With regard to the unexpected negative affect of the Covid-19 pandemic to the operation of Enterprises and normal lives of employees, the General Tax Department has recently issued the Official Letter No. 4110/TCT-DNNCN dated 27th Oct 2021, updating the taxation policy on the Covid-19 related expenses.
According to such Official Letter, the expenses as listed below shall be considered as deductible expense for Corporate Income Tax purpose and non-taxable income for Personal Income Tax treatment, providing that such expenses reflect actual incurrence and are supported with proper invoices and documentation as regulated by Laws:
Quarantine expenses in Vietnam or in foreign countries in case of oversea business trips, including: personal meals, lodging fee, Covid-19 testing fee; traveling expense from place of entry to Vietnam or from place of detecting person demanded for quarantine to quarantine centres; living expenses during the quarantine period; etc.) as demanded by competent authorities;
Covid-19 testing fee or expense for purchasing of Covid-19 testing kits for employees;
Expenses for purchasing equipment to protect employees from the potential infection of Covid-19 during their working time;
Meal and lodging expenses for employees at their working place following the option of “three-on-the-spot” as concurrent isolation and production arrangement;
In light of the above, we would like to update the summary of the relevant guidance related to Corporate Income Tax (“CIT”) and Personal Income Tax (“PIT”) treatment for your further reference
Accordingly, it is clear that the deductible Covid-19 related expenses now cover for both foreign experts and local staff, as long as there is proper supporting documentation for the actual incurred amount. It also releases the tax burden that the employees were supposed to bear while experiencing lots of testing procedure to come back to normal life.
We shall keep you posted for any update from the Government on treatment for expenses related to the fights against the Covid-19 pandemic.
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