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Determination of the reasonable travel expenses in the business

Tue, 17 Apr 2018 15:13:33 PM GMT + 7    Print   Email   Share:

(Chinhphu.vn) – Through the receiving and responding system to recommendations of businesses, Service International Trading Co., Ltd (in Ha Tinh Province) would like to request related agencies to guide the valid dossiers to calculate deductible expenses when determining payable income of the corporate income tax.

 

International Service Trading Company Limited is a two member limited liability company with private capital contribution. Recently, the Company Director went to Binh Duong to attend the Exhibition of Industry and Production in 2017 and met some partners in Ho Chi Minh City aimed to develop the business situation of the company. During the trip, there were actual expenses as follows:

 

- Airfares, baggage charges are accompanied by invoices and airfares.

 

- Cost of hotel in Ho Chi Minh City with a valid invoice as prescribed.

 

- Travel expenses (by taxi, uber, grab) in Ho Chi Minh City is contracted based on the company's regulations.

 

These are actual expenses related to production and business activities of the Company.

 

The company would like to ask, what documents and papers does the company need to prepare to provide to the tax authorities to put the above expenses into reasonable expenses to be deducted when calculating enterprise income tax?

Regarding this issue, The General Department of Taxation has the following opinions:

In the Article 4 of the Circular No. 96/2015 / TT-BTC dated 22 June 2015 of the Ministry of Finance amending and supplementing the Article 6 of Cthe ircular No. 78/2014 / TT-BTC as follows:

" “Article 6. Deductible and non-deductible expenses when calculating taxable income

1. Except for the non-deductible expenses prescribed in Clause 2 of this Article, every expense is deductible if all of these following conditions are satisfied:

a) The actual expense incurred is related to the enterprise’s business operation.

b) There are sufficient and valid invoices and proof for the expense under the regulations of the law.

c) There is proof of non-cash payment for each invoice for purchase of goods/ services of VND 20 million or over (including VAT). The proof of non-cash payment must comply with regulations of law on VAT.

2. The expenses below are not deductible when calculating taxable income:…

2.9. Expenditure on provision of leave travel allowance for employees on leave against regulations of the Labor Code.

Allowance for employees on business trips, allowance for travelling and accommodation of employees on business trips will be deductible expenses when calculating taxable income if they have adequate invoices. If the enterprise pays for the traveling, accommodation, and allowance of employees on business trips in accordance with its financial regulations or rules, such amounts will be deductible.

In case the enterprise sends an employee on a business trip (whether at home or overseas), every payment that reaches VND 20 million or above and payment for air tickets that are made with individuals’ banking cards will be considered non-cash payments and deductible if all of the conditions below are satisfied:

- There are valid invoices issued by the goods or service provider. - The enterprise has a business trip order.

 - The enterprise’s financial regulations or rules allow its employees to pay the trip expenses, air tickets with their personal banking cards and get reimbursed by the enterprise.

In case the enterprise buys an air ticket on a website for one of its employee to go on a business trip serving its business operation, the proof of deductible expense shall be the electronic ticket, the boarding pass, and proof of non-cash payments that bear the name of the traveling employee. If the enterprise fails to collect the boarding pass, the proof of deductible expense shall be the electronic ticket, the business trip order, and the proof of non-cash payments”.

Thus, the current legal documents on enterprise income tax specifically stipulate the conditions for calculating the deductible expenses when determining the income subject to enterprise income tax for the expenses for allowances, travel expenses and accommodation for employees on business trips.

Based on practical conditions, the company is requested to contact the tax office directly to be guided in accordance with regulations.

 

  • By : Online Newspaper of the Government / Translator: HaiYen-Bizic

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