According to Clause 1, Article 6 of Circular No. 78/2014/TT-BTC, which was amended in Circular No. 96/2015/TT-BTC dated June 22, 2015 guiding the implementation of the Law on Corporate Income Tax (CIT) stipulates: “Article 4. Amendment and supplement to Article 6 of Circular No. 78/2014/TT-BTC (amended and supplemented in Clause 2, Article 6 of Circular No. 19/2014/TT-BTC and Article 1 Circular No. 151/2014/TT-BTC) as follows:
“Article 6. Expenses that are deductible and non-deductible when determining taxable income
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:
a) Actual expenses incurred in connection with production and business activities of the enterprise.
b) Expenses with sufficient legal invoices and documents as prescribed by law.
c) Expenses, if there is an invoice for buying goods and services each time with a value of 20 million VND or more (VAT included) upon payment must have a non-cash payment voucher.
Non-cash payment vouchers comply with the provisions of legal documents on VAT”.
Assuming that the enterprise has a customer conference, it shall include these expenses: organizer, presenter, singer, table and food, etc. in the form of a package subscription.
Pursuant to the above provisions, the above-mentioned expenses if they satisfy the conditions specified in Clause 1, Article 6 of Circular No. 78/2014/TT-BTC as amended in Article 4 of Circular No. 96/2015/ TT-BTC: serving the production and business activities of the enterprise; have sufficient legal invoices and documents and have non-cash payment vouchers for goods and service purchase invoices valued at 20 million VND or more (VAT included), they shall be accounted as deductible expenses when determining taxable income.
Additional points of note:
- Particularly for expenses for gifts to customers (if any), enterprises are still allowed to account them as deductible expenses, and at the same time, enterprises must issue invoices and calculate VAT such as invoices for selling goods and services to customers;
- If the above expenses for introducing new products of the enterprise are incurred in the pre-operation period, the enterprise is allowed to record these expenses in Account 242- Prepaid expenses and the maximum allocation period is not more than 3 years as prescribed in Clause 1, Article 47 of Circular No. 200/2014/TT-BTC. Calculation and allocation of prepaid expenses to production and business expenses in each accounting period must be based on the nature and extent of each type of expense to select a reasonable method and criteria.
- If the above expenses for introducing new products of the enterprise are not incurred in the pre-operation period, the enterprise shall record these expenses in Account 641- Selling expenses (Account 6418) and at the end of the period transfer to Account 911 to determine business results for the period as prescribed in Clauses 1 and 2, Article 91 of Circular No. 200/2014/TT-BTC.
- During the inspection process of the tax authority, depending on the tax officer managing it, there may be additional requirements / queries about proofs. Examples of questions about the company’s revenue size are not corresponding, the party size is too large for a regular conference, request for documents about the invited list of potential customers, queries about specific documents / brochures / presentation files used by the enterprise to play in the conference…etc