Tips for businesses to handle the cost of gifts for Tet in accordance with regulations

Handle the cost of donated goods appropriately? The end of the year is an occasion when businesses give gifts to customers as a thank you for their companionship in the past year. However, many accountants are still confused about how the cost of gifts given during this Tet holiday will be handled, whether invoices will be issued, whether they will be included in reasonable expenses, etc. In this article, Bizzi Send accounting information to companies' accounting departments and how to handle costs of Tet gifts in accordance with regulations.

1. Can input VAT on Tet gifts be deducted? 

In Clause 5, Article 14 of Circular 219/2013/TT-BTC stipulates: Input VAT on goods (including goods purchased from outside or goods produced by enterprises) that enterprises use for giving, presenting, promoting, advertising in various forms, serving production business in goods and services subject to VAT shall be deducted.” 

Therefore, goods and services are used to give gifts to customers or reward employees during Tet input VAT is deducted.

2. Are the costs of Tet gifts subject to output VAT?

Clause 3, Article 7 of Circular 219/2013/TT-BTC stipulates: “For products, goods and services (including purchased from outside or self-manufactured by business establishments) used for exchange or donation. , giving, giving, paying instead of salary, is the VAT calculation price of goods and services of the same or equivalent type at the time of arising these activities.”

Therefore, goods and services used as gifts for customers are subject to output VAT. 

VAT calculation price is the VAT calculation price of goods of the same or equivalent type on the market at the time of giving or gifting activities to customers.

3. Do I need to issue an invoice for the cost of donated goods?

According to Clause 7, Article 3, Circular 26/2015/TT-BTC:

"Sellers must issue invoices when selling goods and services, including cases where goods and services are used for promotion, advertising, or samples; goods and services used for giving, giving, giving, exchanging, paying wages for employees (except for goods circulated internally, consumed internally to continue the production process)"

Therefore, Tet gifts will be billed. 

4. Is it classified as a reasonable expense when determining taxable income?

According to Article 4 of Circular 96/2015/TT-BTC stipulating as follows:

“Article 6. Deductible and non-deductible expenses when determining taxable income

1. Except for non-deductible expenses mentioned in Clause 2 of this Article, enterprises may deduct all expenses if they fully satisfy the following conditions:
2. a) Actual expenses incurred in connection with production and business activities of the enterprise.
3. b) The expenditure has enough lawful invoices and documents as prescribed by law.
4. c) Expenditures, if there is an invoice for purchase of goods and services each time with a value of 20 million VND or more (price includes VAT) upon payment must have a non-cash payment voucher.

Non-cash payment vouchers comply with the provisions of legal documents on value added tax.

In case of one-time purchase of goods or services with a value of twenty million VND or more recorded on the invoice but at the time of recording the cost, the enterprise has not yet paid, the enterprise will be included in the deductible expenses upon confirmation. determine taxable income.

In case the enterprise does not have non-cash payment documents when making payment, the enterprise must declare and adjust costs for the value of goods and services without non-cash payment documents. The tax period in which cash payments arise (even in cases where the tax authority and functional agencies have decided to inspect and examine the tax period in which this expense arises).

For goods and service purchase invoices that have been paid in cash arising before the effective date of Circular No. 78/2014/TT-BTC, they are not required to be adjusted according to the provisions of this Point. "

Accordingly, the expenses Gifts given to customers during Tet will be included in reasonable expenses when determining Taxable Income Corporate Income if they meet all the conditions as prescribed above.

5. Notes when handling costs of donated goods

• In case the enterprise buys goods and immediately gives them to customers/partners outside the enterprise, the accounts shall be recorded as follows:

Dr 641.

Dr 133.

Account: 111, 112, 331

Account 3331

• In case the enterprise buys goods, stores them and then gives them as gifts, the following accounts shall be recorded:

Dr 641.

Account: 152, 153, 156

Account 3331

On a case-by-case basis, to account for goods as gifts.

• For the recipient, the donated goods shall be recorded as follows:

Dr 156, 142, 642.

There is account 711.

6. Penalties if not complying with regulations

The fine level for the act of not making invoices for donated goods: 500,000 VND to 1,500,000 VND (according to point b, clause 2, article 24 of Decree 125/2020/ND-CP): 

A fine of between VND 500,000 and VND 1,500,000 for one of the following acts:

1. b) Failing to issue invoices for goods and services used for promotion, advertising, or samples; goods and services used for giving, giving, giving, exchanging or paying wages for employees, except for goods for internal circulation and internal consumption to continue the production process. 

Above is information on how to handle the cost of gifts given during Tet. Hopefully with these articles, accountants will understand and solve problems related to how to handle the cost of gifts given during Tet to limit unwanted risks.