1. About CIT
Provisions in articles XNXX, Circular 4 / 96 / TT-BTC on damaged goods are as follows:
"B) Commodities damaged by changes in natural biochemical processes, goods with expiry date, and no compensation shall be included in deductible expenses when determining taxable incomes.
Documents for damaged goods due to changes in natural biochemical processes, expired goods, calculated into deductible expenses as follows:
- An inventory record of damaged goods, made by the enterprise.
The record of inventory of damaged goods must clearly identify the value of damaged goods, cause of damage; types, quantities and values of recoverable goods (if any), enclosed with import and export lists of damaged goods, certified by lawful representatives of enterprises and liable before law .
- An indemnity claim accepted by the insurer (if any).
- Documents specifying the responsibilities of the organization or individual that must compensate (if any).
c) The above documents shall be kept at the enterprise and presented to the tax agency when so requested by the tax agency. "
-> All records, records are made during the handling of damaged goods stored at the enterprise, and explained to the tax authorities when there is a decision on inspection.
If the application is fully verified, the cost of this damaged product is determined as a reasonable cost when calculating the CIT.
2. About VAT
Provisions in article XNXX, Circular 14 / 219 / TT-BTC on deduction of input VAT
“The input VAT on goods and services used for the production and trading of goods and services subject to VAT is fully credited, including the uncompensated input VAT on the damaged goods. the seventh.
Uncompensated losses are credited to input VAT including: natural disasters, fires, losses that are not covered by insurance, loss of quality, expired goods must be destroyed. Business establishments must have sufficient records and documents proving cases of non-compensation loss to withhold tax. ”
-> Therefore, if the goods lose quality or are expired, destroyed, VAT is still deducted
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Solution:
The cost of inventory for these liquidations is often large. Therefore, when implementing the business, it is necessary to have the minutes and liquidation records fully archived and reasonably explained when examined by the tax authorities.
