Circumstances 1: the withholding of wages and salaries in the remittance year has not been actually paid
"On the pre-tax deduction of enterprise wages and salaries and employee welfare costs and other expenditures of the announcement" State Administration of Taxation Announcement No. 34 of 2015, the second article is clear: enterprises in the annual remittance before the end of the remittance of the actual payment of wages and salaries to the employees have been withholding the year of the remittance of wages and salaries, allowed to remittance year, according to the provisions of the remittance. Deduction. Considering that many enterprises' December salaries are withheld in that year and paid out in January of the following year, if enterprises are strictly required to pay salaries before the end of each tax year to be counted in the current year, they need to make tax adjustments every year, which not only increases the tax compliance cost of taxpayers and the burden of tax administration, but also does not conform to the principle of the accrual system. Therefore, the wages and salaries actually paid to the employees before the end of the annual remittance are allowed to be deducted before the EIT in the year of remittance.
Scenario 2: The five insurance premiums exceed the prescribed scope and standard
Article 35 of the Regulations on the Implementation of the Enterprise Income Tax Law stipulates that the basic social insurance premiums such as basic pension insurance premiums, basic medical insurance premiums, unemployment insurance premiums, work injury insurance premiums, maternity insurance premiums, and housing and provident fund paid by the enterprise for the employees in accordance with the scope and standard stipulated by the competent department of the State Council or the people's government of the province shall be allowed to be deducted. public provident fund, are allowed to be deducted. Supplementary pension insurance premiums and supplementary medical insurance premiums paid by the enterprise for investors or employees shall be allowed to be deducted within the scope and standard stipulated by the competent departments of finance and taxation under the State Council. The portion of the actual payment of five insurance premiums exceeding the prescribed scope and standard shall not be deducted before tax. It should be emphasized that the "five insurance and one gold" paid by the enterprise for the employees has different standards in different places. The judgment standard is, within the scope and standard, according to the actual deduction, more than the standard part, shall not be pre-tax deduction, should be done to increase the taxable income.
Scenario 3: the distribution of electronic red packets do not have the four conditions at the same time
Enterprises distributed electronic red packets belong to the gift to individuals, is randomly distributed, the purpose of which is business promotion and advertising. At the same time, the enterprise is likely to charge this expenditure as business promotion expenses, thus affecting the tax base of the enterprise income tax. Referring to the second requirement of Tianjin IRS in the "2015 Enterprise Income Tax Settlement Related Issues Implementation Caliber": the relevant tax issues related to the pre-tax deduction of the promotional coupon expenditure of the network e-commerce platform to the customers (individuals), the promotional coupon expenditure paid by the network e-commerce platform to the customers can be deducted before tax with the relevant vouchers when the following conditions are available at the same time: 1. The arrangement of the promotional activities of the network e-commerce platform. 2. the consumption records of consumers who actually use the vouchers. 3. the details of the fund transfer of the actual amount paid by the online e-commerce platform for the promotional offer. 4. if it involves the need to withhold and pay personal income tax, there should also be relevant supporting information.
Scenario 4: Employee Welfare Expenses Exceeding the Limit Provided for in the Tax Law
Enterprise employee welfare expenses refer to the expenditure on welfare benefits provided by an enterprise for its employees in addition to employee salaries, bonuses, allowances, subsidies included in the management of the total wage bill, employee education expenses, social insurance premiums and supplemental pension insurance premiums (annuities), supplemental medical insurance premiums, and housing provident funds. Article 40 of the Regulations for the Implementation of the Enterprise Income Tax Law stipulates that an enterprise shall be allowed to deduct employee welfare expenses incurred by the enterprise up to 14% of the total amount of wages and salaries. As a result, the portion of employee welfare expenses exceeding 14% of the total wages and salaries shall not be deducted. If the expenses meet the principle of accrual system stipulated in the tax law, satisfy the requirements of legitimacy, authenticity, relevance, reasonableness and certainty for pre-tax deduction, and are indeed the expenses for the welfare of all the employees of the enterprise, they can be deducted as employee welfare expenses. It is important to note that employee welfare expenses are deductible before tax within the limits set by the tax law, firstly, there should be a compliant bill, and secondly, the reimbursement of meal expenses by the enterprise should be standardized and in line with common sense.
