment documents shall comply with the provisions of legal documents on value-added tax such as Bank payment documents and other non-cash payment documents.

In case of a one-time purchase of goods and/or services with a value of VND 20 million or more stated on the invoice, but by the time of recognition of expenses, the enterprise has not yet paid, the enterprise shall be included in the deductible expenses when determining taxable income.

When making an enterprise without non-cash payment documents, the enterprise must declare adjust and reduce costs for the value of goods and/or services without non-cash payment documents in the tax period in which the cash payment arises (even in cases where tax authorities and functional agencies have made decisions inspect and examine the tax period in which this expense is incurred).

In case the enterprise purchases goods and/or services related to its production and business activities and has invoices printed directly from cash registers by the law on invoices; If this invoice has a value of VND 20 million or more, the enterprise shall base on this invoice and the enterprise's non-cash payment documents to include in the deductible expenses when determining taxable income.

In case the enterprise purchases goods and/or services related to its production and business activities and has invoices printed directly from cash registers by the law on invoices; If this invoice has a value of less than VND 20 million and is paid in cash, the enterprise shall base on this invoice and the enterprise's cash payment documents to include in the deductible expenses when determining taxable income.

 

2. Other deductible expenses when determining taxable income

Under Article 4 of Circular 96/2015/TT-BTC, in addition to the deductible expenses as above, in the regulations on deductible expenses, several noted regulations clearly state the deductible expenses when determining taxable income, specifically:

(1) In case an enterprise has expenses related to the value of losses caused by natural disasters, epidemics, fires, and other force majeure circumstances that are not compensated, this expense shall be included in the deductible expenses when determining taxable income, specifically as follows:

- Enterprises must determine the total value of losses caused by natural disasters, epidemics, fires, and other force majeure cases by the provisions of law.

- The part of the value of losses caused by natural disasters, epidemics, fires, and other force majeure cases that are not compensated shall be determined by the total value of losses minus the value of insurance enterprises or other organizations and individuals subject to compensation by law.

(2) Particularly, fixed assets serving employees working at the enterprise are depreciated and included in deductible expenses when determining taxable income such as:

- Mid-shift rest houses, mid-shift cafeterias, dressing houses, toilets, rooms or health stations for medical examination and treatment, training and vocational training institutions, libraries, kindergartens, sports facilities, and equipment and furniture qualified as fixed assets installed in the above-mentioned works;

- Clean water tanks, garages;

- Shuttle bus for employees, housing directly for employees;

- Expenses for construction of material foundations, expenses for procurement of machines and equipment which are fixed assets used to organize vocational education activities.

Above is the article Deductible costs when calculating CIT, hope the article will bring you useful information and With the desire to share, shoulder part of the work, and help businesses complete their books and tax obligations as soon as possible, TASCO offers you a comprehensive solution – "CIT finalization service".

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