Pursuant to Clause 2, Article 2 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance guiding on Personal Income Tax (PIT) stipulating income from salaries and wages:
“Salary/Wage income is the income an employee receives from an employer, which might include:
a) Salaries, wages and amounts of salary and wage nature in cash or non-cash forms.
b) Allowances and subsidies, except for the following allowances and benefits:
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b.6) Allowance for unexpected difficulties, allowance for work-related accidents and illnesses, one-time allowance for childbirth or adoption, maternity benefits, convalescence and rehabilitation benefits following childbirth, benefits for a decline in working capacity, lump-sum retirement benefits, monthly survivorship allowances, severance allowances, job loss allowances, unemployment benefits, and other allowances as regulated by the Social Insurance Law and the Labor Code.
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đ) Cash or non-cash benefits other than salary or wages paid by the employer that the taxpayer is entitled to in any form:
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Pursuant to Article 4 of Circular 96/2015/TT-BTC dated June 22, 2015 of the Ministry of Finance guiding on corporate income tax (CIT) (effective from January 1, 2015) amending , supplementing Article 6 of Circular No. 78/2014/TT-BTC (amended and supplemented in Clause 2, Article 6 of Circular No. 119/2014/TT-BTC and Article 1 of Circular No. 151/2014/TT-BTC) BTC) as follows:
“Article 6: Deductible and non-deductible expenses when determining taxable income
Except for non-deductible expenses mentioned in Clause 2 of this Article, companies may deduct all expenses if they fully satisfy the following conditions:
a) Actual expenses incurred by the company in connection with its commercial and production activities.
b) The expense has all the required legal invoices and documentation.
(c) When paying for products and services, there must be non-cash payment documents if the invoice has a value of at 20 million VND or more (price includes VAT).
Non-cash payment documents must comply with the provisions of VAT Law.
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Expenses that are not deductible when determining taxable income include:
2.1. Expenses that do not fully satisfy the conditions specified in Clause 1 of this Article.
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Pursuant to the aforementioned provisions, in principle, in case the Company pays foreign workers when the labor contract ends, the expenses include:
– The severance allowance for employees according to the provisions of the Labor Code and the Law on Social Insurance, this expense is not subject to PIT and is included in deductible expenses when determining taxable income.
– If the conditions indicated in Article 4 of Circular 96/2015/TT-BTC are satisfied, airfare and baggage transportation costs for individual foreign employees employed under labor contracts are included in the employee’s PIT taxable income and included in deductible expenses when calculating CIT.
– Expenses for airfare and luggage transportation for the family of foreign employees are included in the employee’s PIT taxable income and are not included in deductible expenses when calculating CIT.