Question:
Our company acts as a sales agent for a factory’s products. In 2018, we exceeded the factory’s sales target, and as a result, the factory rewarded us with a bonus based on our sales performance for each quarter of 2018.
As far as I know, when receiving a bonus, the company is responsible for immediately recording it as “other income” to calculate corporate income tax (CIT). However, our company’s chief accountant has a different perspective and questions why we should record it as “other income” when receiving the bonus. They have decided not to recognize the bonus as “other income” until the company operates at a loss.
As of today, which is the second quarter of 2019, the chief accountant has still not allowed us to record the bonus of approximately 4 billion VND from quarters 2, 3, and 4 of 2018 as “other income” to calculate and settle the CIT for 2018.
We would like to ask the Tax Department whether this approach is correct or incorrect. If it is incorrect, what penalties and tax recoveries would apply? How can we rectify this situation?
Answer:
– Based on Article 7, Point 15 of Circular No. 78/2014/TT-BTC dated June 18, 2014, issued by the Ministry of Finance, which provides guidance on corporate income tax (CIT) and specifies other income subject to CIT.
-Based on Article 10, Point 5 of Circular No. 156/2013/TT-BTC dated November 6, 2013, issued by the Ministry of Finance, which provides guidance on the implementation of certain provisions of the Law on Tax Administration.
-Based on the above regulationsn:
- If your company received a bonus based on sales performance from the partner in 2018, you are required to record this bonus as “other income” to determine the income subject to corporate income tax (CIT) for the year 2018.
- In the event that your company has not recorded this bonus as “other income” when settling CIT for the year 2018 and has not been audited or inspected by the tax authorities, you should amend and adjust your CIT declaration for 2018 in accordance with Point 5, Article 10 of Circular No. 156/2013/TT-BTC issued by the Ministry of Finance.
