| Number: 3887/TCT-CS Regarding the expenditure of support and sponsorship from businesses for activities to prevent and control the Covid-19 epidemic. |
Hanoi, date 08 month 10 year 2021 |
Dear: Provincial and city tax departments under the central government.
To promptly support and encourage businesses to contribute to the prevention and control of the Covid-19 pandemic, the Government has issued Decree No. 44 / 2021 / ND-CP On March 31, 2021, guidance was issued on deductible expenses when determining taxable income for corporate income tax purposes, specifically regarding donations and sponsorships by businesses and organizations for COVID-19 prevention and control activities. Decree No. 44/2021/ND-CP applies to the corporate income tax periods of 2020 and 2021.
According to Decree No. 44/2021/ND-CP, businesses are allowed to deduct expenses when determining taxable income for corporate income tax purposes for donations and sponsorships in cash or in kind to COVID-19 prevention and control activities in Vietnam, through the receiving entities. The documentation for determining these donations and sponsorships includes: a confirmation record of the donation or sponsorship; and accompanying invoices and legal documents in accordance with the law for the monetary or in-kind donation or sponsorship.
To ensure that donations and sponsorships are accurately accounted for as deductible expenses when determining taxable corporate income, and to strictly handle cases of exploiting state policies for personal gain, the General Department of Taxation requires the Tax Departments to review donations and sponsorships from businesses and organizations for COVID-19 prevention and control activities. For donations and sponsorships in kind, especially medical equipment, biological products, and medical supplies, the Tax Departments will inspect and verify invoices, documents, and import declarations (if any), and compare them with the market prices of similar products at the time of purchase. Based on this, the Tax Departments will identify cases where the value of donations and sponsorships is incorrectly declared as deductible expenses when determining taxable income, in order to take appropriate tax management measures in accordance with the law.
The General Department of Taxation hereby informs the Tax Departments to implement this./.