To: Samsung Electronics Vietnam Co., Ltd.

The General Department of Taxation has received the Official Dispatch No. 0207/14-FIN-SEV of Samsung Electronics Vietnam Co., Ltd (SEV) requiring information about the requirements for non-cash payment for overseas business travel expenses.  After receiving the instructions from the Ministry of Finance, the General Department of Taxation proposes that:

- According to Clause 1 Article 6 of the Circular No. 78/2014/TT-BTC dated June 18, 2014 of the Ministry of Finance deductible expenses include:

“a) Actual expenses related to the production and business operation of the enterprises;

b) Lawfully invoiced expenses as required by law.

c) Any purchase of VND 20 million or over (inclusive of VAT) that have a separate invoice, provided proof of non-cash payment is presented.

The proofs of non-cash payment must comply with the regulations of the legislative documents on VAT.”

- Clause 2, Clause 3 and Clause 4 in Article 15, Chapter III, Circular No. 219/2013/TT-BTC of the Ministry of Finance dated December 31, 2013 prescribe as follows:

“2. There are proofs of non-cash payment regarding purchased goods and services (including imported goods) valued at VND 20 million or higher, unless the total value of purchased goods or services at each time is less than VND 20 million (according to the invoices) calculated at VAT-inclusive prices.

The proofs of non-cash payment includes the bank transfer confirmations and other proofs of non-cash payment prescribed in Clause 3 and Clause 4 this Article.

3. The bank transfer confirmations are the proofs proving the wire transfer from the buyers’ accounts to the sellers’ accounts (the accounts of the buyers and sellers must be registered or reported to the tax authorities). Such accounts must be opened at the providers of payment services employing methods of payment complying with the regulations of the law such as cheques, payment orders, collection orders, COD orders, bank cards, credit cards, SIM cards (e-wallets) and other methods of payment under the regulations (including the cases in which the buyers transfer money from their accounts to the sellers’ accounts held by the owners of the private enterprises or the buyers transfer money from their accounts held by the owners of the private enterprises to the seller's accounts which are registered with the tax authorities).

4. Other non-cash payment cases in which the input VAT is deducted include:

…

c) The payment for purchased goods and services that is made by an authorized third party via wire transfer (including the cases in which the sellers request the buyers to pay the third parties which are appointed by the sellers via wire transfer) must be prescribed in the written contract and the third party must be a legal person or entity.”  

According to the abovementioned regulations, if an enterprise assigns its staff members to work abroad and the expenses incurred exceed VND 20 million, the credit card payments made by such assigned members shall be considered non-cash payment. Such payments shall be included in the deductible expenses when determining the taxable income if:

+ There are legitimate invoices and proofs provided by the goods and service suppliers;

+ There is a Decision to assign the staff members to work abroad;

In order to facilitate the administration and ensure the transparency, every enterprise must establish and issue the financial policies or regulations that prescribe or allow the staff members to pay the business travel expenses by credit cards held by themselves. The staff member shall be subsequently reimbursed for such payments by the enterprise.

Samsung Electronics Vietnam Co., Ltd (SEV) must comply with the regulations in this Official Dispatch./.