Circular 96/2015/TT-BTC (MOF, June 22, 2015) (“Circular 96”) extends the scope of deductible expenses for organizations’ charitable and humanitarian activities. Upon this expansion, the taxable income of an organization shall be reduced, and thus the taxes due are reduced. However, to take the respective deductions it is necessary to provide authorities relevant documents, invoices, receipts in accordance with the Circular’s regulations.
The deductible expenses when calculating taxable income, include:
(i) Expenses for educational sponsorships (including sponsorship for vocational education) (pursuant to section 2.22 of Circular 96)
- Sponsorships for public and private schools providing “national education”, provided such sponsorships are not made in the form of contributing capital or buying shares in the relevant school;
- Sponsorships for infrastructure and equipment serving teaching and learning;
- Sponsorships for regular operations of schools;
- Sponsorships for students of compulsory education institutions, vocational educational institutions, and higher education institutions;
- Sponsorships for competitions in the school subjects; and
- Sponsorships for the establishment of scholarship funds.
(ii) Expenses for health sponsorships (pursuant to section 2.23 of Circular 96)
Sponsorships for medical facilities, provided the sponsorships are not made in the form of contributing capital or buying shares in such medical facilities;
Sponsorships for medical equipment, medicines;
Sponsorships for regular operations of hospitals, medical centers; and
Monetary sponsorships for patients via organizations permitted to raise sponsorships.
(iii) Expenses for disaster recovery (pursuant to section 2.24 of Circular 96)
(iv) Expenses for the construction of houses for the poor (pursuant to section 2.25 of Circular 96)
(v) Expenses for the sponsorship for scientific research (pursuant to section 2.26 of Circular 96)
(vi) Expenses for the sponsorship of beneficiaries of other incentive policies (pursuant to section 2.26 of Circular 96)
(vii) Expenses for the sponsorship of extremely disadvantaged areas and relevant State programs (including, for example, sponsorships for building new bridges in extremely disadvantaged residential areas) (pursuant to section 2.26 of Circular 96).