Enterprises should account for VAT deductions in accordance with the law to properly represent economic operations as well as limit tax risks.

This article was consulted by Lawyer Nguyen Quang Trung

Legal grounds:

• Circular No. 219/2013/TT-BTC;
• Circular No. 130/2016/TT-BTC;
• Official Dispatch No. 5475/TCT-CS dated November 28, 2017 of the General Department of Taxation.

We receive the following questions:

Hello lawyer, may I ask if my company has many small amount bill such as mailing fees, bank transfer fees, etc. These bill are not worth much VAT, so Is it possible to account for all of this VAT to expenses instead of declaring and deducting?

In principle, businesses must declare and account correctly for the value added tax calculation method according to the law.

Pursuant to Clauses 8 and 9, Article 14 of Circular No. 219/2013/TT-BTC as follows:

Article 14. Principles of input value added tax deduction

8. Input VAT arising in any period is declared and deducted when determining the tax payable for that period, regardless of whether it has been issued for use or is still in warehouse.

In case a business discovers that the input VAT amount when declaring and deducting is incorrect, it may declare and deduct additional information before the tax authority or competent authority announces the tax inspection decision at the taxpayer’s headquarters.

9. The input VAT amount is not deductible, business can account it as expenses to calculate corporate income tax or calculate it into the original price of fixed assets, minus the VAT amount of goods and services that one-time purchases worth twenty million VND or more without non-cash payment documents.

According to the above regulations:

• The law does not have regulations allowing deductible VAT amounts to be directly included in deductible expenses when determining corporate income tax liability;
• If an enterprise incorrectly declares input VAT, it will be declared and deducted additionally according to the law;
• Only non-deductible VAT can be expensed.

In addition, Official Dispatch No. 5475/TCT-CS dated November 28, 2017 of the General Department of Taxation also has the following instructions:

In case a taxpayer has an input VAT amount arising in a period that is eligible for deduction, it may be declared and deducted when determining the tax amount payable for that period. There is no regulation that businesses can account for deductible expenses when determining income subject to corporate income tax for input VAT amounts that are eligible for deduction but do not declare deductions.

Thus: although the input VAT on services such as mailing fees and bank transfer fees is a small amount, the business has also paid VAT in full. But businesses still have to account for their operations according to their economic nature and declare VAT deductions according to regulations.