Question:
We would like to inquire about two issues for our business relating to VAT:
1 Electricity bills: We make cash payments for electricity bills directly through a bank, not through the company’s account. Can we deduct the VAT and include it in the company’s expenses?
2. The lessee of our office (the buyer) is a representative office. When they pay the office rent, they do so in cash, and the invoice is over 20 million VND. Will the lessor (the seller) be subject to any penalties?
Answer:
In accordance with Article 15 of Circular No. 219/2013/TT-BTC dated December 31, 2013 guiding Value Added Tax (VAT);
In accordance with Article 4 of Circular No. 96/2015/TT-BTC dated June 22, 2015, issued by the Ministry of Finance, providing guidance on corporate income tax (CIT) (effective from August 6, 2015, and applicable to CIT calculation from 2015 onwards), amending and supplementing Article 6 of Circular No. 78/2014/TT-BTC (amended and supplemented in Section 2 of Article 6 of Circular No. 119/2014/TT-BTC and Article 1 of Circular No. 151/2014/TT-BTC):
- In the case where the company makes cash payments for electricity bills directly through a bank, not through the company’s account, this form of payment is considered a cash payment. If the amount the company has to pay for the invoice is equal to or exceeds twenty million VND, the company is not eligible to deduct the input VAT. And it cannot be included in the deductible expenses when calculating CIT as well.
- Therefore, the method of payment for office rent by the representative office, whether in cash or by bank transfer, does not affect the lessor.
- If you have any queries, do not hesitate to reach us at:
- Harley Miller Law Firm “HMLF”
Head office: 14th floor, HM Town building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone number: +84 937215585
Website: hmlf.vn Email: miller@hmlf.vn Linkedin: Harley Miller Law Firm
