NECESSARY AND SUFFICIENT CRITERIA TO DETERMINE SOME DEDUCTIBLE EXPENDITURES WHEN CALCULATING CORPORATE INCOME TAX

On October 18, 2023, the General Department of Taxation issued Official Letter 4619/TCT-CS instructing the Khanh Hoa Department of Taxation on several issues on the tax obligations of enterprises ("Official Letter 4619").

Official Letter 4619 provides detailed guidance on the criteria for determining payments to be included in deductible expenses when determining income subject to corporate income tax ("CIT") as follows:

1. Loan interest payments must meet the following criteria:

1. expenditures for production and business activities of enterprises;
2. have sufficient lawful invoices and documents as prescribed by law;
3. regulated cashless payments;
4. not included in expenditures not deductible by regulations;
5. within the limit of interest expense for affiliated companies - determined for expenses incurred from 01/05/2017 (the effective date of Decree 20/2017/ND-CP) until now.

2. Personal income tax payments paid on behalf of employees must meet the following criteria:

1. having a labor contract with the employee as prescribed;
2. the labor contract stipulates the salary and wages paid to the employee excluding personal income tax;
3. the payment of personal income tax paid by the enterprise on behalf of the employee who has paid the state budget.

In addition to issues related to CIT, Official Letter 4619 guides how to calculate output to calculate natural resources tax for enterprises organizing the exploitation, processing, and consumption of stone used for construction materials. Accordingly,  the output of bucket rock - the rock obtained immediately after blasting - will be the base output for determining the natural resources tax payable by enterprises.