Can fixed assets be deducted when determining collection subject to corporate income tax?

1. Can fixed assets be deducted when determining income subject to corporate income tax?

According to the provisions of Clause 1, Article 9 of Circular 45/2013/TT-BTC (supplemented by Clause 4, Article 1 of Circular 147/2016/TT-BTC), it is stipulated that all existing fixed assets of an enterprise must be depreciated, except for the following fixed assets here:

– Fixed assets have been fully depreciated but are still being used in production and business activities.

– Fixed assets that have not been fully depreciated are lost.

– Other fixed assets managed by the enterprise that are not owned by the enterprise (except financial lease fixed assets).

– Fixed assets that are not management, monitoring, and accounting in the accounting books of the enterprise.

– Fixed assets used in welfare activities to serve the enterprise’s employees (except fixed assets serving employees working at the enterprise such as: mid-shift rest house, mid-shift cafeteria, changing house, toilet, clean water tank, garage, medical room or station for medical examination and treatment, shuttle bus for workers, training facility, etc. vocational training, housing for workers invested in and built by the enterprise).

– Fixed assets from non-refundable aid sources after being handed over to the enterprise by a competent authority to serve scientific research.

– Intangible fixed assets are long-term land use rights with land use fees collected or receiving a transfer of legal long-term land use rights. method.

Type 6 fixed assets specified in Clause 2, Article 1 of this Circular do not have to be depreciated, only a detailed book must be opened to monitor the annual depreciation value of each asset and the capital source of the asset cannot be recorded.

In addition, according to the provisions of point 2.2, clause 2, Article 4 of Circular 96/2015/TT-BTC, regulations on non-deductible expenses when determining taxable income include depreciation expenses for fixed assets in the following cases:

– Depreciation expenses for fixed assets not used for production and trading of goods and services.

Particularly fixed assets serving employees working at the enterprise such as: mid-shift motels, mid-shift cafeterias, changing rooms, restrooms, medical rooms or stations for medical examination and treatment, training and vocational facilities, libraries, kindergartens, sports areas and equipment and furniture that qualify as fixed assets installed in the above works; clean water tank, garage; shuttle buses for workers, direct housing for workers; The cost of building facilities, the cost of purchasing machines and equipment, which are fixed assets used to organize vocational education activities, are depreciated and included in deductible expenses when determining taxable income.

– Depreciation costs for fixed assets without documents proving ownership of the enterprise (except for financial lease-purchase fixed assets).

– Depreciation costs for fixed assets determined not to be managed, monitored, and accounted for in the enterprise’s accounting books according to the current fixed asset management and accounting regime.

– Excess depreciation Current regulations of the Ministry of Finance on the management, use and depreciation regime of fixed assets.

The enterprise shall notify the method of asset depreciation. fixed that the enterprise chooses to apply to the tax authority directly managing it before performing depreciation (for example, announcing the choice to implement the straight-line depreciation method…). Every year, enterprises depreciate fixed assets according to current regulations of the Ministry of Finance on the management, use and depreciation of fixed assets, including cases of accelerated depreciation (if the conditions are met).

Enterprises operating with high economic efficiency are allowed to depreciate quickly but not more than 2 times the depreciation rate determined by the straight-line method to quickly innovate technology for some fixed assets according to current regulations of the Government. Ministry of Finance on management, use and depreciation of fixed assets. When performing accelerated depreciation, businesses must ensure profitable business.

Fixed assets contributed as capital, fixed assets transferred upon division, separation, consolidation, merger, or type conversion that are re-evaluated according to regulations, the enterprise receiving these fixed assets will be depreciated into deductible expenses according to the re-evaluated original price. For other types of assets that do not qualify as fixed assets with capital contribution, transfer when divided, split, consolidated, merged, or converted and this asset is re-evaluated according to regulations, the enterprise receiving this asset will be included in expenses or gradually allocated to deductible costs according to the re-evaluated price.

For self-made fixed assets, the original price of the fixed asset is depreciated and included in the deductible costs as the total production costs. to form that asset.

For assets that are tools, instruments, circulating packaging, … that do not meet the conditions for being determined as fixed assets according to regulations, the cost of purchasing the above assets is gradually allocated to production and business operating expenses during the period but not exceeding 3 years at most.

– Depreciation for fixed assets that have been fully depreciated value.

Thus, according to the above regulations, the depreciation of fixed assets that does not exceed the prescribed level will be deducted when determining the taxable income of the enterprise.

2. What are the conditions to be included in expenses deductible from corporate income tax?

Pursuant to Article 6 of Circular 78/2014/TT-BTC (amended by Article 4 of Circular 96/2015/TT-BTC), regulations on deductible expenses when determining taxable income are as follows:

– Except for non-deductible expenses mentioned in Clause 2 of this Article, enterprises are allowed to deduct all expenses if they fully meet the following conditions:

+ Actual expenses incurred related to production and business activities of the enterprise;

+ Expenses with sufficient legal invoices and documents according to the provisions of law.

+ Expenses if there are invoices for each time purchase of goods and services with a value of from 20 million VND or more (price includes VAT) must have non-cash payment documents when paying.

Non-cash payment documents must comply with the provisions of legal documents on value added tax.

In case of each purchase of goods or services with a value of twenty million VND or more recorded on the invoice, but at the time of recording the expense, the enterprise has not yet paid and does not have a non-cash payment document, then the enterprise will be included in the deductible expenses when determining taxable income. In case the enterprise does not have non-cash payment documents, the enterprise must declare and adjust to reduce costs for the value of goods and services without non-cash payment documents in the tax period in which the cash payment arises (including in cases where tax authorities and functional agencies have decided to inspect and check the period in which this cost arises).

For invoices for purchasing goods and services. Services paid in cash that arose before the effective date of this Circular do not have to be adjusted according to the provisions of this Point.

In cases where an enterprise purchases goods and services related to its production and business activities and has invoices printed directly from the cash register in accordance with the law on invoices; If this invoice has a value of 20 million VND or more, the enterprise will base on this invoice and the enterprise’s non-cash payment documents to calculate deductible expenses when determining taxable income.

In case the enterprise purchases goods and services related to its production and business activities and has invoices printed directly from the cash register in accordance with the law on invoices; If this invoice is worth less than 20 million VND and is paid in cash, the enterprise will base on this invoice and the enterprise’s cash payment documents to calculate deductible expenses when determining taxable income.

3. Method of calculating corporate income tax?

Pursuant to Article 3 of Circular 78/2014/TT-BTC, stipulating the method of calculating corporate income tax as follows:

“Article 3. Tax calculation method

1. The amount of corporate income tax payable in the tax period is equal to taxable income multiplied by tax rate.

Corporate income tax payable is determined according to the following formula:

Corporate income tax payable = (Taxable income – Appropriation for science and technology fund (if any)) x corporate income tax rate

In case an enterprise has paid corporate income tax or a tax similar to corporate income tax outside Vietnam, the enterprise can deduct the amount of corporate income tax paid but must not exceed the amount of corporate income tax payable in the period according to the provisions of the Law on Corporate Income Tax.