Does the Ministry of Finance of Vietnam propose to increase the business trip expenses? Do employee's travel expenses include personal income tax?
Ministry of Finance of Vietnam: Shall business trip expenses increase?
Recently, on December 16, 2024, the Ministry of Finance of Vietnam issued Official Dispatch 13783/BTC-HCSN in 2024 Download seeking feedback on the draft Circular amending and supplementing a number of provisions of Circular 40/2017/TT-BTC.
In the Draft Circular amendment, the Ministry of Finance of Vietnam proposes an increase in the business trip expenses, including the cost of renting accommodation at the destination to be reimbursed either as a lump sum or based on actual invoices; and other expenses such as meals. Specifically, as follows:
(1) Accommodation rental at the destination reimbursed as a lump sum:
- Ministerial level leaders, Deputy Ministers, and equivalent leadership positions, lump-sum rate: 1,200,000 VND/day/person (current rate 1,000,000 VND/day/person), regardless of the destination;
- For other officials and public employees and employees:
+ Traveling to districts, cities under central authority and first-class urban cities in provinces, lump-sum rate: 550,000 VND/day/person (current rate 450,000 VND/day/person).
+ Traveling to districts, district-level towns under central authority, district-level towns, remaining cities in provinces, lump-sum rate: 400,000 VND/day/person (current rate 350,000 VND/day/person).
+ Traveling to other regions, lump-sum rate: 350,000 VND/day/person (current rate 300,000 VND/day/person).
(2) Accommodation rental at the destination reimbursed based on actual invoices:
- For Ministerial level leaders and equivalent positions: Reimbursement of room rates: 3,000,000 VND/day/room (current rate 2,500,000 VND/day/room) on a standard of one person per room, regardless of the destination;
- Traveling to districts, cities under central authority, and first-class urban cities in provinces:
+ For Deputy Ministers and equivalent leadership positions: Reimbursement of room rates: 1,500,000 VND/day/room (current rate 1,200,000 VND/day/room) on a standard of one person per room.
+ For others: Reimbursement of room rates: 1,200,000 VND/day/room (current rate 1,000,000 VND/day/room) on a standard of two people per room.
- Traveling to other regions:
+ For Deputy Ministers and equivalent leadership positions: Reimbursement of room rates: 1,300,000 VND/day/room (current rate 1,100,000 VND/day/room) on a standard of one person per room.
+ For others: Reimbursement of room rates: 900,000 VND/day/room (current rate 700,000 VND/day/room) on a standard of two people per room.
(3) Meal expenses, other expenditures:
- Meal and other expenses for individuals on business trips paid by the agency or unit sending the personnel, calculated from the departure to the end of the trip returning to the agency or unit. Meal and other expenses rate: 250,000 VND/day (current rate 200,000 VND/day).
- Officials, public employees, and laborers on the mainland sent on assignments at sea or islands will receive meal and other expenses at 300,000 VND/person/day spent at sea or on islands (applies to working days at sea or on islands, as well as travel days to and from sea or islands) (current rate 250,000 VND/day).
Download Official Dispatch 13783/BTC-HCSN in 2024 and the Draft Circular amendment.
Does the Ministry of Finance of Vietnam propose to increase the business trip expenses? Do employee's travel expenses include personal income tax? (Image from the Internet)
Do employees' business travel expenses include personal income tax in Vietnam?
According to section d.4, point d, clause 2, Article 2 of Circular 111/2013/TT-BTC which specifies taxable income for PIT as follows:
Taxable income
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- Income from wages and salaries
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d) Monetary or non-monetary benefits beyond wages and salaries paid by employers that the taxpayer enjoys in any form:
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d.4) The portion of lump-sum payments for office supplies, travel expenses, telephone, uniforms, etc., that exceeds the current state standards. The lump-sum not counted as taxable income in certain cases includes:
d.4.1) For officials and those working in administrative agencies, Communist Party, unions, Associations: the lump-sum applies according to guidance documents from the Ministry of Finance of Vietnam.
d.4.2) For employees in business organizations, representative offices: the lump-sum applies in accordance with taxable corporate income as determined by directives under the Enterprise Income Tax law.
d.4.3) For employees in international organizations, representative offices of foreign entities: the lump-sum follows the international organization's or foreign entity's office regulations.
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Simultaneously, based on section b point 2.5 clause 2 Article 6 Circular 78/2014/TT-BTC amended by clause 2 Article 3 of Circular 25/2018/TT-BTC stipulating deductible and non-deductible expenses in determining taxable corporate income as follows:
Deductible and Non-deductible Expenses in Determining Taxable Income
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- Non-deductible expenses include:
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2.5. Salary, wages, bonuses paid to employees under the following conditions:
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b) Salaries, bonuses not specifically recorded for eligibility and amounts in one of the following: Employment contract; Collective labor agreement; Company's, Corporation's, Group's financial regulations; Bonus regulation issued by the Board Chairman, General Director, Director according to Company's financial regulations.
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Thus, for employees in business organizations, representative offices, the employees' business travel expenses will not be subjected to personal income tax if the business travel expense payments align with the lump-sum rates specified in one of the following documents: Employment contract; Collective labor agreement; Company's financial regulations, Corporation, Group's; Bonus regulations issued by the Board Chairman, General Director, Director following the Company's financial regulations.
Except when a company pays an employee more than the lump sum rate, the amount exceeding the lump-sum must be counted as taxable personal income.
Additionally, for employees in international organizations, representative offices of foreign entities, the lump-sum rate is determined following the international organization's or foreign entity's office regulations.
When is the time of determining personal income taxable from salaries and wages?
According to point b clause 2 Article 8 Circular 111/2013/TT-BTC, which specifies the timing of determining personal income taxable from salaries and wages as follows:
- The timing for determining taxable income from wages and salaries is at the time the organization or individual pays income to the taxpayer.
- Specifically, the timing for determining taxable income for insurance premium payments accumulated per the guidance at point d.2 clause 2 Article 2 of Circular 111/2013/TT-BTC is the time when the insurer or voluntary pension management company pays the insurance money.
