Problem: Are advertising costs on Google and Facebook considered business expenses? If so, then What does the file include?
In business operations, investing in Google and Facebook advertising has become a regular expense for many companies. However, Google and Facebook only accept payments via Visa and Mastercard and do not issue VAT invoices to users..
So, are these expenses considered deductible expenses? What documentation is required?
Google and Facebook advertising costs are deductible expenses.
According to the Circular 78 / 2014 / TT-BTC Article 6, Clause 1 stipulates the deductible and non-deductible expenses when determining taxable income as follows:
“1. Except for the non-deductible expenses mentioned in Clause 2 of this Article, enterprises are allowed to deduct all expenses if they meet the following conditions:
a) Actual expenses incurred related to the production and business activities of the enterprise;
b) The expenditure is supported by valid invoices and documents as required by law.
c) For expenditures with invoices for goods and services valued at 20 million VND or more (including VAT), payment must be made using non-cash methods.
Non-cash payment documents must comply with the regulations of the legal documents on value-added tax.
According to the above regulations, Advertising expenses are incurred to sell the company's goods and services, therefore they are business operating expenses and are deductible..
But what documentation does a business need to have to qualify for such expenses as deductible costs?
To include Google and Facebook advertising costs as deductible expenses, the following documents are required.
- The unit's regulations regarding the purchase of online services, including advertising, comply with Vietnamese law.
- A written proposal from the sales department requesting advertising to be submitted to superiors, along with a printed copy of the terms and conditions offered by the advertising network/website (prices, advertising methods, payment terms).
- Documentation proving that the business's advertising request has been fulfilled.
- Payment documents from individual credit cards to Google and Facebook; and payment documents from company accounts to individual credit cards, such as bank statements with payment orders, checks, etc., proving that the company paid for advertising services.
- The tax declaration and supporting documents for contractor tax payment must be submitted before making payments to Facebook and Google, as required by regulations.
Please refer to document number: 5681/CT-TTHT dated February 17, 2017 and Official Letter No.: 1550/TCT-CS dated April 24, 2018