Scenario 5: commercial insurance premiums for which no specific tax policy exists
Commercial insurance premiums paid by enterprises for investors or employees cannot be deducted before tax. For the tax law does not list, belong to the category of commercial insurance, such as medical insurance, group accidental injury insurance, etc., due to the lack of specific tax policy regulations, can not be deducted before the enterprise income tax.
Scenario 6: Employer's Liability Insurance Premiums Not Directly Paid to Employees
Employer's Liability Insurance is not directly paid to employees, but it is a kind of insurance which is responsible for compensating for the injuries, disabilities, or deaths caused by accidents or occupational diseases stipulated by the state in the course of the insured's employees' work related to the insured's business, therefore, this kind of insurance should be a kind of commercial insurance. The insurance should be a commercial insurance and cannot be deducted before tax.
Scenario 7: Foreign insurance premiums paid by foreign enterprises for domestic employees
Foreign-invested enterprises and foreign enterprises directly pay or bear all kinds of offshore commercial life insurance premiums and offshore social insurance premiums for their employees working in China, such as unemployment insurance premiums, retirement pensions, savings, personal accident insurance premiums, etc., which are paid to offshore social insurance institutions and commercial insurance institutions, medical insurance premiums, etc., shall not be deducted before enterprise income tax. However, the overseas insurance premiums can be deducted before the enterprise income tax if they are paid as wages and salaries to the employees.
Scenario 8: Non-compulsory personal insurance premiums
The Interpretation of the Regulations for the Implementation of the Enterprise Income Tax Law stipulates that the basis for such insurance premiums must be statutory, i.e., it is mandatory for enterprises to take out personal safety insurance for their employees under the laws and regulations of the state, and if it is not mandatory under the laws and regulations of the state, the insurance premiums incurred by enterprises voluntarily taking out so-called personal safety insurance for their employees shall not be deducted from the enterprise income tax. If it is not mandatory by state laws and regulations, the so-called personal safety insurance that the enterprise voluntarily takes out for its employees is not allowed to be deducted before tax. The size of such insurance premiums, the premium rate and the number of insured persons are all based on national laws and regulations. The following two conditions need to be met for the insurance coverage:
●The insurance coverage is based on the law, i.e., the national laws and regulations require the enterprises to insure the employees. For example, the Coal Law and the Construction Law stipulate that coal mining enterprises (building construction enterprises) shall participate in work-related injury insurance and pay work-related injury insurance premiums for their employees in accordance with the law. Encourage enterprises to apply for accidental injury insurance for underground workers (workers engaged in dangerous operations) and pay insurance premiums. Before the State Administration of Taxation issued further policies, the accidental injury insurance purchased by coal and construction enterprises for their employees should still be regarded as insured on the basis of the law in consideration of the specificity of the industry. However, the policies of various provinces and municipalities clearly stipulate that enterprises need to apply for personal safety insurance for special types of workers, and it is uncertain whether it is regarded as a statutory basis for insurance, so it is better to confirm with the competent tax authorities in advance.
●There is a clear legal basis for insurance coverage, premium rates, and insured persons. In general, the provinces and municipalities for coal and construction industry for special types of work are provided for clear insurance costs, insurance rates and insured objects, etc., only in accordance with the provisions of the special types of work, special industry insurance, the enterprise can obtain safety-related certificates and production and business.
Therefore, before the scope of special types of work is clarified, it is recommended that enterprises deal with the pre-tax deduction of personal safety insurance premiums for employees of special types of work in accordance with the principle of prudence, and communicate with the competent tax authorities, or else it will bring unnecessary tax risks.
