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MINISTRY OF FINANCE
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SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
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No.: 176/2010/TT-BTC
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Hanoi, November 05, 2010
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CIRCULAR
GUIDING ENTERPRISE TO PREVIOUSLY DEDUCT FROM COSTS WHEN DETERMINING
INCOMES SUBJECT TO CORPORATE INCOME TAX IN ORDER TO CREATE AN ASSISTANCE SOURCE
FOR THE POOR DISTRICTS IN IMPLEMENTING RESOLUTION NO. 30a/2008/NQ-CP DATED
DECEMBER 27, 2008 OF THE GOVERNMENT ON RAPID AND SUSTAINABLE POVERTY REDUCTION
SUPPORT PROGRAM FOR 61 POOR DISTRICTS
Pursuant to the
Law on Enterprise Income Tax No.14/2008/QH12 and the documents guiding
the implementation of the Law on Tax
Administration No.29/11/2006 78/2006/QH11dated
29/11/2006 and documents
guiding the implementation;
Pursuant to the Resolution No.30a/2008/NQ-CP dated 27/12/2008 of the Government
on rapid and sustainable poverty reduction support
program for 61 poor districts;
Pursuant to the Decree No.118/2008/ND-CP dated 27/11/2008 of the Government defining
the functions, tasks, powers and organizational structure of the Ministry of Finance;
After having directive opinion of the Prime Minister in the official dispatch
No.3741/VPCP-KTTH dated 03/6/2010 of the Government Office,
The Ministry of Finance guides enterprises
to previously deduct from costs when determining incomes subject to Corporate
Income Tax (CIT) to assist for the poor districts in implementing the
Resolution No.30a/2008/NQ-CP dated 27/12/2008 as follows:
Article
1. Subjects and scope of application
This Circular guides on calculating costs or previously deducting from
costs when determining incomes subject to Corporate Income Tax (CIT) for the
enterprises to assist or creating source for the enterprises to assist for the
poor districts in implementing the Resolution 30a dated
27/12/2008 of the Government on rapid and sustainable poverty reduction support
program for 61 poor districts (hereinafter referred to as Resolution No.30a).
The poor districts to be of the list of poor districts are subject to
the Resolution No.30a, provided for in point 1 item IV of official dispatch No.705/TTg-KGVX
dated 11/5/2009 of the Prime Minister and Annex I - the list of poor districts
subject to the Resolution No.30a issuing attached herewith. In case, the
Prime Minister provides for otherwise, provisions of the
Prime Minister shall be complied
with.
The concept of enterprise in this Circular shall be construed as business concept has been defined
in the CIT Law No.14/2008/QH12
and the guidelines.
Article 2. Deduction mechanism and Objectives of using deducted
expenses
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Based on the financial ability and
funding commitment
and progress of funding for poor districts, enterprises
determine by themselves the rate of cost-accounting
into costs when calculating CIT, ensuring the principle: total balance
of the previously deducted account to fund for poor districts subject to the Resolution No. 30a not more than the
total amount that the enterprises have committed to
fund for poor districts subject to the Resolution No. 30a which up to the time
of financial statements, the
enterprises have not yet performed.
2. The enterprises use the previously deducted amount only
to fund education, health, disaster recovery and
charity houses for poor people under the law regulations for poor districts subject
to the Resolution No. 30a.
3. For the amounts that enterprises
paid actually in the tax period to
fund education, health, disaster
recovery and charity
houses for poor people as
prescribed by law for the poor
districts to be of the list of districts
poor subject to the Resolution No. 30a having
sufficient invoices, legal
documents shall be
included in the deducted cost when
determining income subject to CIT under regulations. In case the funding for education, health, disaster recovery and
charity houses for poor people in tax period was
taken from the previously deducted amounts to create assistance source for poor districts subject to Resolution No. 30a,
enterprises shall not be included
in deducted expenses when
determining the income subject to CIT.
