On July 12, 2019, the Ministry of Finance issued Circular 43/2019/TT-BTC guiding Clause 4, Article 24 of Decree 82/2018/NĐ-CP, which stipulates the deduction of housing construction costs for workers in industrial parks and economic zones.
Conditions for housing construction costs for workers to be included in expenses.
Khoản 4 Điều 24 Nghị định 82/2018/NĐ-CP as follows:
4. The costs of investing in the construction, operation, or leasing of apartment buildings and social infrastructure facilities serving workers in industrial parks and economic zones are reasonable expenses that can be deducted for calculating the taxable income of enterprises with investment projects in industrial parks and economic zones.
According to Circular No. 43/2019/TT-BTC of the Ministry of Finance, whether the costs of investment in construction, operation, or leasing of apartment buildings and social infrastructure facilities serving workers in industrial parks and economic zones, incurred by enterprises with investment projects in industrial parks and economic zones, are deductible when determining taxable corporate income depends on whether those investment costs are classified as fixed assets according to the Ministry of Finance's regulations on the management, use, and depreciation of fixed assets.
Specifically, the guidelines stipulated in Article 1 of this circular are as follows:
Article 1. Guidance on the provisions of Clause 4, Article 24 of Government Decree No. 82/2018/ND-CP dated May 22, 2018.
1. The costs of constructing, operating, or leasing apartment buildings and social infrastructure facilities serving workers in industrial parks and economic zones, incurred by enterprises with investment projects in industrial parks and economic zones, are deductible when determining taxable corporate income as follows:
a) For fixed assets: These are included in the project value and depreciation is deductible when determining taxable income and corporate income if they meet the conditions for being fixed assets as stipulated by the Ministry of Finance on the management, use, and depreciation of fixed assets.
b) Regarding expenses (except as stated in point a, Clause 1 of this Article):
These expenses are deductible when determining taxable income for corporate income tax purposes, as stipulated by corporate income tax laws.
2. Incentives for investment projects in the construction of housing, cultural and sports facilities, and social infrastructure serving workers in industrial zones and economic zones.
"Investment projects for the construction of housing, cultural and sports facilities, and social infrastructure serving workers in industrial zones and economic zones are entitled to incentives as prescribed by the law on social housing construction and related laws."
Thus, the costs of constructing housing for workers, and even cultural and sports facilities to serve other workers' needs, are included in the expenses regardless of the source of investment capital or funds from welfare funds.
Circular 43/2019/TT-BTC takes effect from August 26, 2019. Housing-related expenses for workers in industrial parks and economic zones incurred from July 10, 2018, are governed by Clause 4, Article 24 of Decree 82/2018/ND-CP and are subject to the provisions of this Circular.
