Official Dispatch 89924/CT-TTHT on salaries, expenses for COVID-19 victims

To: Nissan Automotive Technology Vietnam Co., Ltd

(Address:  26^th floor, Keangnam Landmark Tower, Lot E6, Cau Giay New Urban Area, Me Tri Ward, Nam Tu Liem District, Hanoi City; Tax identified code:  0101145668)

In response to the document No. AC-NATV/2020-10 dated September 28, 2020 of Nissan Automotive Technology Vietnam Co., Ltd (hereinafter referred to as the Company) on deductible expenses when determining enterprise income tax on salaries and other expenses for COVID-19 victims, Hanoi Tax Department hereby directs as follows:

- According to Article 4 of the Ministry of Finance's Circular No. 96/2015/TT-BTC dated June 22, 2015, providing guidance on enterprise income tax in the Government’s Decree No. 12/2015/ND-CP of February 12, 2015, guiding the determination of deductible and non-deductible expenses when determining taxable income, non-deductible expenses include:

“Article 4. To amend and supplement Article 6 of the Circular No. 78/2014/TT-BTC (amended and supplemented in Clause 2, Article 6 of the Circular No. 119/2014/TT-BTC, and Article 1 of the Circular No. 151/2014/TT-BTC) as follows:

“Article 6. Deductible and non-deductible expenses when determining taxable income

1. Except for the non-deductible expenses prescribed in Clause 2 of this Article, enterprises may deduct any expense that fully satisfies the following conditions:

a) Actual expenses related to their production and business activities.

b) Expenses with adequate lawful invoices and documents.

c) Expenses for purchase of goods or services valued at VND 20 million or more (VAT-inclusive prices) per invoice with non-cash payment documents.

Non-cash payment documents must comply with legal documents on value-added tax.

In case of one-time purchase of goods or services valued at VND 20 million

...”

2. Non-deductible expenses for determining taxable income include:

...

2.6. Salaries, wages and bonuses paid to employees in one of the following cases:

a) Salaries, wages and other amounts payable to employees that enterprises have accounted into production and business expenses in the period but have not paid such amounts or have no payment documents as required by law

b) Salaries, bonuses and life insurance premiums for employees for which the conditions for payment and levels of these amounts are not specified in one of the following documents: labor contract; collective labor agreement; financial regulations of the company, corporation or group; reward regulations issued by the chairperson of the Board of Directors, general director or director under the financial regulations of the company or corporation”.

- Article 3 of the Ministry of Finance's Circular No. 25/2018/TT-BTC dated March 16, 2018, amending and supplementing Item e, Point 2.2, Item b, Point 2.6, Point 2.11 and Point 2.30, Clause 2, Article 6 of the Circular No. 78/2014/TT-BTC (amended and supplemented by Article 4 of the Circular No. 96/2015/TT-BTC) prescribes that:

“2. To amend the first paragraph of Item b, Point 2.6, Clause 2, Article 6 of the Circular No. 78/2014/TT-BTC (which was amended and supplemented under Article 4 of the Ministry of Finance’s Circular No. 96/2015/TT-BTC of June 22, 2015), as follow:

b) Salaries and bonuses for employees for which the payment conditions and levels are not specified in one of the following documents: labor contract; collective labor agreement; financial regulation of the company, corporation or group; or reward regulation issued by the chairperson of the Board of Directors, general director or director under the financial regulation of the company, corporation or group.”.

“4. To amend the first paragraph of the fifth em rule of Point 2.30, Clause 2, Article 6 of the Circular No. 78/2014/TT-BTC (which was amended and supplemented under Article 4 of the Circular No. 96/2015/TT-BTC), as follow:

- Welfare expenses paid directly to employees, such as  expenses for funerals and weddings of employees and their relatives; expenses on summer holidays or medical treatment; expenses for refresher training courses; expenses for employees’ families affected by natural disasters, enemy sabotage, accidents or illnesses; expenses for rewarding employees’ children for their study achievements; expenses for employees’ travel during holidays; payment for accident insurance, health insurance, and other voluntary insurance for employees (except life insurance and voluntary pension insurance for employees mentioned at Point 2.11 of this Article), and other welfare expenses. The total welfare expenses must not exceed one month’s average wage actually paid in the tax year of the enterprise.”

- Pursuant to Item a, Point 1, Section II of the Government's Resolution No. 84/2020/NQ-CP dated May 29, 2020, regarding the tasks and solutions to continue to remove difficulties in production and business, accelerate the disbursement of public investment and ensure social order and safety in the context of COVID-19 pandemic.

Pursuant to the above provisions, if the Company has paid salaries, wages and other amounts of salary and wage nature to employees taking leave during the period of social distancing, waiting time due to the impact of the COVID pandemic and other expenses of a direct welfare nature for employees, the Company may account expenses that satisfy conditions provided in Article 4 of the Ministry of Finance’s Circular No. 96/2015/TT-BTC (amended and supplemented by Article 3 of the Circular No. 25/2018/TT-BTC) as deductible expenses for determination of taxable income.

Currently, the Government has assigned the Ministry of Finance to coordinate with relevant ministries and agencies in formulating a Government’s Decree to implement a number of contents specified in Item a, Point 1, Section II of the Resolution No. 84/NQ-CP, which contains content related to the determination of deductible expenses when determining enterprise income tax for contributions and donations in the fight against the COVID-19 pandemic.  Upon receiving specific instructions, the Company should study and base on the actual production and business to comply with.

For any difficulties arising in the course of implementing tax policy, the Company may refer to Hanoi Tax Department’s guiding documents posted on the website http://hanoi.gdt.gov.vn or contact the Division of Inspection and Examination No. 2 for further support.

Hanoi Tax Department hereby informs the Company for implementation./.