Pursuant to Point d Clause 2 Article 2 of Circular No. 111/2013/TT-BTC dated August 15th, 2013 of the Ministry of Finance detailing personal income tax (PIT) and income subject to PIT from wages, including:
“Monetary or non-monetary benefits other than salaries and wages paid by the employer that taxpayers enjoy in any form:
…”.
Pursuant to Clause 3, Article 14 of Circular No. 219/2013/TT-BTC dated December 31st, 2013 of the Ministry of Finance regarding value added tax (VAT) and the principles of VAT deduction:
“Input VAT on fixed assets, machinery, and equipment, including input VAT on leasing activities of these assets, machinery, and equipment, and other input VAT related to assets, machinery, and equipment such as warranty and repair in the following cases are not deductible but are included in the original price of the fixed assets or deductible expenses according to the provisions of the Law on Corporate Income Tax and other instructional documents: Specialized fixed assets serving the production of weapons and equipment for national defence and security; Fixed assets, machinery, and equipment of credit institutions, reinsurance companies, life insurance companies, securities businesses, medical examination and treatment facilities, and training facilities; Civilian aircrafts and yachts not used for the purpose of transporting goods, passengers, tourism, or hospitality.
For fixed assets that are passenger vehicles with 9 seats or less (except for vehicles used in the business of transporting goods, passengers, tourism, or hospitality) with a value exceeding 1.6 billion VND (price without VAT), the input VAT amount corresponds to the excess value above 1.6 billion VND that is not deductible.”
Pursuant to Article 4 of Circular No. 96/2015/TT-BTC dated June 22nd, 2015 of the Ministry of Finance amending and supplementing Article 6 of Circular No. 78/2014/TT-BTC regarding corporate income tax (CIT) (amended and supplemented in Clause 2, Article 6 of Circular No. 119/2014/TT-BTC and Article 1 of Circular No. 151/2014/TT-BTC) which stipulates deductible and non-deductible expenses when determining taxable income:
“Article 6. Deductible and non-deductible expenses when determining taxable income
1. Except for non-deductible expenses mentioned in Clause 2 of this Article, businesses may deduct all expenses if the expenses fully meet the following conditions:
a) Actual expenses incurred related to the manufacturing process or business activities of the business.
b) Expenses with enough legal invoices and documents according to the provisions of law.
c) Expenditures if there are invoices for each purchase of goods and services with a value of 20 million VND or more (VAT included) that are not paid in cash, provided there are relevant certifying documents (non-cash payment documents).
Non-cash payment documents must comply with the provisions regarding legal documents on value added tax.
…
2. Expenses that are not deductible when determining taxable income include:
2.1. Expenses that do not meet the conditions specified in Clause 1 of this Article.
…
2.2. Depreciation expenses for fixed assets falling into one of the following cases:
e) A number of specific cases are identified as follows:
– Not included in deductible expenses when determining taxable income: Depreciation corresponding to original price exceeding 1.6 billion VND/vehicle for passenger cars with 9 seats or less (except: cars used in passenger transportation, tourism, or hospitality; cars used in modelling and test driving for automobile businesses); Depreciation for fixed assets that are civilian aircrafts and yachts not used in transporting goods, passengers, tourism, or hospitality.
Passenger vehicles with 9 seats or less specializing in passenger transportation, tourism and hospitality businesses are cars registered with the name of the business in the Business Registration Certificate or Registration Certificate, operating in one of the following industries: passenger transportation, tourism, hospitality, completed with appropriate business licenses in accordance with regulations specified in legal documents stipulating goods transportation, passenger transportation, tourism, and hospitality.
Civilian aircrafts and yachts not used for business purposes such as transporting goods, passengers, or tourists are civilian aircrafts and yachts of companies registered and accounted for depreciation of fixed assets, but the Business Registration Certificate or Registration Certificate of the companies does not show registration for goods transportation, passenger transportation, tourism, or hospitality businesses.
…”.
Pursuant to Clause 2, Article 11 of Circular No. 92/2015/TT-BTC dated June 15th, 2015 of the Ministry of Finance, supplementing Item d.1, Point d, Clause 2, Article 2 of Circular No. 111/2013/TT-BTC stipulating income from salaries and wages:
“d.1) Housing, electricity, water and associated services (if any), excluding: housing, electricity and water benefits and benefits from associated services (if any) for housing developed by employers to be provided free of charge to workers working in industrial parks; housing built by employers in economic zones and impoverished, specially impoverished areas to be provided free of charge to workers working in said areas.
In case an individual residing at the workplace, the taxable income is based on rent or depreciation costs, electricity, water costs and costs of other services calculated according to the ratio between the personal area used by the individual and the area used as the workspace.
The costs of rent, electricity, water and associated services (if any) for housing paid by employers are included in taxable income based on the actual amount paid on behalf of the workers, but must not exceed 15% of the total income eligible for additional taxes (excluding costs of rent, electricity, water and other associated services (if any)) at the housing unit, regardless of where the income is paid.
Based on the above regulations, refer to the following principles:
1/ In case the Company pays rent to employees (employees sign a rental contract directly with the landlord, rent is paid by the Company to the employee, the employee pays directly to the landlord) then the entire housing allowance must be included in the taxable personal income amount in order to calculate PIT according to regulations.
2/ In case the Company’s business area is non-driver car rental service (no passenger transportation included in business functions), when buying cars from 9 seats or less with a value of over 1.6 billion VND for rental purposes, the Company is not allowed to deduct input VAT on the VAT corresponding to the value above 1.6 billion VND and is not allowed to deduct depreciation as deductible expenses on the original value above. 1.6 billion VND.
(Reference: Official Letter No. 3390/CT-TTHT issued by Ho Chi Minh Tax Department)