Are the expenses deducted from the Trade Union Fund for employees subject to personal income tax in Vietnam?
Are the expenses deducted from the Trade Union Fund for employees subject to personal income tax in Vietnam?
Official Dispatch 20657/CT-TTHT 2020 from the Hanoi Tax Department dated April 20, 2020, guides on the policy of personal income tax.
Official Dispatch 20657/CT-TTHT 2020 on PIT regarding expenses deducted from the Trade Union Fund for employees, Hanoi Tax Department responds as follows:
According to point c clause 2 Article 3 Decree 65/2013/TT-BTC, amended by Article 2 Decree 12/2015/ND-CP, guiding income from salaries and wages:
Taxable Income
...
2. Income from salaries and wages is the income received by employees from employers, including:
a) Salaries, wages, and amounts of similar nature in cash or kind.
b) Allowances, subsidies, except for the following allowances and subsidies...
c) Remuneration received in various forms such as: commission from selling goods; brokerage commission; remuneration for participating in scientific, technical research topics; remuneration for participating in projects, proposals; royalties according to the law on royalties; remuneration for teaching activities; remuneration for performing in artistic, cultural, sports events; advertising services fee; other service fees, other remuneration.
d) Money received from participation in business associations, boards of directors of enterprises, enterprise supervisory boards, project management boards, management boards, other organizations, and professional associations.
dd) Benefits in cash or kind, aside from salary or wages, paid by the employer that the taxpayer receives in any form...
e) Bonuses in cash or kind in any form, including bonuses in stock, except the following bonuses:
...
Based on the regulations above, in case expenses for employees arise, and these expenses are deducted from the Trade Union Fund, fulfilling the duties regulated in Article 27 of the Law on Trade Union 2012, the employee receiving these expenses does not have to include them in taxable income from salaries and wages for PIT purposes.
Are the expenses deducted from the Trade Union Fund for employees subject to personal income tax in Vietnam?
What are the regulations on financial management of the Trade Union Fund in Vietnam?
Article 27 of the Law on Trade Union 2012 stipulates the financial management of the union as follows:
- The union manages and uses finances according to the law and the regulations of the Vietnam General Confederation of Labor.
- Union finances are used for activities to fulfill the rights and responsibilities of the union and to maintain the operation of the union system, including the following duties:
+ Propagate, disseminate, and educate the guidelines, policies of the Communist Party, and laws of the State; enhance the professional and vocational skills for workers.
+ Organized activities representing and protecting the lawful and legitimate rights and interests of workers.
+ Develop union membership, establish grassroots unions, and build strong unions.
+ Organize emulation movements initiated by the union.
+ Train and foster union officials; train and foster elite workers to create a source of officials for the Communist Party, the State, and union organizations.
+ Organize cultural, sports, and tourism activities for workers.
+ Organize gender and gender equality activities.
+ Visit, support union members and employees during illness, maternity, accidents, and hardships; organize other welfare activities for workers.
+ Motivate and reward workers and their children who achieve good results in study and work.
+ Pay salaries to full-time union officials, responsibility allowances for part-time union officials.
+ Finance the operations of union machinery at all levels.
+ Other related tasks.
What are the sources of finance for the Trade Union?
Article 26 of the Law on Trade Union 2012 stipulates union finances as follows:
Trade Union Finances
Trade Union finances include the following sources of revenue:
1. Union dues paid by union members according to the regulations of the Charter of the Vietnam General Confederation of Labor;
2. Trade Union Fund contributed by agencies, organizations, and enterprises, equivalent to 2% of the wage fund used as a basis for social insurance contributions for employees;
3. State budget support;
4. Other revenues from cultural, sports, and economic activities of the union; from projects assigned by the State; from aid and sponsorships from domestic and foreign organizations and individuals.
Trade Union finances include the following revenue sources:
- Union dues paid by union members according to the regulations of the Charter of the Vietnam General Confederation of Labor.
- Trade Union Fund contributed by agencies, organizations, and enterprises, equivalent to 2% of the wage fund used as a basis for social insurance contributions for employees.
- State budget support.
- Other revenues from cultural, sports, and economic activities of the union; from projects assigned by the State; from aid and sponsorships from domestic and foreign organizations and individuals.
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