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17 July, 2019

Are vacation and travel expenses subject to PIT?

Are vacation and travel expenses subject to PIT? If yes, to which cases must pay personal income tax? Let’s find out with Asiasoft.

Annual vacation is a welfare policy of many businesses for their employees.

However, according to Official Letter No. 1650/TCT-DNNCN issued on April 24, 2019, vacation money for individual employees may still be subject to PIT.

Specifically in 2 cases:

  • Vacation money clearly stating the recipient’s personal name;
  • The actual vacation money is received from the business.

Therefore, only the general expenses without specifying the recipient’s name are not included in the employee’s taxable income.

– At points a, d, clause 2, Article 2, Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance guiding:

“2. Income from salary, wages

Income from wages and salaries is the income an employee receives from an employer, including:

a) Salaries, wages and other amounts of salary and wage nature in cash or non-cash forms.

dd.3.2) Expenses for other services for individuals in health care, entertainment, aesthetic entertainment… if the payment content clearly states the name of the beneficiary. In case the content of service fee payment does not include the name of the individual entitled to it but is shared among the employees, it is not included in the taxable income.”

– At Point 2.30, Clause 2, Article 4 Circular No. 96/2015/TT-BTC dated June 22, 2015 of the Ministry of Finance guiding the CIT amending and supplementing Article 6 of Circular No. 78/2014/TT -BTC (amended and supplemented in Clause 2, Article 6 Circular 119/2014/TT-BTC and Article 1 Circular No. 151/2014/TT-BTC) guides:

“2. Expenses that are not deductible when determining taxable income include:

2.30 Expenses not corresponding to taxable revenue, except for the following expenses:

– Expenses of welfare nature are spent directly on employees such as: expenses for filial piety and joy of themselves and their families; expenses for vacation, expenses for treatment support; expenditures on additional support for learning knowledge at training institutions; expenses to support the families of employees affected by natural disasters, enemy sabotage, accidents, illness; spending on rewarding children of employees with good academic achievements; only support travel expenses on holidays and Tet for employees; expenses for accident insurance, health insurance, and other voluntary insurance for employees (except for expenses for purchasing life insurance for employees as guided at Point 2.6, voluntary retirement insurance for employees with orientations to referred to at point 2.11 of this Article) and other welfare payments. The total amount of welfare expenditure mentioned above must not exceed 01 month’s average salary actually made in the tax year of the enterprise.”

  • Based on the above instructions and the fact that the VP of DECKERS OUTDOOR has signed a travel service contract with Saigon tourist in Hai Phong, then:

– In case, vacation expenses are paid by the Representative Office for employees from the welfare fund and the expenses clearly state the individual’s name, this amount shall be included in the employee’s personal income taxable income.

– In case, the general expenditure for the collective of employees does not specify the name of the beneficiary, this income is not included in the employee’s personal income taxable income.

– In case the individual (employee) of the Representative Office actually receives the vacation payment from the above Representative Office, this income shall be included in the employee’s personal income taxable income.

Nguồn: Tin tức kế toán

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