Fill In The New Version: Pay Attention To Welfare Related Tax Risks

The current fortieth regulations on the implementation of the enterprise income tax law and the notice of the State Administration of Taxation on the deduction of wages and salaries of employees and welfare of workers and staff members (No. 3 of the state tax letter [2009]) stipulate that the staff and workers' welfare expenses shall be deducted from the total amount of wages and salaries which are allowed before tax deduction and shall be deducted within the proportion of 14%.

Employee pay should be reasonable as a base for calculating the upper limit of welfare cost deduction.

Specifically, it includes the following aspects:

- formulating a more standardized system of wages and salaries for employees;

The wage and salary system is in line with the industry and regional level.

The wages and salaries paid in a certain period are relatively fixed, and the adjustment of wages and salaries is orderly.

- the actual wages and salaries paid have been withheld and paid in accordance with the law.

Obligation;

The arrangement of wages and salaries does not aim at reducing or evading taxes.

The total amount of wages and salaries is the sum of wages and salaries actually paid by the taxpayers in accordance with the above provisions, excluding the social welfare premium and housing accumulation fund of the staff and workers welfare, staff education funds, trade union funds, endowment insurance, medical insurance, unemployment insurance, work-related injury insurance, maternity insurance premiums, etc.

The welfare cost of staff and workers of enterprises refers to the welfare treatment expenses provided by the enterprises for workers and staff members in addition to the wages, bonuses, allowances, management of the total wages included, the funds for staff education, social insurance premiums and supplementary endowment insurance premiums (Nian Jin), supplementary medical insurance premiums and housing provident fund.

The following cash payment and non monetary collective benefits actually issued or paid are allowed to be deducted before the enterprise income tax:

The cost of equipment, facilities and personnel in the welfare department, which has not yet been separated from the social functions, includes the equipment, facilities and maintenance costs of the staff welfare department, such as staff canteen, staff bathroom, barber shop, medical clinic, nurseries, sanatorium, etc.

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Subsidies and non monetary benefits for health care, life, housing, pportation and so on, including the expenses paid by the enterprise to the workers for medical expenses in the field, the medical expenses for the workers in the Medical Co ordinator, the medical subsidies for the employees, the subsidies for heating expenses, the cooling and heating costs, the difficult subsidies, the relief fees, the subsidy for the canteen, and the pportation allowance.

Other welfare benefits, including burial allowance, pensions, settling expenses and visiting relatives' travel expenses.

In addition to the items listed above, other accrual basis principles that meet the requirements of tax law satisfy the requirements of pre tax deduction, such as legality, authenticity, relevance, rationality and certainty, which are indeed expenses of employees' welfare nature of enterprises, and can be deducted as employee welfare benefits.

The Provisional Regulations of the original enterprise income tax stipulate that 14% of the welfare tax is calculated according to the taxable wage, which is actually deducted before tax and then used again. How it is used and whether it is used has no effect on the enterprise income tax.

The current enterprise income tax law is based on the welfare cost before deducting tax, in fact, it is a specific expenditure. Whether the deduction is allowed will directly affect the tax base and tax payable of enterprise income tax.

Welfare payment and deduction of documents

It can not be lumped together. It can not be rigid to demand payment and deduction from invoices. Nor can it be simply understood that welfare payments without invoices can be paid and deducted.

In practice, the payment voucher should be obtained in accordance with the principles of legality and reasonableness, in accordance with relevant tax laws, invoice management regulations and financial systems.

The payment of welfare benefits shall be paid for taxable items, such as taxable services or goods that are subject to business tax and value-added tax, such as the purchase of materials issued during festivals, the cost of external facilities such as the canteen utensils purchased by the welfare department, or the payment of maintenance costs, etc., and the invoices shall be obtained as payment vouchers.

The expenses paid to the employees or the funds allocated to the welfare department, such as difficult subsidies, heatstroke prevention and cooling, canteen subsidies, etc., can be legally paid as a result of the receipt of documents, receipts, etc.

There are strict rules for the payment of benefits and pre tax deductions. No cost of excess deductions, expenses for other subjects, payment of documents without legal payment, or expenses that do not meet the requirements of tax deduction must not be installed.

In the process of financial management and accounting treatment, subsidies to workers, such as housing allowance, pportation subsidy or vehicle subsidy, or communication subsidy, are paid to workers on a monthly basis. The allowance for daily allowance paid to employees and the monthly lunch allowance that is not uniformly provided for meals should be included in the total amount of staff and workers, and will no longer be included in the management of employee benefits.

Expenditures for entertainment, fitness, tourism, entertainment, shopping, gifts and other expenses paid by the enterprise for the purchase of commercial insurance, securities, equity, collectibles and so on shall not be used as a welfare expense before the tax deduction.

Strict distinction should be made.

In addition to the expenses and deductions of other expenses, neither the cost of equipment purchase, repair expenses, pportation subsidy, visiting family expenses and other expenses that should be included in the staff welfare expenses should be included in other subjects such as management expenses, etc., but the expenses for staff travel expenses, gifts and other gifts purchased by customers should not be paid. The personal income tax paid, the social insurance premiums undertaken by the employees should not be included in the expenses of the welfare expenses of employees, and should be included as welfare expenses.

The employee welfare cost incurred by an enterprise shall be set up separately and accurately accounted for. The payment of welfare benefits must conform to the financial system and the tax law; the payment of welfare benefits should be based on the true, lawful and effective credentials; not all the welfare benefits that meet the prescribed requirements can be deducted in full before tax, and only be allowed to be deducted within the proportion of no more than 14% of the total wages and salaries.

Therefore, enterprises should strengthen financial management of employees' welfare benefits, standardize pre tax deduction behavior, and guard against tax risks arising from irregular deduction.

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