Question:
Regarding bonuses for employees, we have a question for the tax authority as follows: after the end of the fiscal year, we assess the performance and work capacity of each employee for the past year, combined with the business results achieved and various other practical factors to determine the specific bonus amount for each employee. The assessment process takes 3 months, and the bonuses are paid afterward, with expenses recorded in the following year. Can the bonus expenses be included in reasonable and legitimate expenses for that accounting year?
Answer:
-Based on Article 2.5, Article 6 of Circular No. 78/2014/TT-BTC dated June 18, 2014, issued by the Ministry of Finance (as amended and supplemented by Article 4 of Circular No. 96/2015/TT-BTC dated June 22, 2015, of the Ministry of Finance) providing guidance on corporate income tax (CIT), the regulations specify which expenses can be deducted and which cannot when determining taxable income subject to CIT.
-In the case of the company paying bonuses to employees, the bonus expense can be recognized as a deductible cost when determining the taxable income subject to CIT for the tax settlement year if it meets the conditions for eligibility and the amount paid corresponds to the regulations in Clause 2.5, Article 4 of Circular No. 96/2015/TT-BTC. This applies even if the bonuses are paid before the deadline for submitting the CIT finalization documents for that year.
