Is charity money counted as an expense deductible from personal income tax?
Nghe An Tax Department received documents from a number of businesses asking whether charity money can be deducted from tax. Nghe An Tax Department responded as follows:
Pursuant to Article 4 of Circular 96/2015/TT-BTC dated June 22, 2015 of the Ministry of Finance amending and supplementing Article 6 of Circular No. 78/2014/TT-BTC (amended and supplemented in Clause 2, Article 6 of Circular No. 119/2014/TT-BTC and Article 1 of Circular No. 151/2014/TT-BTC) as follows:
Article 6:
2. Expenses that are not deductible when determining taxable income include:
...2.24. Funding for overcoming the consequences of natural disasters is not for the right subjects specified in Section a of this Point or there is no record identifying the funding amount specified in Section b below...
2.25. Sponsorship for building houses for the poor not for the right subjects specified in Section a of this Point; Sponsorship for building houses of gratitude, houses for the poor, houses of great solidarity according to the provisions of law without records identifying the sponsorship amount specified in Section b below:..
2.26. Funding scientific research not in accordance with regulations; funding for policy beneficiaries not in accordance with the law; funding not in accordance with the State's program for localities in areas with especially difficult socio-economic conditions...
2.32. Expenditures to support localities; expenditures to support unions and social organizations; charity expenditures (except for expenditures to sponsor education, healthcare, overcoming consequences of natural disasters, building houses of gratitude, building houses for the poor, building houses of great solidarity; funding for scientific research, funding for policy beneficiaries as prescribed by law, funding under the State's program for localities in areas with especially difficult socio-economic conditions as stated in Points 2.22, 2.23, 2.24, 2.25, 2.26, Clause 2 of this Article)...”
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* Based on the above regulations, the Tax Department guides the unit on the following principles:
- For expenses for funding education, health care, overcoming the consequences of natural disasters, building houses for the poor, building houses of great solidarity; funding for scientific research, funding for policy beneficiaries according to the provisions of law, funding according to the State's program for localities in areas with particularly difficult socio-economic conditions through agencies and organizations with the function of mobilizing funding according to the provisions of law, the Company is allowed to account for deductible expenses when determining income subject to Personal Income Tax (PIT) if the expenses are for the right subjects and there are sufficient documents to determine the funding amount according to the provisions in Section a, Section b, Points 2.22, 2.23, 2.24, 2.25, 2.26, Clause 2, Article 6 of Circular 78/2014/TT-BTC (amended and supplemented in Article 4 of Circular 96/2015/TT-BTC) mentioned above.
- Expenses for supporting unions, social organizations, and charitable expenses that do not meet the conditions specified in Article 4 of Circular 96/2015/TT-BTC shall not be included in deductible expenses when determining taxable income for corporate income tax.
It is recommended that the Company base on the actual situation of expenses, compare with the principle of determining deductible expenses according to the above regulations to implement. In the process of implementing tax policies, if there are any problems, the unit can contact the Tax Department for details.
