An employee buys supplies for the company but pays with a personal bank card, is the payment amount considered a deductible expense?

This article was consulted by Lawyer Nguyen Quang Trung

Legal ground:

• Official dispatch No. 1333/CTTPHCM-TTHT dated February 22, 2021 of the Ho Chi Minh City Tax Department.

We have received the following question:

TLT Legal, I wanted to ask, I work as an accountant for a company and my boss assigned me to buy supplies. If I use my ATM card to pay, will this amount be considered reasonable and valid to include in deductible expenses later?

Cases like the above question are actually found in many businesses, because the value is small, so employees use ATM cards, personal credit cards to pay in advance, then ask the company to pay refund.

On this issue, the Ho Chi Minh City Tax Department has issued Official Letter No. 1333/CTTPHCM-TTHT dated February 22, 2021 with the following instructions:

In case the Company authorizes an individual who is an employee of the Company to use a bank card, personal credit card to pay for goods and services for the seller, then the Company pays the individual through a bank transfer from the Company’s account to the individual’s account. If this form of payment is specifically regulated in the Company’s financial management regulations and the Company’s Decision on authorization for the individual; In addition, if the above expenses have complete records and documents proving that the goods and services are used for the Company’s production and business activities, the above payment method is considered to meet the conditions for non-cash payment documents, serving as a basis for declaring, deducting input value-added tax and accounting for deductible expenses when calculating corporate income tax. The Company is responsible for establishing and monitoring the list of personal credit card accounts of employees authorized to pay for goods and services in the above form and providing it to the competent authority when necessary.

According to the above instructions, enterprises can include expenses paid in advance by employees using personal bank cards in deductible expenses when calculating corporate income tax.

However, it is necessary to note that the following conditions have to be met:

• Enterprises must reimburse employees by bank transfer;
• Payment in this form must be stipulated in the financial regulations of the enterprise, or there must be a written authorization from the enterprise to the individual purchasing the goods;
• The purchased goods and services must be used for production and business activities and have full legal invoices and documents;
• The enterprise have to make a list of bank card accounts of individuals performing this work.