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The following article by OTIS LAWYERS will answer readers' questions about whether the school fees for children of foreign workers can be deducted from corporate income tax and personal income tax in accordance with the law.
Corporate Income Tax on School Fees for Children of Foreign Workers
Article 6 of Circular No. 78/2014/TT-BTC, amended by Article 4 of Circular No. 96/2015/TT-BTC, stipulates that, except for non-deductible expenses mentioned in Clause 2 of this Article, enterprises can deduct all expenses if the following conditions are met:
- The expenses are actually incurred and related to the business and production activities of the enterprise.
- The expenses are supported by lawful invoices and documents as required by law.
- If the expense involves a purchase of goods or services worth VND 20 million or more per transaction (including VAT), the payment must be made via non-cash methods.
Wage, salary, and bonus payments to employees fall under the following cases:
- The enterprise has signed a labor contract with a foreign worker that specifies school fees for the foreign worker's children studying in Vietnam (from kindergarten to high school), and the company pays these fees as part of the salary. In this case, if there are sufficient invoices and documents, the school fees are deductible when determining corporate income tax liability.
Thus, the school fees for children of foreign workers can be included as deductible expenses for corporate income tax purposes if the following conditions are met:
- The company has signed a labor contract with a foreign worker employed in Vietnam, and the contract specifies school fees for the worker's children (from kindergarten to high school), which are paid by the company as part of the salary.
- There are valid invoices and documents with the company's name, address, and tax code as required.
Personal Income Tax on School Fees for Children of Foreign Workers
According to point g.7, Clause 2, Article 2 of Circular 111/2013/TT-BTC, which provides guidance on the Personal Income Tax Law:
- School fees paid by employers for the children of foreign workers working in Vietnam (studying in Vietnam) and for the children of Vietnamese workers working abroad (studying abroad) from kindergarten to high school are not included in the taxable income for personal income tax purposes.
For any questions or comments, please contact:
OTIS AND PARTNERS LAW FIRM
Office address: 2nd Floor, CT3 Building, Yen Hoa Park View Urban Area, No. 3 Vu Pham Ham Street, Yen Hoa Ward, Cau Giay District, Hanoi
Email: [email protected]
Hotline: 0987748111
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