Page 10 - VSIP News - QII 2014

Basic HTML Version

(Soure: PwC)
• For a project provided CIT incentives because of its location, all profits are entitled to CIT incentives except for
profits from capital assignment, transfer of immovable property and from services subject to special sales tax.
2. Deductible expenses
• The cap on the deductibility of Advertising and Promotion (A&P) expenses has been increased from 10% to 15%.
For a trading entity, the purchase price of goods must be excluded from the expense base for A&P cap
calculation purposes. The purchase price of goods is defined to include import duty, special sales tax and
environment tax (if any).
• Gifts to customers are CIT deductible but subject to the A&P cap.
• Payment discounts are no longer subject to the A&P cap.
• For casino or gaming activities, deductible management expenses are capped at 4% of revenue.
• In order to be CIT deductible, themost updated salary needs to bementioned in the labour contract or its appendix.
• School fees for the children of expatriates are now CIT deductible commencing from pre-school.
• For the online purchase of air tickets, evidence of non-cash payment and the boarding pass (or decision on
business trip) are required for CIT deductibility purposes. These documents are not required if the air ticket is
purchased from an airline/agent and supported by a VAT invoice.
3. Other changes
• The reversal of provisions and net unrealized foreign exchange gains relating to the main business activities of a
taxpayer are no longer treated as other income.
• A&P expenses for a real estate company will be recognised in the first year of handover of real property instead
of in the year incurred.
• Capital assignment with a value of VND 20m or more must be supported by documents evidencing non-cash
payment. If not, the tax authorities have the right to deem the transfer price for CIT purposes.
• For entities with an alternate tax year end (i.e. not 31 December), the applicable CIT rates will be applied on an
apportionment basis e.g. 1 July – 31 Dec 2013 = 25% and 1 Jan – 30 June 2014 = 22%.