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Consult on Issue

VAT & PIT

Released at: 23:15, 10/10/2014 TAX CONSULT

VAT & PIT

On August 15, 2014, the General Department of Taxation (GDT) issued Official Letter No 3311 providing guidance on this matter.

What is the tax guidance on increasing income from expansion projects in the 2009-2013 period?

On August 15, 2014, the General Department of Taxation (GDT) issued Official Letter No 3311 providing guidance on this matter. Incremental income not entitled to CIT incentives can be determined by either of the following methods:

- Method 1:
Income derived from expansion projects not entitled to CIT incentives = Total taxable income in the year (excluding other income not entitled to incentives) x Value of fixed assets from expansion projects used for production and business/Total historical cost of fixed assets used for production and business
Total historical cost of fixed assets used for production and business: the total fixed assets from expansion projects and current fixed assets used for production and business according to the balance sheet at the end of the fiscal year.

- Method 2:
Incremental income from expanded investment are not entitled to CIT incentives = Total taxable income in the year (excluding other income not entitled to incentives) x Value of expansion project capital in production and business/Total actual investment capital in production and business
Total actual investment capital in production and business: the total equity capital and loan capital in production and business according to the balance sheet at the end of the fiscal year.

Are depreciation expenses for fixed assets as capital contribution deductible?

On August 13, 2014 the GDT issued Official Letter No 3240 providing guidance on depreciation and deductible expense for fixed assets as capital contribution. Fixed assets contributed by individuals that are properly recognised as increasing charter capital by the licensing authority and used for business purposes will be deductible for CIT purposes.

What are the terms for business trip expenses paid overseas via personal credit cards being deductible?

According to Official Letter No 3819 dated September 6, 2014 from GDT, where a company sends an employee abroad for work, if the expenses accrued exceed VND20 million any payment via credit cards is accepted as a form of the non-cash payment and such expenses shall be accounted into deductible expenses if they have the following paperwork: 
• Appropriate invoices and documents;
• A decision or document assigning the employee to go abroad for work.
However, the company should issue regulations allowing employees to make payments via their own cards, and then such expenses shall be reimbursed by the Company.


This column is prepared in cooperation with KPMG Vietnam

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