Question:
In our monthly regulations, our company provides additional support to employees in the form of allowances such as gasoline, telephone, and rent. All these allowances do not have invoices (with the company’s name, address, and tax identification number) and are paid in cash along with the salary. I would like to know:
1. Can these allowances be counted as deductible expenses for determining corporate income tax?
2. Do individual employees receiving these allowances have to pay personal income tax (PIT)?
Answer:
Based on Article 6 of Circular No. 78/2014/TT-BTC dated June 18, 2014, issued by the Ministry of Finance (as amended and supplemented in Article 4 of Circular No. 96/2015/TT-BTC dated June 22, 2015), which provides guidance on corporate income tax (CIT), it specifies which expenses can be deducted and which cannot when determining CIT.
Additionally, based on Circular No. 111/2013/TT-BTC dated August 15, 2013, issued by the Ministry of Finance, which provides guidance on personal income tax (PIT).
According to the above regulations, in the case where the company provides additional support to employees in the form of allowances such as gasoline, telephone, and rent, if these expenses are clearly recorded and specified in terms of conditions and amounts eligible for receiving them in one of the following documents: Labor contracts, Collective labor agreements, Company’s financial regulations, Group financial regulations, Regulations on rewards set by the Chairman of the Board of Directors, General Director, or Director according to the company’s financial regulations, then these expenses can be counted as deductible expenses for determining CIT. At the same time, they must also be included in the taxable income for PIT calculation purposes for the employees, following the regulations.
