Official Letter No. 6550 / CT-TTHT on tax policy for malfunctioned products as follows:
In case the Company incurs payments of fines or compensation due to a breach of an economic contract with the customer, when paying money, the company shall make a payment voucher. Compensation received by foreign companies is subject to FCWT, before making payment, the Company is responsible for calculating, declaring, and deducting tax according to regulations. Based on economic contracts; minutes of agreement; documents proving the damage; vouchers of company tax payment and payment are included in expenses according to the provisions of the Law on CIT. In case of a fine due to malfunctioned goods (no return of goods), the cost of goods cost corresponding to the turnover subject to enterprise tax calculation shall be included in deductible expenses when determining CIT.
