PRE-ESTABLISHMENT EXPENSES

The business founders are allowed to sign contracts for the establishment and operation of the business before and during the business registration process. Expenses incurred before granting of the enterprise registration certificate are still allowed to deduct value added tax and deduct in corporate income tax expenses if the required procedures and documents are fully met.

THE PRE-ESTABLISHMENT EXPENSES

Expenses paid pre-company registration according to the Enterprise law:

1.  The enterprise’s founder may sign contracts serving the establishment and operation of the enterprise before and during the process of enterprise registration.
2. When the Certificate of Enterprise Registration is granted, the enterprise shall continue exercising and performing the rights and obligations under the concluded contracts , and the parties shall transfer the rights and obligations in accordance with the contracts.
3. In case the Certificate of Enterprise Registration is not granted, the persons who conclude the contracts are responsible for their execution. Any other participant in the establishment of the enterprise is also responsible for the execution of these contracts. 

Expenses paid pre-company registration according to the Tax regulations:

1. According to Vietnam current law, the Founder(s) may sign service contracts for the establishment and operation of the enterprise before the process of business registration.  
2. Before a company is established, its founders can authorize another entity in writing to pay on their behalf some amounts related to the establishment of the company, the company may deduct input VAT according to the invoices bearing the name of the authorized entity. The invoices of which the value is 20 million VND or more must be paid by bank transfer. And those expenses incurred before being granted an enterprise registration certificate, if there are full invoices and documents, serving the production and business activities of the unit, they can be accounted for as deductible expenses when calculating corporate income tax, and the expenses can be gradually allocated to business expenses, not exceeding 3 years from the date the enterprise begins operating.

READ MORE:

• Doing business in Vietnam – register a company
• Doing business in Vietnam – enterprise establishment procedures
• Doing business in Vietnam – general terms and conditions
• Doing business in Vietnam – how to name the company
• Doing business in Vietnam – lawful locations
• Doing business in Vietnam – trademark protection
• Doing business in Vietnam – charter capital contribution post establishment
• Doing business in Vietnam – manage your capital and money
• Doing business in Vietnam – direct investment capital account
• Doing business in Vietnam – company’s charter
• Doing business in Vietnam – internal salary and wages policy
• Doing business in Vietnam – the annual licensing fees
• Doing business in Vietnam – payroll services
• Legal representative of enterprise in Vietnam – roles and responsibilities
• Foreign loans subject to registration with the state bank