Guidance on Welfare Expenditure for Employees under Official Dispatch 5568/TCT-CS 2023 - How is it Regulated?
Guidance on welfare-related expenses for employees in Official Dispatch 5568/TCT-CS 2023
Recently, on December 11, 2023, the General Department of Taxation issued Official Dispatch 5568/TCT-CS 2023 providing guidance on tax policies.
The content of the official dispatch guides on welfare-related expenses for employees as follows:
(1) Regarding pricing policies:
Welfare-related expenses directly paid to employees are not included in the overall cost of products and irrigation services as prescribed in Decree 96/2018/ND-CP.
(2) Regarding corporate income tax policies:
The company can deduct the welfare-related expenses directly paid to employees when determining taxable corporate income according to Clause 4, Article 1 of Decree 91/2014/ND-CP if there are sufficient invoices and documents as prescribed by law. The total welfare-related expenses should not exceed one month's average actual salary for the tax year of the enterprise.
Guidance on welfare-related expenses for employees in Official Dispatch 5568/TCT-CS 2023
What are the management costs included in the price of irrigation products and services?
Based on Clause 4, Article 7 of Decree 96/2018/ND-CP stipulating management costs included in the price of other irrigation products and services as follows:
- Material costs used for enterprise management such as office supplies, materials used for fixed asset repair, tools, and equipment;- Office supplies for management tasks;- Costs of training, scientific research, application of new technologies directly related to the provision of irrigation products and services (if any), according to current legal regulations;- Costs of outsourcing services for enterprise management; expenses for purchasing and using technical documents, patents (not meeting the criteria for recording as fixed assets) to be allocated gradually into enterprise management costs;- Conference, reception, travel, train, and bus expenses; expenses for female employees, fees for attending conferences;- Severance allowances;- Audit costs;- Costs of collecting fees for using other irrigation products and services (if any);- Contingency costs (if any), including provisions for doubtful debts, provisions for payables calculated into expenses for providing other irrigation products and services;- Other fees and charges as prescribed by law.
What does the direct welfare fund for employees include?
Based on Clause 4, Article 1 of Decree 91/2014/ND-CP, amending and supplementing Decree 218/2013/ND-CP, it is stipulated as follows:
Amend and supplement Decree No. 218/2013/ND-CP dated December 26, 2013, of the Government of Vietnam detailing and guiding the implementation of the Law on Corporate Income Tax as follows:
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- Welfare-related expenses directly paid to employees where the enterprise has valid invoices and documents as prescribed, such as funeral and wedding expenses of the employees and their families; vacation expenses; treatment allowances; supplementary education support at educational institutions; support for employees' families affected by natural disasters, enemy destruction, accidents, illness; rewards for employees' children with academic achievements; travel allowance for holidays and New Year for employees, and other welfare-related expenses as guided by the Ministry of Finance; the total amount of such expenses shall not exceed an average month’s actual salary in the tax year.
Furthermore, based on Clause 4, Article 3 of Circular 25/2018/TT-BTC, amending and supplementing Point e Clause 2.2, Point b Clause 2.6, Clause 2.11, and Clause 2.30 Article 6 of Circular 78/2014/TT-BTC, the regulations are as follows:
Amend and supplement Point e Clause 2.2, Point b Clause 2.6, Clause 2.11, and Clause 2.30 Article 6 of Circular No. 78/2014/TT-BTC dated June 18, 2014, of the Ministry of Finance (amended and supplemented in Article 4 of Circular No. 96/2015/TT-BTC dated June 22, 2015, of the Ministry of Finance) as follows:
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4. Amend the first paragraph of the fifth dash point at Clause 2.30, Article 6 of Circular No. 78/2014/TT-BTC (amended and supplemented in Article 4 of Circular No. 96/2015/TT-BTC):
- Welfare-related expenses directly paid to employees, such as funeral and wedding expenses of the employees and their families; vacation expenses; treatment allowances; supplementary education support at educational institutions; support for employees' families affected by natural disasters, enemy destruction, accidents, illness; rewards for employees' children with academic achievements; travel allowance for holidays and New Year for employees; accident insurance, health insurance, and other voluntary insurance for employees (except for expenses on life insurance, retirement insurance for employees as guided at Point 2.11 of this Article) and other welfare-related expenses. The total amount of welfare-related expenses mentioned above shall not exceed an average month’s actual salary in the tax year of the enterprise.
Thus, according to the aforementioned regulations, the direct welfare fund for employees includes the following items:
- Funeral and wedding expenses for the employees and their families;- Vacation expenses, treatment allowances;- Supplementary education support at educational institutions;- Support for employees' families affected by natural disasters, enemy destruction, accidents, illness;- Rewards for employees' children with academic achievements;- Travel allowance for holidays and New Year for employees;- Accident insurance, health insurance, other voluntary insurance for employees (except for expenses on life insurance, retirement insurance for employees);- Other welfare-related expenses.
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