Can a business account for the purchase price of goods and services without invoices as deductible expenses when determining taxable income? This article presents a solution for businesses to account for the purchase price of goods and services without invoices as deductible expenses when determining the taxable income of the business
1. Purchase of goods and services without invoice
According to Clause 2.4, Article 4 of Circular 78/2014/TT-BTC, enterprises are allowed to include costs of purchasing goods and services without invoices if the enterprise purchases goods in the following cases:
“ – Purchase of agricultural, seafood, and aquatic products directly sold by producers and fishermen;
– Purchase handicraft products made of jute, sedge, bamboo, rattan, leaves, reeds, rattan, straw, coconut shells, coconut shells or raw materials from agricultural products directly sold by non-business handicraft producers;
– Purchase soil, rock, sand, and gravel directly from households and individuals who exploit them for sale;
– Buy scrap from direct collectors;
– Purchase of goods, assets, and services directly from households and individuals not doing business;
– Purchase of goods and services from households and business individuals (excluding the above cases) with revenue below the threshold for value-added tax (VND 100 million/year) .
To submit the cost of purchasing goods and services without invoices, businesses need the following documents:
– Contract for purchase of goods and services.
– Payment documents: payment voucher if paying in cash and payment authorization if paying via bank account. Enterprises are not required to pay via bank account for orders over 20 million VND.
– Goods delivery record.
– List of purchased goods and services without invoices, form 01/TNDN ( issued with Circular 78/2014/TT-BTC ). The person signing the list is the legal representative or authorized person of the enterprise and is responsible for the accuracy and truthfulness of the list of purchased goods and services without invoices before the law.
– Photocopy of ID card of the person providing goods and services.
Note: If the purchase price of goods and services on the list of purchased goods and services without invoices is higher than the market price of the same or similar goods and services on the market at the time the enterprise prepares the list, the tax authority will use the market price of the same or similar goods and services to determine deductible expenses when determining taxable income.
For example: On March 31, 2017, company X (tax code: 1234567890; address: 58 street x, ward y, Ho Chi Minh City) bought 500kg of unprocessed coffee beans from Nguyen Van A at a price of 45,000 VND/kg. Knowing Nguyen Van A’s information as follows:
- ID number: 2587985277
- Address: Hiep Thanh, Duc Trong, Lam Dong.
- Mr. A grows coffee at home and sells it to company X.
Because company X buys goods directly from farmers, company X can create a list 01/TNDN to calculate into the company’s cost of goods sold.
Table 01/TNDN:
2. Property rental costs
In order for the cost of renting assets without invoices to be accounted for as deductible expenses when determining the taxable income of the enterprise, the following documents are required:
If the total income from renting out personal assets is less than 100 million/year:
+ Property lease contract
+ Documents for payment of property rental (payment via bank account is not required for expenses over 20 million)
If the total income from renting out personal assets is from 100 million/year or more:
For businesses to include property rental costs in determining taxable income, business households and individuals must declare and pay taxes (or have the business pay taxes on their behalf). The required documents are:
+ Property lease contract.
+ Documents for payment of property rental (payment via bank account is not required for expenses over 20 million).
+ Personal tax payment documents.
Note : If the lease contract stipulates that the lessee is the taxpayer, the enterprise can include tax payments in deductible expenses when determining taxable income.
For example: On October 1, 2016, Company X signed a contract to rent a house from Nguyen Van A for 2 years from October 2016 to October 2018 with a rental value of 20 million/month. The contract stipulates that Company X is the taxpayer. Knowing that in 2017, Mr. A only generated rental income from renting the house to Company A.
In 2016, Nguyen Van A generated rental income of 60 million VND (office rental fee to company X for October, November and December 2016). In 2016, Mr. A’s rental income was less than 100 million VND/year, so Mr. A did not have to declare and pay taxes.
In 2017, Nguyen Van A received 240 million VND from renting an office to company X. Mr. A must declare and pay taxes on this rental. Taxes incurred in 2017 include business license fees of 300,000 VND; VAT of 12 million; personal income tax of 12 million. Therefore, in 2017, the company included deductible expenses when determining tax in 2017 as rent and tax payments. The total is 264,300,000 VND.
3. Advertising costs on Facebook, Google,…
According to Circular 103/2014/TT-BTC, in order for businesses to be able to include advertising costs on Facebook, Google… as deductible expenses when determining taxable income, businesses need to declare taxes, pay contractor taxes and have the following documents:
+ Contract for providing advertising services on Facebook, Google,…
+ Payment documents: payment authorization for businesses to pay money directly to Facebook, Google through the company account. If the company authorizes an individual to pay money, the company must transfer money to the individual to pay.
+ Tax payment receipt.
4. Electricity and water bills with invoices in the name of the person renting the production and business location
Enterprises can include electricity and water bills with invoices not bearing the enterprise’s name in deductible expenses when determining taxable income. Enterprises need to have the following documents:
+ Lease contract (the lease contract is signed with the person listed on the electricity and water bill. The lease contract states that the electricity and water bills will be paid by the business.)
+ Electricity and water bills.
+ Business electricity and water payment documents.
Note : The enterprise accounts for the entire payment amount as company expenses because VAT is not deductible.