Reasonable expenses are valid, deductible expenses #
Concept of terms #
According to Vietnamese Accounting Standard No. 01 - General Standards stipulate:
“Cost: Is the total value of items that reduce economic benefits in the accounting period in the form of amounts spent, deductions of assets or arising liabilities resulting in a decrease in equity, does not include distributions to shareholders or owners. ”
According to Vietnamese - Vietnamese dictionary:
“Reasonableness is right, in accordance with logic.
Provisions of tax on reasonable and deductible expenses #
According to current regulations in Circular 96/2015 / TT-BTC dated 22 June 6
“Except for the non-deductible expenses specified in Clause 2 of this Article, all expenses may be deducted if the following conditions are satisfied:
a) The actual expenses are incurred in connection with the business and production activities of the enterprise.
b) The expenditure has enough legal invoices and documents as prescribed by law.
c) If there is an invoice for each purchase of goods or services valued at VND 20 million or more (the price includes VAT), there must be a non-cash payment voucher. "
Reasonable Reasonable Reasonable Reasonable Reason #
The arguments all come from enterprises that the arising costs are reasonable and valid, but the tax authorities say not. Who is right and who is wrong is always a controversial story for many times when the tax office performs the settlement at the enterprise.
The tax authorities make arguments on the reasonableness and validity of the expenses that the enterprises have incurred in the period to eliminate them from deductible expenses. Enterprises cannot prove, criticize and convince the tax authorities to believe in the logic, reasonableness and truth of the costs of their business.
Example 1: Enterprise has a fixed asset that is a car and incurs expenses for buying gasoline for this car. This cost for businesses is completely reasonable, how can the tax authorities not accept?
If the cost of purchasing gasoline of the enterprise is too large, incompatible with the travel route of the user, this is not consistent with the logic, not reasonable, the tax authority will not accept it.
Example 2: Business travel expenses of your business are excluded by tax authorities because the business does not have sufficient invoices and documents as prescribed, does not guarantee the validity or the enterprise cannot prove the arising per diem is "real".
Example 3: Why is the golf expense of the enterprise paid out? Because the tax authorities believe that this amount is personal expenses, not related to the production and business activities of the enterprise even though the enterprise has full red invoices.
How to eliminate the difference between tax authorities and accountants #
Reasonable reasonable expenses / Deductible expenses = Accounting expenses on the financial statements (+/-) adjustments due to differences between tax and accounting.
The smaller the adjustments for the difference between tax and accounting, the less the difference between tax and accounting data. To achieve that, businesses need to prove their costs are reasonable, "right, in accordance with logic" and can counter the arguments of the tax authorities. This is the content that the tax authorities pay attention to and is also something that businesses often ignore, only focusing on the collection of documents (validity).
To ensure the validity, enterprises only need to have sufficient documents and documents in accordance with the tax law. To ensure the reasonableness, enterprises need to ensure that costs incurred are REAL, logically relevant and necessary for production and business activities.
The shorter the difference between accounting and taxation becomes, which means that the adjustments for differences also diminish, the greater the firm's responsibility for its own data. Instead of dealing with the tax authorities, businesses just follow the above principle, prove as clear as possible, don't let tax become your concern.