I. REGARDING CORPORATE INCOME TAX
According to Article 6, Clause 1, Circular 78/2014/TT-BTC dated June 18, 2014 of the Ministry of Finance stipulating:
“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 goods and services purchased each time with a value of VND 20 million or more (VAT included) when making payment, there must be non-cash payment vouchers.
Non-cash payment vouchers comply with the provisions of legal documents on value-added tax.”
According to Article 4 of Circular 96/2015/TT-BTC, effective from August 6, 2015, amending and supplementing Point 2.15, Clause 2, Article 6 of Circular 78/2014/TT-BTC on non-deductible expenses as follows:
“2.15. Payment of electricity and water bills for electricity and water contracts signed by the owner being a household or individual leasing a production or business location directly with the electricity and water provider without sufficient documents in one of the following cases:
a) In case the enterprise renting the location for production and business directly pays electricity and water bills to the electricity and water supplier, there are no bills for electricity and water payment and the contract for leasing the production and business location.
b) In case the enterprise renting the location for production and business pays electricity and water bills to the owner of the production and business location, there is no proof of electricity and water payment for the lessor of the production and business location in accordance with the actual amount of electricity and water consumed and the contract for the leasing the production and business location.”
Thus, according to the above provisions, in case the enterprise leases a location for production and business, the cost of electricity and water shall be included in the deductible expenses unless there are enough: Location rental contract + Electricity and water bill + Actual proof of payment.
In addition, on the rental contract, it is necessary to clearly state the content of the party responsible for paying the electricity and water bills.
II. REGARDING VALUE ADDED TAX
According to Article 14 of Circular 219/2013/TT-BTC, stipulating the principle of input value-added tax deduction:
“15. Enterprises are not allowed to deduct input VAT in the following cases:
– The bill does not record or incorrectly records one of the items such as name, address, tax code of the seller, so the seller cannot be identified;
– The bill does not record or incorrectly records one of the items such as name, address, tax code of the buyer, so the buyer cannot be identified”.
Thus, electricity and water bills that do not bear the name of the company but the name of the owner are not entitled to input VAT deduction. VAT is accounted for in general expenses.