Deductible expenses for the determination of taxable income

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Every accountant must determine deductible expenses and non-deductible expenses to ensure the right amount of tax and business benefits. Deductible expenses for the determination of taxable income are defined in the following post.

Deductible expenses for the determination of taxable income

In accordance with article 1, Circular n° 96/2015/TT-BTC, companies are deducted from expenses if they meet all the conditions as follows:

(1) Actual expenditures related to the production and commercial activities of enterprises.

(2) Expenses accompanied by invoices and adequate legal documents, as required by law;

(3) For expenses for the purchase of goods or services with invoices worth VND 20 million or more (price including tax) each, there must be non-cash payment documents.

Therefore, companies are deducted from all expenses if the actual expenses related to production and business activities and have adequate invoices and legal documents as required by law;

Non-cash payment documents should comply with legal value-added tax documents such as payment documents through banks and other non-cash payments.

In case of purchasing goods or services worth VND 20 million or more per invoice but, at the time of recording the expenses, companies have not yet paid any money, they can still account for these expenses as deductible expenses in determining taxable income.

When making such a payment without non-cash payment documents, enterprises must declare and reduce the expenses corresponding to the value of the goods or services without non-cash payment documents during the tax period in in which they make the cash payment (even where tax authorities and functional agencies have issued inspection or review rulings with respect to the tax period in which such payment is made).

In case a company purchases goods or services for its production and commercial activities and has an invoice printed by the cash register under the Invoice Law, if the value of such invoice is VND 20 million or moreover, based on this invoice and the non-cash payment document, the company can include this value in the deductible expenses when determining the taxable income

In case a company purchases goods or services for its production and commercial activities and has an invoice printed by the cash register under the Invoice Law, if the value of such invoice is less than VND 20 million , based on this invoice and the cash payment document, the company can include this value in the deductible expenses for the determination of taxable income.

Deductible expenses for the determination of taxable income
Businesses must declare and reduce expenses for the value of goods or services (Illustration)

Other deductible expenses for the determination of taxable income

In accordance with Article 4 of Circular No. 96/2015/TT-BTC, in addition to the above deductible expenses, there are a number of other deductible expenses as follows:

(1) If a company has expenses related to the value of uncompensated losses caused by natural disaster, epidemic, fire or other force majeure events, it may include these expenses in deductible expenses for the determination of taxable incomemore specifically as follows:

– The company shall determine by itself according to the regulations the total value of losses caused by natural disaster, epidemic, fire or other force majeure events.

– The value of uncompensated losses caused by natural disaster, epidemic, fire or other force majeure events is the total value of the losses less compensation paid by insurers or other organizations and individuals according to law

(2) In particular, fixed assets at the service of workers in companies may be amortized and included in deductible expenses for the determination of taxable income as following:

– Nursing homes and mid-shift canteens, changing rooms, toilets, infirmaries and vocational training establishments, libraries, kindergartens, gymnasiums, and equipment and furniture qualified as fixed assets installed in these structures;

– Clean water tanks and garages;

– Transport cars, houses for workers;

– Expenses for the construction of physical foundations and for the acquisition of machinery and equipment that constitute fixed assets for the organization of vocational training activities.

here are the deductible expenses for the determination of taxable income.

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