Thông tư 176/2010/TT-BTC

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

1. Enterprises must make funding plan for poor districts according to sponsoring content (as prescribed regime) which have been registered with the Ministry of Labour – War Invalids and Social Affairs. This funding plan is sent to the District-level People’s Committee (DPC) where those enterprises have registered to assist so such agencies to synthesize and submit to the Provincial-level People committee for approval. Based on approved poverty reduction program, the DPC issues written confirmation on funding commitment of the enterprises in which states clearly the progress of funding, funding amount, financing activities of the enterprises for the district. Funding plan for the poor districts of the enterprises and confirmation of the DPC which receives funding are the basis for enterprises to be included in the costs or deducted previously into expenses when determining income subject to CIT to spend or to create assistance sources for poor districts subject to the Resolution No. 30a.

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:

+ CIT is collected arrears due to not yet used up the previously deducted amount (assuming tax rate of CIT in the deduction term is 25%):

(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.

2. The contents which are not guided in this Circular and the contents which are not contrary to the guidance in this Circular shall comply with current regulations.

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./.