Scenario 9: Employee travel expenses without withholding and paying personal income tax
The Circular of the Ministry of Finance and the State Administration of Taxation on the Policy of Individual Income Tax on Personal Incentives Provided by Enterprises to Marketing Personnel in the Form of Free Tours (Cai Shui [2004] No. 11) stipulates that: "In the course of marketing activities for commodities, the enterprises and units will provide personal incentives for the outstanding personnel with training courses, seminars, workshops, workplaces, and so on for the marketing performance. In the course of commodity marketing activities, enterprises and units shall organize tourism activities in the name of training courses, seminars, working visits, etc., and the marketing performance rewards (including in-kind goods and marketable securities, etc.) shall be included in the taxable income of the marketing personnel according to the full amount of the expenses incurred, and individual income tax shall be levied according to law, and shall be withheld by the enterprises and units that provide the said expenses. Among them, such rewards enjoyed by the employees of the enterprises shall be merged with the wages and salaries of the current period and be subject to individual income tax in accordance with the item of "Income from Wages and Salaries"; such rewards enjoyed by other personnel shall be regarded as the income from labor services of the current period and be subject to individual income tax in accordance with the item of "Income from Labor Remuneration". The rewards should be treated as current labor income and subject to individual income tax under the item of "Income from labor compensation"." The company should withhold and pay individual income tax on behalf of the rewarded personnel according to the item of "salary and wages income". It can be seen that the enterprise in the "administrative expenses" in the travel expenses, in accordance with the "wages, salaries" project withholding and payment of personal income tax, can be deducted as wages, salaries in the enterprise income tax before the deduction. It can be seen that the enterprise organization staff collective tourism expenditure, first, no direct relationship with the income; Secondly, is not in line with the provisions of the tax law pre-tax deduction of the scope of employee welfare expenses. Therefore, there is no withholding of personal income tax, is not a reasonable salary expenses, can not be deducted in accordance with the "wages, salary income" project.
Scenario 10: Withholding of employee severance compensation
The Reply to the Approval of the Pre-Tax Deduction of Severance Compensation for the Transfer of Internal Personnel of Huawei Group [2015] No. 299 of the General Taxation Letter makes it clear that: According to the "People's Republic of China Enterprise Income Tax Law" and its implementing regulations and the "Circular of the State Administration of Taxation on the Deduction of Wages, Salaries and Employee Welfare Expenses of Enterprises" (Guoshuaihan [2009] No. 3), the State Administration of Taxation has issued the following regulations. No. 3 [2009]), Huawei's tax treatment of severance compensation matters did not comply with the principle of actual deduction for enterprise income tax and should be adjusted for tax purposes. In accordance with the company's financial system, the enterprise has withdrawn severance compensation for its employees and made tax adjustments to the amount incurred under the "Withholding Expenses" account in the current year when making the annual enterprise income tax remittance. In accordance with the principle of certainty of pre-tax deduction, the severance compensation provided by the enterprise is not allowed to be deducted before tax, and needs to be adjusted by tax. For the purpose of EIT, the provision for severance compensation is treated as a projected liability for accounting purposes, and the exact amount of severance compensation has not yet been determined. In the pre-tax deduction of enterprise income tax, the principle of certainty needs to be followed, that is, the amount of pre-tax deduction items is determined, because the company's provision of severance compensation does not meet the requirements of the principle of certainty, therefore, it is not allowed to be deducted from tax, and it needs to be increased by tax.
Circumstances 11: retroactive recognition of personal income expenditures for a period of more than five years
Article 6 of the Announcement of the State Administration of Taxation on Certain Tax Treatment Issues Concerning Taxable Income for Enterprise Income Tax (Announcement of the State Administration of Taxation No. 15 of 2012) stipulates that: "According to the relevant provisions of the Law of the People's Republic of China on the Administration of Taxation Levies in the Chinese People's Republic of China , for expenditures actually incurred by an enterprise in previous years that are found to be deductible before enterprise income tax but not deducted or under-deducted in accordance with the tax regulations, the enterprise shall be allowed to retroactively calculate the deduction to the year in which the item was incurred after the enterprise has made a special declaration and explanation, but the period of recognition of the retroactive deduction shall not be more than five years." Therefore, enterprises reimbursing employees' relevant personal income expenses in previous years should calculate the deduction in the retroactive to the year when the personal income expenses were incurred, but the period of retroactive confirmation shall not exceed 5 years.
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