The Ministry of Finance is seeking opinions on the draft Decree regulating the declaration, calculation of taxes, tax deduction, tax payment, and use of electronic invoices by business households and individuals (2nd time).
According to Article 6 of the draft Decree, the expenses that are deductible and not deductible when determining personal income tax for business households and individuals are as follows:
(1) The deductible expenses are actual expenses arising from production and business activities, with sufficient invoices, legal documents and non-cash payment documents for each payment with a value of VND 5 million or more, specifically as follows:
- Costs of raw materials, materials, fuel, energy, goods used in production and business.
- Costs of wages, wages, compulsory allowances, insurance and payments to employees with compulsory insurance according to regulations; costs of wages, wages, allowances and payments to employees under 01 month.
- Cost of fixed asset depreciation for production and business activities under the fixed asset management, use and depreciation regime.
- External service costs such as electricity, water, phone, internet, transportation, property rental, repair, maintenance with legal documents.
- Cost of paying interest on loans for production and business of credit institutions according to actual interest rates. The cost of paying interest on loans for production and business of subjects other than credit institutions does not exceed the level prescribed in the Civil Code.
- Other expenses directly serving production and business activities, with legal invoices and documents. Cashless payment documents are implemented according to the provisions of legal documents on value added tax.
(2) Expenditures not eligible for tax determination:
- The expenditure is not related to production and business activities.
- Expenditures without enough legal invoices and documents.
- Salary, wages and only paid wages of individuals in business, groups of individuals in business, members of the household; wages, wages and only paid wages that have been accounted for but in reality are not only paid or do not have payment documents.
- The depreciation of fixed assets exceeds the prescribed level or the depreciation of assets not used for production and business activities.
- Administrative fines, contract violations, compensation for errors of business households and individuals.
- Residential land and domestic facilities on land, cars and assets registered for ownership or registered for use under personal name, except for cars and assets registered for ownership or registered for business purposes of transportation and tourism.
- Expenses for personal and family needs. Individuals are responsible for accounting for separate expenses for business operations and expenses for personal and family needs.
In case a business household or individual has an annual revenue of over VND 500 million to VND 03 billion, if they choose the method of paying tax on income (revenue on expenses) but have expenses that do not meet the conditions for deduction according to regulations, they will not be included in the deductible expenses. In this case, households and individuals are allowed to switch to the tax payment method according to the provisions of Clause 3, Article 4 of the draft Decree.
