If a business is in difficulty and stops production, how is income tax accounted for?

*Song Lam Cement Joint Stock Company 2Question: In 2022, there is cement production, the production process goes through 3 stages (powder production stage, clinker production stage, cement production stage). During the year, the Company proactively stopped the production line for 3 months. To avoid damage to the machinery, the company still let it run idle, workers went to work to check, maintain machinery and equipment, clean the factory... So are the actual costs paid during the above period such as salaries and insurance of employees considered deductible expenses when calculating corporate income tax?

-Tax Department's response: For the cost of wages and insurance of employees during the period of production suspension, this is an expense that does not correspond to taxable revenue, so it cannot be deducted when determining taxable income for Corporate Income Tax (CIT) according to the provisions of Point 2.30, Clause 2, Article 6, Circular No. 78/2014/TT-BTC (amended and supplemented in Circular No. 96/2015/TT-BTC).

*Nghe Tinh Railway Joint Stock Companystated that the 2022 corporate income tax settlement has been submitted; by March 28, 2023, the unit receivedDecision to reduce land rent30% of 2022. So, can the 30% reduction in land rent in 2022 be deducted from taxable income in 2022? If deducted, does the unit have to declare additional financial statements and finalize corporate income tax?

-Tax Department's response: In case the land rental cost serves the production and business activities of the unit, after the tax authority's decision to reduce the land rental in 2022 (March 28, 2023), the unit shall make adjustments to reduce the costs incurred in 2022 on the 2022 corporate income tax finalization declaration and supplement the 2022 Financial Statement according to the provisions of Article 47, Law on Tax Administration No. 38/2019/QH14.

In addition, in the face of the difficulties of businesses and the economy, on October 3, 2023, the Prime Minister issued Decision No. 25/2023/QD-TTg on continuing to reduce land rent by 30% in 2023. The Decision takes effect from November 20, 2023 and the deadline for implementing documents and procedures is until March 31, 2024, so businesses, units, organizations, households and individuals who are being directly leased land by the State according to the Decision or Contract, or Certificate of Land Use Rights, House Ownership Rights and other assets attached to land of competent state agencies in the form of land lease with annual payment, need to learn about the process and procedures in Articles 4 and 5 of this Decision to make a declaration.

*Business asks:Accounting for the environmental restoration deposit paid by the enterprise annually is not deductible when calculating corporate income tax. When the mineral exploitation activities are completed and there is a decision to handle the deposit to carry out environmental improvement, can the enterprise record the entire deposit of the entire mineral exploitation project as expenses of that fiscal year?

– Tax Department's response:Pursuant to Clause 1, Article 137, Law on Environmental Protection No. 72/2020/QH14; Clause 1, Clause 7, Article 37, Decree No. 08/2022/ND-CP and Article 6, Circular No. 78/2014/TT-BTC (amended and supplemented in Circular No. 96/2015/TT-BTC), it is stipulated that: In case after the end of mineral exploitation activities, the Company does not completeenvironmental improvement and restoration planand there is a decision to handle the deposit by a competent authority, the expenditure for environmental improvement and remediation according to the provisions of law is included in the expenses and deducted when determining taxable income of CIT if it meets the conditions specified in Article 6, Circular No. 78/2014/TT-BTC (amended and supplemented in Circular No. 96/2015/TT-BTC).

* Business asked: The company is currently building a warehouse, the labor cost is about 300 million VND. The contractor is an individual without an invoice and the owner is an individual. So, in order to account for this cost, what procedures must the company follow to make that cost reasonable?

-Tax Department's response:In case the contractor is a business individual with tax registration: The individual goes to the tax authority to complete the procedures to purchase invoices each time they arise. In case the contractor is a non-business individual: The company prepares a list of purchased goods and services according to the provisions of Circular No. 78/2014/TT-BTC (amended and supplemented in Circular No. 96/2015/TT-BTC), along with payment documents for the seller of goods and services and the labor contract. The company is responsible for deducting personal income tax before paying the individual according to the provisions of Circular No. 111/2013/TT-BTC and related documents.