Over the weekend, the Ministry of Finance officially submitted to the Government a Draft Decree guiding the calculation and inclusion of deductible expenses of enterprises and organizations for expenses incurred to support and sponsor Covid-19 prevention and control activities when determining Taxable Corporate Income.Ms. Nguyen Thi Thanh Hang, Deputy Director of Tax Policy Department, Ministry of Finance, spoke about this issue.

Ms. Nguyen Thi Thanh Hang, Deputy Director of
Tax Policy Department, Ministry of Finance

Why does the Ministry of Finance propose to deduct expenses of enterprises and organizations for thoseincurred to support and sponsor Covid-19 prevention and control activities when determining Taxable Corporate Income?

Under the difficult circumstances, many businesses and organizations all over the country, both at the central and local levels, have shown the spirit of mutual care, response and cooperation with the State in Covid-19 epidemic prevention and control activities, including donations and grants in cash and equipment (medicine, medical equipment, food) to support disadvantaged groups in society affected by the Covid-19 pandemic. This support is a humane gesture that needs to be encouraged, especially when the impact of the Covid-19 epidemic is considered to be serious.

The current law on corporate income tax has regulations allowing enterprises and organizations to include deductible expenses when determining taxable income for a number of donations. However, for the support of businesses and organizations for Covid-19 prevention and control activities, there are some new expenditures that have recently arisen have not yet been included in deductible expenses.

In order to show the encouragement of the State to the spirit of working with enterprises and organizations for Covid-19 prevention and control, ensuring the legal basis for implementation and contributing to solving the difficulties of enterprises and organizations during the Covid-19 pandemic, the Ministry of Finance has submitted to the Government to submit to the National Assembly that expenses of businesses and organizations to support and finance Covid-19 prevention activities are included in deductible expenses when determining taxable income according to the provisions of the Law on Enterprise Income Tax.

With the approval of the National Assembly, the Government assigned the Ministry of Finance to submit to the Government for promulgation a Decree guiding the calculation and inclusion of deductible expenses of enterprises and organizations incurred to support and sponsor Covid-19 prevention and control activities when determining Taxable Corporate Income.

Implementing resolutions of the National Assembly and the Government, the Ministry of Finance has developed a draft a Decree guiding the calculation and inclusion of deductible expenses of enterprises and organizations for expenses incurred to support and sponsor Covid-19 prevention and control activities when determining Taxable Corporate Income, it collectedsuggestions of relevant ministries, branches, localities, organizations and individuals according to the summary procedures prescribed in the Law on Promulgation of Legal Documents, and posted it on the website of the Government, the website of the Ministry of Finance, consulted organizations and individuals to complete the documents of the Decree. The draft Decree has also been appraised by the Ministry of Justice according to regulations.

A representative of BIDV donated VND3 billion in
support to the Covid-19 prevention in Hai Duong.

Currently, how are these expenses for support and sponsorship defined?

According to the provisions of the Law on Corporate Income Tax and current guiding documents, enterprises and organizations are included in deductible expenses when determining taxable income of corporate income tax for 5 groups of support and sponsorship.

Specifically, spendingoneducation includes: sponsoring public and private schools under the national education system in accordance with the law on education, that are not for capital contribution or share purchase in schools; funding facilities for teaching, learning and school operations; funding regular school activities; funding scholarships for pupils and students of general education institutions, vocational education institutions and higher education institutions as prescribed in the Education Law; sponsoring contests for subjects taught in schools in which the contestants are learners; sponsoring the establishment of educational promotion funds in accordance with the law on education and training.

Spending on funding for health includes: funding for medical facilities established in accordance with the health law that are not for capital contribution or share purchase in hospitals and medical centers;funding medical equipment, tools, and medicines; regular activities of hospitals and medical centers; financial aid for sick people through an agency or organization that has the function of mobilizing funding according to the provisions of law.

Spending on funding for disaster recovery includes: financial or equipmentdonations for overcoming natural disastersdirectly to organizations in accordance with law; individuals suffering from natural disasters through an agency or organization that has the function of mobilizing donations according to the provisions of law.

Spending on sponsorship for building houses of the poor according to regulations of the Prime Minister.

Spending on building houses of gratitude and solidarity; funding for scientific research; funding for policy beneficiaries; funding under the program prescribed by the Government to be implemented in localities with extremely difficult socio-economic conditions.

Thus, this regulationdoes not include a number of expenses to support and finance Covid-19 prevention and control activities.

What is the social impact of this policy?

Through statistics of the Ministry of Finance, the total value of sponsorships of businesses and organizations for Covid-19 prevention and control activities in 60 localities in Vietnam is about VND878 billion. Allowing enterprises and organizations to be included in deductible expenses when determining taxable income of corporate income is expected to reduce state budget revenue by about VND170 billion.

However, the implementation of this solution shows the encouragement of the State to organizations and enterprises for Covid-19 prevention and control activities, contributing to enhance the spread of solidarity in society.

Thank you, madam!