Question:
Thang Steel Company buys and simultaneously sells goods to customer A, with all transactions exceeding 20 million VND. Both parties have created an offset agreement and the remaining value is paid in cash (the value remaining after offsetting is under 20 million VND). Can the company include this payment in deductible expenses and deduct VAT on the cash portion? (According to Article 4, Article 15 of Circular 219 guiding VAT, the company finds that payments under 20 million VND in cash after offsetting debts can still be deducted for tax and included in deductible expenses.)
Answer:
-Based on Article 10, Article 1 of Circular No. 26/2015/TT-BTC dated February 27, 2015, by the Ministry of Finance, amending and supplementing Article 15 of Circular No. 219/2013/TT-BTC dated December 31, 2013, by the Ministry of Finance (as amended and supplemented in Circular No. 119/2014/TT-BTC dated August 25, 2014, and Circular No. 151/2014/TT-BTC dated October 10, 2014, by the Ministry of Finance) regarding the conditions for deducting input VAT.
-Based on the above regulations:
- In the case where the company buys and simultaneously sells goods to customer A, if the purchase and sale contract includes provisions for offsetting the value of goods purchased against the value of goods sold, both parties in the transaction must have a reconciliation report to confirm the settlement of the offsetting of values between the two sides regarding the payment and offsetting of the purchased goods against the sold goods.
- In the event that, after performing the offset payment methods mentioned above, the remaining value is paid in cash and the amount is under 20 million VND, the company can deduct the input VAT and include it in deductible expenses when determining taxable income subject to Corporate Income Tax (CIT) as per the regulations.
