Which salary and bonus payments cannot be deducted when calculating corporate income tax?

Which salary and bonus payments cannot be deducted when calculating 2024 corporate income tax?

In Article 6 of Circular 78/2014/TT-BTC, amended by Article 4 of Circular 96/2015/TT-BTC and Clause 2, Article 3 of Circular 25/2018/TT-BTC, it is stipulated that salary and bonus payments cannot be deducted when calculating 2024 corporate income tax, including:

(1) Expenditure on salaries, wages and other payables that have been accounted for in production and business expenses in the period but are not actually paid or do not have payment documents.

(2) Salaries and bonuses that are not specifically stated in terms of eligibility and benefit levels in one of the following documents:

+ Labor contract;

+ Collective labor agreement;

+ Financial regulations of Companies, Corporations, and Groups;

+ Bonus regulations are prescribed by the Chairman of the Board of Directors, General Director, and Director according to the financial regulations of the Company and Corporation.

– In case an enterprise signs a labor contract with a foreigner, it states that tuition fees for the foreigner’s children studying in Vietnam from preschool to high school are paid by the enterprise in the nature of salaries and wages and have full invoices and documents: counted as deductible expenses when determining income subject to corporate income tax.

– In case an enterprise signs a labor contract with an employee, which records housing expenses paid by the enterprise to the employee, this payment is of the nature of salary or wages and has full invoices and documents, then it will be included in deductible expenses when determining income subject to corporate income tax.

– In case a Vietnamese enterprise signs a contract with a foreign enterprise clearly stating that the Vietnamese enterprise must bear the accommodation costs for foreign experts during their working time in Vietnam, then:

House rent for foreign experts working in Vietnam paid by Vietnamese enterprises is included in deductible expenses when determining income subject to corporate income tax.

(3) Expenditure on salaries, wages and allowances payable to employees but at the end of the deadline for submitting annual tax finalization documents, the actual amount has not been spent, except in cases where the enterprise has set aside a reserve fund to supplement the salary fund of the following year. The annual reserve level is decided by the business but must not exceed 17% of the implemented salary fund.

(4) Salaries and wages of private business owners, owners of one-member limited liability companies (owned by an individual); remuneration paid to founders, members of the board of members, and board of directors who do not directly participate in production and business operations.

What are the conditions for deductible expenses when calculating corporate income tax?

At Clause 1 Article 9 of the Law on Corporate Income Tax 2008 Amended and supplemented by Clause 5, Article 1 of the 2013 Amended Corporate Income Tax Law and Clause 3, Article 1 of the Law Amending and Supplementing a Number of Articles of Tax Laws 2014 stipulates that the conditions for deductible expenses when calculating corporate income tax are:

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

– Expenses have sufficient invoices and documents according to legal regulations. For invoices for each purchase of goods and services with a value of 20 million VND or more, there must be non-cash payment documents, except in cases where non-cash payment documents are not required according to the provisions of law.

– Not included in non-deductible expenses as prescribed in Clause 2, Article 9 of the Law on Corporate Income Tax 2008.

On what basis is corporate income tax calculated?

In Article 5 of Decree 218/2013/ND-CP, there is a regulation that calculating corporate income tax is based on taxable income in the period and tax rate.

Tax basis
The basis for tax calculation is the taxable income in the period and the tax rate.
The tax period shall comply with the provisions of Article 5 of the Law on Corporate Income Tax and the provisions of tax administration law.
Enterprises can choose the tax period based on the calendar year or fiscal year but must notify the tax authority before doing so.
Thus, calculating corporate income tax is based on the following basis:

– Taxable income in the period;

– Tax rate.