DEDUCTIBLE EXPENDITURES IN CORPORATE TAXABLE INCOME

Along with tax rates, taxable income is the basis for calculating corporate income tax payable in the tax period. In which, taxable income is equal to revenue minus deductible expenditures according to regulations. So, what kind of expenditures will be determined as deductible expenditures in corporate income tax?

1. Method of calculating corporate income tax

The amount of corporate income tax payable in the tax period is calculated as taxable income multiplied by the corporate income tax rate, except for some cases specifically prescribed by the Government.

Note, in case an enterprise has paid income tax outside Vietnam, the amount of income tax paid will be deducted but must not exceed the amount of payable income tax according to regulations.

2. Taxed income

Taxed income is determined as follow:

– Taxed income in a tax period is the taxable income minus tax-exempt incomes and losses carried forward from previous years.

– Taxable income is turnover minus deductible expenses for production and business activities plus other incomes, including income received outside Vietnam.

–  Incomes from transfers of real estate, project of investment, the right to participate in projects of investments, the right to explore, extract, and process minerals must be separated. The loss on transfers of projects of investment (except for mineral exploration and mineral extraction projects), incomes from transfers of the right to participate in projects of investment (except for the mineral exploration and mineral extraction projects), incomes from transfer of real estate shall be offset against the profit in the tax period.

>> NON-DEDUCTIBLE EXPENDITURES WHEN CALCULATING CORPORATE TAXABLE INCOME https://linconlaw.vn/non-deductible-expenditures-when-calculating-corporate-taxable-income/

>> WHO IS EXEMPT FROM CORPORATE INCOME TAX? https://linconlaw.vn/who-is-exempt-from-corporate-income-tax/

3. Deductible expenditures when calculating corporate taxable income

Enterprises are entitled to deduction of all expenses which fully meet the following conditions:

– Actual expenses incurred related to production and business activities of the enterprise; Expenses for vocational education activities; Expenditures for carrying out national defense and security tasks of the enterprise according to the provisions of law;

– Expenditures that have sufficient invoices and documents according to law. The invoice for any purchase of goods or services of at least 20 million VND must be enclosed with proof of cashless payment, except for the cases in which proof of cashless payment is not required by law.