4. The content and procedures, records of funding for
education, health, disaster recovery and charity
houses for the poor people, enterprises
perform under the guidance in the point 2.21, 2.22, 2.23
and 2.24 items
IV, Part C of
Circular No.130/2008/TT-BTC dated 26/12/2008 of the
Ministry of Finance detailing the
implementation of CIT Law and Decree No.124/2008/ND-CP dated 11/12/2008.
Article 3. Management of deducted expenses
1. Term of the previous deducted amounts
into costs to fund poor districts
subject to the Resolution 30a under
the provisions of this Article is 3 years from the year the enterprises deduct.
Where the termination of previously deducted
term but the enterprises did not use up amount
deducted or used
for improper purposes, the enterprise shall
refund the amount already deducted but not used,
used but not up or used for improper purposes into other income
when determining income subject to CIT
and the interest
generated from the
corresponding payable income tax.
a) Tax rate
of CIT used to calculate the recovery tax is a tax
rate applied to enterprises in the
deduction term. Where in the
term of deduction, the enterprise apply the different tax rate of CIT, tax rate of CIT used
to calculate the recovery tax is
the tax rate at the time of deduction of
the recovered amount according
the principle of first deducted, first
used.
b) Interest rate for recovered tax amount which the enterprise
have already deducted but not yet used up is the one
year-term Treasury bill’s interest rate
applied at the time of recovery
time and the interest calculated time is
calculated by year, since the
next year of the deducted year to recovered one.
For example: in 2010, Company A has committed to support for the poor district
B to the end of 2012 was one billion dong
and the poor district
C is two billion dong (with certification of the DPC B and C). Based on the commitment
to support the District B and District C of Company A and assistance Certification
of the DPC B
and C, Company
A determine the previously deducted rate
into cost to create assistance
resources for the
poor district subject to the Resolution No.30a in 2010 was 2 billion dong.
By the end of 2012, the funding
amount of Company to district B is 0.7
billion dong and to district C is 0.8 billion dong. In this case, the Company only used 1.5
billion dong, not yet used up the
previously deducted amount of the year 2010, the Company is collected
arrears and interest incurred as follows:
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(2 billion - 1,5 billion) x 25% = 125 million
dong
+ Time
to calculate interest from 2011 to 2012 is two years.
Therefore, the interest arising from CIT collected
arrears due to not yet used up the previously
deducted amount (assuming the one year-term Treasury bill’s interest
rate is 12% ):
125 billion x 12% x 2 years = 30 billion dong
The years
after 2010, the previously deducted amount and use of the previously
deducted amount is
calculated according to principle of first
deducted, first used as mentioned above.
c) The interest rate for the recovery tax
amount calculated on the previously deducted amount used for improper purposes is the interest
rate calculated under ratio of late payment penalties as
prescribed of the Tax Administration Law and the time
period for interest is the period since being
previously deducted until being collected arrears. The
date of recovery is the date that the violation
is detected and recorded in writing (except for the case
not required to record).
d) The determination
of the previously deducted time of the
amount used for improper purposes for use as a basis of calculating interest for the
collected arrears tax amount calculated on the previously
deducted portion used for improper purposes is according to principle of first
deducted, first used.
2. The program of the Government's poverty reduction assistance
is implemented from 2009 to 2020. Therefore, enterprises
are entitled to deduct or previously deducted into costs to create assistance source for poor districts subject
to the Resolution No.30a maximum up
to 2019 and the
latest is at the time of submission of tax settlement
reports of the year 2020, the enterprises must complete the previous deduction liquidation
procedures to create assistance
source for poor districts subject
to the Resolution No.30a and
reimbursement of the surplus (if any) into other
income when determining income
subject to CIT of the year 2020
and the interests arising from the
corresponding payable CIT under the
provisions of clause 1 of this Article.
Article 4. Implementation organization
1. This Circular takes effect 45 days after the signing date.
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During the course of implementation if any problem arises, the
organizations and individuals
need promptly to reflect to the Ministry
of Finance for study and additional
guidance./.
FOR THE MINISTER
DEPUTY MINISTER
Do Hoang Anh Tuan