Official Dispatch No. 11043/CTQNA-TTHT on Invoice Issuance and Tax-Deductible Expenses for Corporate Income Tax (CIT)

Official Dispatch No. 11043/CTQNA-TTHT on Invoice Issuance and Tax-Deductible Expenses for Corporate Income Tax (CIT)

Legislation

Official Dispatch No. 11043/CTQNA-TTHT on Invoice Issuance and Tax-Deductible Expenses for Corporate Income Tax (CIT)

 

General Department of Taxation

Quang Nam Tax Department

No: 11043/CTQNA-TTHT

Re: Invoice issuance and deductible expenses for Corporate Income Tax (CIT)

SOCIALIST REPUBLIC OF VIETNAM

Independence - Freedom - Happiness

Quang Nam, December 27, 2024

 

To:

SGI VINA CO., LTD

Tax Code: 4001258658, Email: htrang@relats.com

Address: Lot 25, Dien Nam - Dien Ngoc Industrial Park, Dien Ngoc Ward, Dien Ban Town, Quang Nam Province

The Quang Nam Tax Department has received Official Letter No. 02-24/SGI-KTT dated December 20, 2024, from SGI VINA CO., LTD (hereinafter referred to as the "Company") regarding invoice issuance timing and deductible expenses for Corporate Income Tax (CIT). In response, the Tax Department provides the following guidance:

1. Invoice Issuance Timing

According to Clause 1, Article 9 of Decree No. 123/2020/ND-CP (dated October 19, 2020):

  • The time of invoice issuance for goods sales (including the sale of state assets, confiscated assets, assets contributed to state funds, and national reserve goods) is the moment the ownership or usage rights of the goods are transferred to the buyer, regardless of whether payment has been received.

2. Regulations on Import and Export Goods of Export Processing Enterprises (EPEs)

According to Clause 50, Article 1 of Circular No. 39/2018/TT-BTC (amending Article 74 of Circular No. 38/2015/TT-BTC):

  • Goods imported for the production of exported products by EPEs must undergo customs procedures and must be used for production purposes, except in the following cases:

    • Transactions between EPEs, where raw materials, machinery, or equipment are exchanged under processing contracts.
    • Domestic purchases of construction materials, office supplies, food, and other consumables for company operations.
    • Internal movement of goods within an EPE or between EPEs within the same export processing zone.
    • Goods exchanged among subsidiaries of the same corporation operating in Vietnam.
    • Goods temporarily brought into or out of the EPE for repair, warranty, or processing activities such as inspection, classification, packaging, or repackaging.

  • If customs procedures are not required, EPEs must still maintain documentation and detailed records to track incoming and outgoing goods, in accordance with regulations on commercial transactions, accounting, and auditing.

  • If an EPE purchases goods from domestic companies and has fully paid all applicable taxes, it is not required to complete customs procedures. However, if the purchased goods are subject to export duties, customs procedures must be carried out unless the goods are used as raw materials or consumables in production.

3. Deductible and Non-Deductible Expenses for CIT Calculation

According to Article 4 of Circular No. 96/2015/TT-BTC (amending Article 6 of Circular No. 78/2014/TT-BTC):

Deductible Expenses

A company is eligible for CIT deductions unless the expenses fall under non-deductible categories. Expenses must meet the following conditions:

  • Directly related to business operations.
  • Supported by legitimate invoices and documents as required by law.
  • For transactions worth VND 20 million or more (including VAT), non-cash payment proof is required.

Non-Deductible Expenses

Some expenses cannot be deducted, including:

  • Expenses that do not meet the above conditions.
  • Input VAT that has already been deducted or refunded.

4. Specific Application for EPEs and Domestic Transactions

  • If the company (an EPE) is not subject to VAT declaration and payment, the invoice issuance time for exported goods remains the moment ownership or usage rights are transferred to the buyer, regardless of payment.

  • If an EPE purchases goods from a domestic enterprise and the domestic company does not complete customs procedures, but instead issues an invoice with 8% or 10% VAT, the deductible expenses depend on the type of goods and procedures:

    • If the purchased goods require customs procedures (as per Clause 50, Article 1 of Circular No. 39/2018/TT-BTC) but do not have sufficient invoices and documents as per Article 4 of Circular No. 96/2015/TT-BTC, they are not deductible for CIT.
    • If the purchased goods do not require customs procedures, or if customs procedures are optional, and the expenses (including VAT) comply with Article 4 of Circular No. 96/2015/TT-BTC, they are deductible for CIT.

Conclusion

The Company should review the relevant legal regulations and actual transaction conditions to ensure compliance with the tax laws.

Best regards,

Recipients

- As mentioned above;

- Department: TTKT1;

- Tax Department Website;

- Archived at: VT, TTHT.

On behalf of the Director General

Deputy Director General

 

 

 

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