Enterprises are allowed to include actual expenses incurred for production and business in corporate income tax expenses but must have full documentation.

This article was consulted by Lawyer Nguyen Quang Trung

Legal ground:

• Circular No. 96/2015/TT-BTC.

We have received the following question:

I would like to ask, this year my company has an overdue bank loan because I have not been able to turn around the money to pay the bank. With the interest within the term, I accept it, but the overdue interest is very high, can the company include it in corporate income tax expenses?

Pursuant to Article 6 of Circular No. 78/2014/TT-BTC, amended and supplemented by Circular No. 96/2015/TT-BTC, in principle, enterprises are allowed to include in their corporate income tax expenses if the expenses meet the following three conditions:

1. The actual expenses incurred are related to the production and business activities of the enterprise.
2. The expenses have sufficient legal invoices and documents as prescribed by law.
3. The expenses if there are invoices for the purchase of goods and services each time with a value of VND 20 million or more (prices including VAT) must have non-cash payment documents when paying.

In addition, the law also does not have any provisions excluding the expenses for overdue interest on loans under credit contracts. Therefore, enterprises are still allowed to deduct overdue interest when determining corporate income tax obligations.

However, enterprises must ensure that the loan is used for production and business activities. Also, the credit contract has a clause on overdue interest, this overdue interest must have full and valid documents.