Article 40 of the Regulations for the Implementation of the Enterprise Income Tax Law stipulates that enterprises are allowed to deduct employee welfare expenses up to 14% of the total wages and salaries. This provision has changed the previous welfare expense deduction according to the 14% of the total salary that can be deducted before tax, and changed the withholding deduction to the actual deduction. However, due to the wide scope of deduction of employee welfare expenses, there are irregularities in the actual deduction. Then, how to standardize the deduction of employee welfare expenses before tax? Combined with the current policy, the author suggests the following.
Comprehensive understanding of the scope of employee welfare accounting
Employee welfare refers to the enterprise through the organization of collective welfare facilities, the establishment of a variety of subsidies, the provision of services and other forms of material help for employees to improve and enhance the quality of life provided. Employee welfare includes both collective welfare and individual welfare, with collective welfare being the mainstay. Collective welfare has two distinctive features: first, it is free or preferential treatment (including low fees), with subsidies; second, it is in the form of consumption to meet the needs of the vast majority of workers **** the same needs of each employee has equal rights to use, such as staff dormitories, bathrooms, canteens and other facilities. Individual welfare is mainly for the special living difficulties of individual workers to provide the necessary monetary subsidies, paid directly to the difficult, such as the staff living hardship allowance.
Financially, the Ministry of Finance's "Notice on Issues Related to the Convergence of the Old and New Financial Systems of Enterprises" (Caijing [2008] No. 34) makes it clear that: (1) Supplementary pension insurance belongs to the category of enterprise employee benefits, consisting of enterprise contributions and individual contributions **** with the same composition. (2) The portion of the total enterprise contribution to the supplementary pension insurance that is within 4% of the gross salary is charged to the cost (expense). The portion in excess of the prescribed percentage shall not be borne by the enterprise, and the enterprise shall withhold the contribution from the individual employee's salary. Individual contributions shall be borne entirely by the individual. (3) For employees who have retired before the establishment of the supplementary pension insurance or who have been internally retired in accordance with the state regulations without being included in the supplementary pension insurance plan, the pension costs paid by the enterprise to them in accordance with the relevant state regulations shall be charged to the administrative expenses.
Taxation regulations, the State Administration of Taxation "on the deduction of wages and salaries and employee welfare costs of enterprises notice" (State Taxation Letter [2009] No. 3, hereinafter referred to as the State Taxation Letter [2009] No. 3) stipulates that the enterprise employee welfare costs mainly include:
(1) not yet implemented the separation of the function of running a society, the welfare department of the equipment, facilities and personnel incurred expenses, including the equipment, facilities and repair and maintenance costs of collective welfare departments such as staff canteens, staff bathrooms, barber shops, medical clinics, child care centers, nursing homes, etc., and the wages and salaries, social insurance premiums, housing provident funds, and labor costs of staff in the welfare departments.
(2) Subsidies and non-monetary benefits for employees' health care, living, housing, transportation, etc., including medical expenses paid by the enterprise to employees for overseas medical treatment on official business, medical expenses for employees of enterprises that do not have medical care co-ordination, medical subsidies for the employees' dependent immediate family members, subsidies for heating expenses, summer heat-prevention and cooling expenses for employees, subsidies for employees' difficulties, relief expenses, subsidies for the funding of the employees' canteens, and transportation subsidies for employees. subsidies, etc.
(3) Other employee welfare expenses incurred in accordance with other regulations, including funeral subsidies, compassionate care, settling-in expenses, and travel expenses for family visits.
It is worth noting that the following expenses are not included in the scope of employee welfare expenses: the cost of retired employees; the compensation of dismissed employees; employee labor protection costs; employees in the sick leave, maternity leave, family leave during the subsidies received; employees' study fees; employees' food subsidies (including lunch subsidies in the enterprise and food subsidies during business trips) and so on. State tax letter [2009] No. 3 document, including the scope of employee welfare costs, and we usually say that the enterprise employee benefits compared to greatly narrowed, such as the enterprise sent to the employees of the annual goods, holiday expenses, holiday materials and organization of staff travel expenditures, etc. are not included.
