What is YEP? Are YEP organization expenses deductible when calculating CIT in Vietnam?

What is YEP?

Currently, there is no specific regulation that defines what YEP is. However, you can refer to the definition below to understand what YEP entails:

YEP is an abbreviation for the term "Year End Party," an annual event organized at the end of the year, deeply reflecting the corporate culture. It is an occasion for organizations and companies to review the past journey, appreciate the collective efforts of the employees, and mark the conclusion of a productive year while preparing the spirit for the new year.

YEP is not merely a party; it is also an opportunity for the company's leadership to express recognition for the contributions of each individual, department, and partner. It is also a chance for members of the organization to meet, interact, share achievements, memorable experiences, and project expectations into upcoming plans and goals.

(1) The important significance of the Year End Party

The Year End Party not only creates a joyful and comfortable environment but also contributes to building strong relationships among the company's members. A well-prepared year-end party with engaging activities such as art performances, award presentations, or speeches from leadership will help employees feel the company's care and appreciation.

Moreover, YEP is also an occasion for businesses to affirm their distinctive culture, professionalism, and team spirit. Through joyful and meaningful moments, employees will gain additional motivation for work, tighten their relationships with colleagues, superiors, and the leadership.

(2) YEP – A commencement for new goals

As a year ends, YEP is a time for everyone to share new plans together, fostering motivation towards greater success. Not just a celebratory occasion, it is a method for companies to establish team spirit, setting a foundation for sustainable development in the future.

It can be said that the Year End Party is an indispensable event in any organization. Thorough and creative preparation for this party will bring great value, promote work spirit, build corporate culture, and strengthen employees' loyalty to the organization.

Note: Information is for reference only!

What is YEP? Are YEP organization expenses deductible when calculating CIT in Vietnam? (Image from internet)

Is it mandatory for businesses to organize Year End Party (YEP) for their employees in Vietnam?

Based on the provisions of Clause 2, Article 6 of the Labor Code 2019, regarding the rights and obligations of the employer as follows:

Rights and obligations of the employer

1. The employer has the following rights:

a) Recruit, allocate, manage, supervise labor; reward and handle labor discipline violations;

b) Establish, join, operate in organizations representing the employer, occupational organizations, and other organizations per the law;

c) Request labor representatives to negotiate for signing collective labor agreements; participate in resolving labor disputes, strikes; dialogue, exchange with labor representatives about labor relations issues, improving employees' material and spiritual life;

d) Temporarily close the workplace;

dd) Other rights under the law.

2. The employer has the following obligations:

a) Execute labor contracts, collective labor agreements, and other lawful agreements; respect the honor and dignity of employees;

b) Establish mechanisms and conduct dialogues, and exchanges with employees and labor representatives; implement workplace democracy regulations.

c) Train, retrain, nurture to enhance professional skills to sustain, transition careers, and jobs for employees;

d) Comply with labor, employment, vocational education, social security, health insurance, unemployment insurance, occupational safety, and health regulations; develop and implement solutions to prevent sexual harassment at the workplace;

dd) Participate in developing national occupational skill standards, evaluating, recognizing employees' professional skills.

Thus, organizing a Year End Party (YEP) is not a mandatory obligation for enterprises toward employees.

This is a voluntary activity, demonstrating the goodwill and encouragement from the company to show appreciation and boost team spirit, rather than a mandatory responsibility per legal regulations.

Are YEP organization expenses deductible when calculating CIT in Vietnam?

Based on Article 6 of Circular 78/2014/TT-BTC as amended by Article 4 of Circular 96/2015/TT-BTC, which regulates deductible and non-deductible expenses when determining taxable income:

Deductible and non-deductible expenses when determining taxable income

1. Except for non-deductible expenses stated in Clause 2 of this Article, enterprises may deduct all expenses if they meet the following conditions:

a) Expenses actually incurred related to the enterprise's production and business activities.

b) Expenses have sufficient legal invoices and documents as prescribed by law.

c) Expenses if there are invoices from purchasing goods and services each worth 20 million VND or more (inclusive of VAT) must have non-cash payment documents when paying.

Non-cash payment documents shall be implemented per the value-added tax law.

In cases where purchasing goods and services each time have a value from twenty million VND and above stated on the invoice, but by the time of recording expenses, the enterprise has not yet paid, the expenses can be deducted when determining taxable income. If, upon payment, the enterprise does not have non-cash payment documents, it has to declare, adjust, and decrease expenses for the part of goods and services lacking non-cash payment documents during the tax period with payments made in cash (including cases where tax and relevant authorities have decided to inspect the tax period with these expenses incurred).

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Therefore, under legal regulations, the expenses of organizing the company's YEP can be recognized as reasonable expenses when calculating CIT if this expense meets the following 03 conditions:

(1) The expenses actually incurred relate to the company's production and business activities.

(2) The expenses have adequate legal invoices and documents as required by law.

(3) The expenses, if involving purchasing goods and services each worth 20 million VND or more (inclusive of VAT), must have non-cash payment documents.