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EMPLOYEES' WELFARE
A. Employees' welfare expenses are deductible when calculating corporate income tax (CIT).
Pursuant to Point 2.31, Clause 2, Article 6 of Circular 78/2014/TT-BTC (amended and supplemented by Article 4 of Circular 96/2015/TT-BTC and Clause 4, Article 3 of Circular 25/2018/TT-BTC), detailed regulations on 08 employee welfare expenses that are deductible when calculating corporate income tax in 2024 include:
1. Expenditures on employees’ family occasions.
2. Expenditures on holiday allowance or treatment assistance.
3. Expenditures on professional training.
4. Assistance in employees’ families affected by natural disasters, hostilities, accidents, illness.
5. Expenditures on rewarding employees’ children for their educational achievements.
6. Allowances for traveling during holidays of the employees.
7. Payment for unemployment insurance, health insurance, and other voluntary insurance for employees (except for life insurance, voluntary pension insurance mentioned in Point 2.11, Clause 2, Article 6, Circular 78/2014/TT-BTC).
8. Other welfare expenditures.
B. Maximum deductible employees' welfare expense when calculating corporate income tax
- The total amount of welfare expenses mentioned above shall not exceed 01 month of actual average salary paid during the tax year of the enterprise.
- The determination of 01 month's actual average salary in the tax year of an enterprise is determined by dividing the salary fund in the year by (:) 12 months. In case the enterprise has been operating for less than 12 months: The determination of 01 month's actual average salary in the tax year is determined by dividing the salary fund in the year by (:) the actual number of months of operation in the year.
- The implemented salary fund is the total amount of actual salary paid in that settlement year up to the final deadline for submitting the settlement dossier as prescribed (not including the amount of salary reserve fund deduction of the previous year spent in the tax settlement year).
C. VAT on employee welfare payments
Regarding the declaration of VAT deduction for employee welfare expenses, there are specific instructions according to Official Dispatch 4005/TCT-CS dated September 29, 2015 issued by the General Department of Taxation.
In case an enterprise has a welfare expense for employees who are directly benefited, that expense is included in the deductible expenses when determining taxable income for employee welfare expenses if there are full invoices and vouchers and the total expense does not exceed 01 month's average actual salary made in the tax year according to regulations. At the same time, the enterprise is allowed to deduct VAT on the welfare expenses corresponding to the amount included in the deductible expenses when determining the above taxable income if it meets the deduction conditions according to regulations.
