A reader has email address huudungx @ xx would like to ask : I am the director of a newly established joint stock company. Before starting a business, I hired a consulting company to carry out business establishment procedures at a cost of VND 50 million. After the company is established, will this amount be included in deductible expenses when calculating corporate income tax?

Clause 1, Article 19 of the 2014 Law on Enterprises provides for contracts prior to business registration as follows:

1, Enterprise founders may sign contracts in service of the establishment and operation of enterprises before and during the enterprise registration process.

Clause 3 Article 3 of Circular 45/2013 / TT-BTC guiding the management, use and depreciation of fixed assets is as follows: 3. The cost of establishment of enterprise, cost of staff training, advertising cost incurred prior to the establishment of enterprise, cost of research stage, relocation, sale for possession and use of technical materials, patents, license of technology transfer, trademarks, business advantage that are not intangibles fixed assets but are amortized into business cost of enterprises in a maximum time not exceeding 3 years according regulations of Law on Enterprise Income Tax.

Clause 1 Article 4 of Circular No. 96/2015 / TT-BTC amending and supplementing Article 6 of Circular No. 78/2014 / TT-BTC regulating deductible and non-deductible expenses when determining taxable income:

1. Except for the non-deductible expenses prescribed in Clause 2 of this Article, every expense is deductible if all of these following conditions are satisfied:

a) The actual expense incurred is related to the enterprise’s business operation.

b) There are sufficient and valid invoices and proof for the expense under the regulations of the law.

c) There is proof of non-cash payment for each invoice for purchase of goods/ services of VND 20 million or over (including VAT).

The proof of non-cash payment must comply with regulations of law on VAT.

In case of a purchase of goods and services that are worth VND 20 million or over according to the invoice which is yet to be paid for by the enterprise when the expense is accounted for, such expense will be deductible when calculating taxable income.

Thus, expenses of an enterprise before the establishment of an enterprise, if it satisfies all the conditions specified above, will be deducted when determining taxable income of enterprise income tax.