Recognising educational and training cost as deductible expense

In a previous article, we have mentioned the procedures for some deductible expenses in CIT regulation. Today, we would like to discuss about the another expense: Educational and training cost. According to the most current Regulation, is this expense recognised as deductible expense?

Legal basis for " educational and training cost as deductible expense "

Based on Circular 78/2014/TT-BTC, Article 6, clause 1 regulates:

“1. Except expenses specified in Clause 2 of this Article, enterprises may deduct all expenses that fully satisfy the following conditions:

a/ Actual expenses arising in relation to production and business activities of enterprises;

b/ Expenses with adequate lawful invoices and documents as required by law;

c/ For expenses for purchase of goods or services with invoices valued at VND 20 million or more (VAT-inclusive prices) each, there must be non- cash payment documents;

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

Applying those above regulation, then any expense being spent by enterprise must satisfy following conditions:

– Actual expenses arising in relation to production and business activities of enterprises;

– Expenses with adequate lawful invoices and documents as required by law;

– For expenses for purchase of goods or services with invoices valued at VND 20 million or more (VAT-inclusive prices) each, there must be non- cash payment documents;

Anyway, Enterprise which has some expenses that is not correspondence with revenue but still recognise as deductible expenses. According to Circular 96/2015/TT-BTC, Article 4; amendment, supplement Article 6, Circular 78/2014/TT-BTC as below:

“2.30. Expenses that do not correspond with assessable revenues, except for:

……

- Expenditures on provision of vocational education and training for employees, including:

+ Payment for teachers, learning materials, equipment serving vocational education, materials for practicing, and other aid for learners.

+ Expenditure on training employees recruited by the enterprise”

Conclusion

Based on above regulation, expenses spend for vocational education and training although these expenses do not corresponding with taxable revenue, but they are still recognised as deductible expenses, include:

– Expenses spend for teachers, training documents, training equipment using for vocational training, practical materials, and other supporting cost for trainees.

– Expenses spend for staffs that being recruited to work at Enterprise.

However, in order recognising those above expenses as deductible expenses the procedures needed:

– Payment voucher for teachers, in case the income of these teachers at the range of Personal income tax deduction, Enterprise should deduct PIT out of their salary before making payment.

– Invoice for buying documents, equipment, practical materials for vocational education.

– Invoice, document related to expense spending for staffs.

– Enterprise must have evidence for non-cash payment applying for invoice with total amount over 20 million VND.