Công văn 1766/TCT-DTNN

OFFICIAL LETTER

ON THE DETERMINATION OF SOME EXPENSES FOR CALCULATING INCOMES SUBJECT TO BUSINESS INCOME TAX

To: Provincial/municipal Tax Departments

The General Department of Taxation has received enterprises’ requests for guiding expenses accounted as production and business costs and advertisement, sales promotion and marketing costs subject to the control level specified at Point 11, Section III, Part B of the Ministry of Finance’s Circular No. 128/2003/TT-BTC of December 22, 2003, guiding the implementation of the Government’s Decree No. 164/2003/ND-CP of December 22, 2003, detailing the implementation of the Business Income Tax Law. Based on the Ministry of Finance’s instructions, the General Department of Taxation hereby gives guidance on some expenses specified in Section III, Part B of the above Circular as follows:

1. The following expenses serving enterprises’ production and business activities shall be wholly accounted as expenses for determining incomes subject to business income tax if they fully have lawful vouchers and receipts as prescribed:

- Expenses for market research: exploration, survey, interview, and collection, analysis and assessment of information; and costs for development and support of market research. In case enterprises hire consultants to conduct market research, and development and support of market research, these costs shall be accounted as other expenses for purchased or hired services to directly serve production and business activities.

- Expenses for display and introduction of products and organization of fairs and trade exhibitions (including expenses spent through or in support of other organizations, individuals and sales agents): costs for opening showrooms or stalls for product display and introduction; costs for renting space for product display and introduction; costs for materials and tools serving product display and introduction; costs for transport of displayed products; costs for organizing customer conferences to introduce and guide the use of products; and cost for printing and distributing handbills introducing and guiding the use of products, including free products for trial use.

- Expenses for purchase or production of goods and services offered free of charge together with products sold (according to the enterprise’s regulation on sales) in the forms of goods, services, goods vouchers, service coupons, customer cards, and lottery tickets and competition coupons. The value of free goods and services mentioned above must not exceed the value of products sold at a time.

- Discounts for quick payment, including payments in cash to sales agents and customers buying goods or services in large volume and having receipts or payment documents and invoices in accordance with the Finance Ministry’s regulations.

2. Other expenses not specified at Point 1 above shall be determined for calculating business income tax under the guidance of the Ministry of Finance’s Circulars No. 128/2003/TT-BTC of December 22, 2003, and No. 88/2004/TT-BTC of September 1, 2004.

Based on current tax policies and regulations and the guidance of this Official Letter, provincial/municipal Tax Departments shall guide units to carry out business income tax finalization for the fiscal year of 2005.

In the course of implementation, provincial/municipal Tax Departments should report arising problems to the General Department of Taxation for timely guidance and settlement.