Employee welfare expenses incurred by the enterprise, should be set up separately
The tax accounting of employee welfare expenses have strict requirements, the enterprise employee welfare expenses incurred, should be set up separately, for accurate accounting. Document No. 3 of the State Taxation Letter [2009] clearly stipulates that the employee welfare expenses incurred by enterprises should be set up separately and accurately accounted for. If there is no separate account book for accurate accounting, the tax authority shall order the enterprise to make corrections within the specified period. If the enterprise fails to do so after the deadline, the tax authority may reasonably approve the employee welfare expenses incurred by the enterprise. Some enterprises have set up an administrative expense employee welfare expense account under administrative expenses, and such enterprises should adjust their books of accounts in a timely manner to group employee benefits into the account of employee welfare expense under employee compensation payable. In this regard, it is recommended that enterprises should account for employee welfare expenses incurred through the account of employee compensation payable employee welfare expenses. Enterprises may also adopt the method of accounting for employee welfare expenses by withholding in normal times and settling at the end of the year, but the accounting is more complicated. It should be noted that the balance of employee welfare expenses recognized for tax purposes is not the same as the balance of employee welfare expenses for accounting purposes. In addition, after the implementation of the current Enterprise Income Tax Law, the pre-tax deduction of employee welfare expenses is not necessarily equal to the actual employee welfare expenses incurred in the current year, and the actual employee welfare expenses incurred in the current year have to be offset against the balance of employee welfare expenses first. Employee welfare expenses must be supported by legal documents
On the issue of pre-tax deduction of employee welfare expenses, Article 40 of the Regulations for the Implementation of the Enterprise Income Tax Law stipulates that employee welfare expenses incurred by an enterprise shall be allowed to be deducted to the extent that they do not exceed 14% of the total amount of wages and salaries. Under the Enterprise Income Tax Law, whether the expenditure on employee welfare fees must be charged on the basis of legal invoices is currently of great concern to taxpayers. According to the principle of reasonableness stipulated in the Enterprise Income Tax Law and the Implementation Regulations of the Enterprise Income Tax Law, the reasonable expenditure refers to the necessary and normal expenditure in line with the routine of production and business activities, which should be recognized in the current period's profit and loss or the cost of the assets concerned, the employee welfare fee belongs to the necessary and normal expenditure of the enterprise, and the enterprise has to be treated specifically in the actual work.
such as employee hardship allowance, as long as the decision can represent the interests of the employees can be used as legal documents, reasonable welfare expenses charged within the scope of the wages, subsidies are not required invoices, for the purchase of physical assets belonging to the scope of the employee welfare expenses charged within the scope of the assets and related costs incurred to the outside world should be obtained legal invoices. If the enterprises have not processed the invoices of inter-year welfare expenses in place before the annual remittance of enterprise income tax, they will have to make corresponding tax adjustments and pay the relevant taxes once they are verified. The current lack of evidence of the reasonableness of the employee welfare expenses charged by enterprises is mainly manifested in the following: firstly, the entry vouchers are not legal, such as the procurement expenditure of the staff canteen of the enterprise, if the invoice is not obtained, no pre-tax deduction is allowed, and the outsourced items are not invoiced or the invoices obtained are not in compliance with the regulations; secondly, the formalities of the homemade payment vouchers are incomplete, and the recipients do not sign to confirm or are signed by others on behalf of the recipients; thirdly, the expenditures of a large amount are not subject to any board of directors' resolution; and fourth, the subsidy items concerned have no basis for issuance. Accounting for employee welfare expenditure to be accurate
Enterprises do not follow the scope of expenditure accounting phenomenon is more common, one should be in the employee welfare costs in other accounting items, such as: enterprise canteen staff wages, canteen housing and equipment repair costs, etc. directly in the production cost or administrative expenses; enterprises to employees issued by the transportation subsidies, employees heat stroke prevention and cooling fees and other costs directly Expenditures such as transportation subsidies for employees, summer cooling expenses for employees, etc. are directly charged to administrative expenses; repair costs, fuel costs, driver's salary and other expenditures of the special vehicles used by the enterprise for transporting employees to and from work are directly charged to costs and administrative expenses. Secondly, the expenses that do not belong to the scope of expenditure of employee welfare costs as employee welfare costs, the most typical is that many enterprises should be used as business hospitality expenditures for gifts, food, tea, normal entertainment activities, arrangements for customers to travel the cost of expenses incurred as a collective welfare expenditures of the employees within the enterprise, in the employee welfare costs, thinking that this way as long as the employee welfare costs do not exceed 14% of the total salary, it will be able to full tax. 14%, you can deduct the full amount of pre-tax deduction, if the business hospitality expenses, you can only deduct the actual amount of 60% of the limit. Thirdly, the costs that should be borne by individual employees, such as withholding of personal income tax, social security contributions on behalf of the part of the individual, the cost of personal consumption of business leaders as employee welfare costs.
Enterprise pre-tax deduction of employee welfare expenses is standardized, whether in place, should focus on the following six aspects: First, whether to set up a separate accounting books; Second, whether the expenditure is in line with the scope of the expenditure; Third, whether in the 14% limit of the total amount of wages to be deducted; Fourth, there is no first of all, the balance of previous years to offset the payable employee welfare expenses, the balance of the amount of whether to change the use of the five is the calculation of the limit of the deduction before tax The total amount of wages is reasonable; six is whether the employee welfare expenses are reasonable and true, whether the vouchers are legal.