Reasonable Business Expenses Without Invoices - FDI Company Formation in Vietnam

What is a reasonable expense? Reasonable expenses do not require invoices, conditions for calculating corporate income tax & how to calculate personal income tax on reasonable expenses of an enterprise.

During the operation, the enterprise may have some transactions, buying and selling activities with individuals without invoices. So how to include these costs in reasonable expenses when calculating corporate income tax, what conditions must these expenses meet, what documents and certificates are required? Let’s find out with fdiinvietnam.com in the article below.

Content summary

I. What is a reasonable cost?

Reasonable expenses are actual expenses incurred during the business operation and have full invoices and valid documents according to the provisions of law.

II. Reasonable expenses between businesses and individuals without invoices

➨ Case 1: Enterprises make a list of purchased goods and services (according to form No. 01/TNDN Circular 78/2014/TT-BTC) to purchase goods and services:

Purchase of assets and services from non-business individuals;
Purchase of goods and services from business households and individuals with revenue of less than 100 million VND/year;
Buy goods directly produced and sold by people, regardless of whether the revenue is above or below 100 million VND/year.

Required documents:

Goods delivery record;
Contract for sale of goods, contract for services;
Photocopy of CCCD of the person providing goods and services;
List of purchased goods and services without invoice, form number 01/TNDN;
Payment documents: payment voucher or payment order (orders over 20 million are not required to transfer money to a bank account).

Note:

Form No. 01/TNDN must be filled in completely and correctly with all information on the list. The enterprise is solely responsible for the truthfulness and accuracy of the list.

If at the time of making the list of purchased goods and services, the price on the list is higher than the market price, the tax authority will apply the market price of the goods and services to determine the deductible expenses when calculating corporate income tax.

➨ Case 2: Enterprises purchasing goods and services from business individuals and business households with revenue of 100 million VND/year or more are required to have invoices. Business individuals and business households must go directly to the Tax Department where they reside to receive instructions on purchasing invoices and declaring and paying taxes according to regulations.

Required documents:

Minutes of handover;
Invoice purchased at the Tax Department;
Contract for sale of goods, contract for services;
Payment documents: payment voucher if paying in cash or payment order if paying by bank account.

➨ Case 3: Enterprises hire individuals under seasonal contracts, assigning individuals to some short-term, unstable jobs. Enterprises deduct personal income tax at a rate of 10% according to regulations on salaries and wages before paying to individuals.

Required documents:

Copy of individual’s CCCD;
Seasonal contract, assignment;
Payment documents: payment voucher or payment order (bank transfer not required).

➨ Case 4: Enterprises leasing assets from individuals need to contact the tax authority where the individual has the assets for lease, to declare and pay taxes on behalf of the individual leasing the assets.

Lease contracts of assets under 100 million VND/year require a contract and payment documents;
The contract for leasing personal property has an agreement that the rental does not include taxes and the enterprise pays taxes on behalf of the individual. In order for the costs to be included in reasonable expenses when calculating corporate income tax, the contract for leasing property, payment documents and tax payment receipt on behalf of the individual are required.

Required documents:

Payment documents;
Property lease agreement;
Copy of personal ID card;
Tax payment certificate on behalf of individuals.

See also:

>> How to declare property rental tax online;

>> Contract drafting and review services.

III. Conditions for calculating corporate income tax and how to calculate personal income tax on reasonable expenses

1. Cost of purchasing goods produced and sold by people themselves

➨ Conditions for calculating reasonable expenses when calculating corporate income tax:

List of form No. 01/TNDN attached with documents (form No. 01/TNDN applies to purchases from people who produce and sell by themselves, not applicable to purchases from traders).