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Costume Support-Understanding and How to Do It Right?
Posted date 10/03/2016
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Posted date 10/03/2016
14.741 view
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The uniform of the Employee is supported by the company in cash or in kind with the purpose of all employees in the company wearing the same (uniform), each subject in the company has its own uniform. For example: security guards have their own uniform, female office staff have their own type, male office staff have their own type... Support in cash or in kind must comply with the company's regulations. In addition, the clothing allowance is a type of salary allowance for employees, so how is this allowance regulated at this time? According to Article 4 of Circular 96/2015/TT-BTC amending and supplementing Point 2.6, Clause 2, Article 6 of Circular 78/2014/TT-BTC (effective from the 2015 settlement), the expenses that are not included in deductible expenses include: “2.7. The part of the cost of clothing in kind for employees without invoices or documents. The part of the cost of clothing in cash for employees exceeds VND 5 (five) million/person/year. In case the enterprise has a cost of clothing
The uniform of the Employee is supported by the company in cash or in kind with the purpose of all employees in the company wearing the same (uniform), each subject in the company has its own uniform. For example: security guards have their own uniform, female office staff have their own type, male office staff have their own type... Support in cash or in kind must comply with the company's regulations. In addition, the clothing allowance is a type of salary allowance for employees, so how is this allowance regulated at this time?
According to Article 4 of Circular 96/2015/TT-BTC amending and supplementing Point 2.6, Clause 2, Article 6 of Circular 78/2014/TT-BTC (effective from the 2015 settlement), the following expenses are not included in deductible expenses, including:
“2.7. The portion of clothing expenses in kind for employees without invoices or documents. The portion of clothing expenses in cash for employees exceeding VND 5 (five) million/person/year.
In case the enterprise has to pay for uniforms in both cash and kind for employees to be counted as deductible expenses, the maximum amount of money spent must not exceed 5 (five) million VND/person/year, and in-kind expenses must have invoices and documents.
For specific business sectors, this cost is implemented according to specific regulations of the Ministry of Finance.
According to point b.2.1, clause b, article 8 , Circular 111/2013/TT-BTC on reasonable expenses deducted when determining income from business and wages, it is stipulated that:
“The cost of uniforms paid to employees shall not exceed VND 5,000,000/person/year. In case of uniforms paid in both cash and kind to employees, the maximum amount to be included in deductible expenses when determining taxable income shall not exceed VND 5,000,000/person/year. For special business sectors, this cost shall be implemented according to the regulations of the Ministry of Finance.”
Thus, it can be understood that expenses for clothing are not included in the taxable income of employees if those expenses are within the following control levels:
- Cash expenditure does not exceed 5 million VND/person/year
- There is no limit on the amount of expenditure in kind (must have clear invoices and documents)
- If the enterprise pays in cash and in kind, the cash payment must not exceed 5 million VND/person/year and the in-kind payment is not controlled.
Accordingly, support in cash or in kind is included in deductible expenses, but what are the documents, whether they are reasonable or not, and whether they are real? Below I will provide the necessary documents for your reference.
- Firstly : The company must have regulations that require employees to wear uniforms when coming to work, clearly specifying which groups must wear uniforms, which groups do not have to wear uniforms, which groups must wear what kind of uniforms... that is, each group has its own regulations regarding uniforms.
So, the first thing is to have rules and regulations on clothing for employees, for each specific group of people.
- Second : The company must have regulations on supporting uniforms in cash or kind; the regulations must be detailed and specific about the level of support.
Example: Granting of physical certificates:
+ Workers: Provided with 5 sets of uniforms/person/year, provided twice a year, each set worth 400,000 VND - 600,000 VND
+ Protection: 3 sets/person/year, each set worth from 300,000 VND to 500,000 VND
Thus, the regulations on granting certificates in kind must be clearly and specifically stated for the target groups and support levels. When applying the above regulations, employees must wear uniforms and the company must sign a contract to make uniforms, have a uniform sewing invoice, and have the warehouse import and export of the uniforms provided by the company itself.
Example: Cash payment
Similar to above, clearly define the target groups and how much support each type of target receives:
+ Workers: 2.5 million/person/year
+ Office staff: 4 million/person/year
+ Head/Deputy Head of Department: 5 million/person
When providing cash, only need to make a support list, the director's decision because there are regulations above. Employees must sign the list of financial support.
- Third: This is the most important thing, when the tax authority comes to inspect and collect information according to its authority during the inspection process but no one answers about the uniform, what color... or no employee wears the uniform during working hours, all of the above documents are meaningless, the Tax will exclude the cost of the uniform from the deductible expenses.
Therefore, when supporting in cash and kind, there must be a specific product, that is, the supported employees must wear the actual uniforms as prescribed by the company.
Conclude:
- With clothing expenses:
According to Article 4 of Circular 96/2015/TT-BTC amending and supplementing Point 2.6, Clause 2, Article 6 of Circular 78/2014/TT-BTC (effective from the 2015 settlement), the following expenses are not included in deductible expenses, including:
“2.7. The portion of clothing expenses in kind for employees without invoices or documents. The portion of clothing expenses in cash for employees exceeding VND 5 (five) million/person/year.
In case the enterprise has to pay for uniforms in both cash and kind for employees to be counted as deductible expenses, the maximum amount of money spent must not exceed 5 (five) million VND/person/year, and in-kind expenses must have invoices and documents.
For specific business sectors, this cost is implemented according to specific regulations of the Ministry of Finance.
According to point b.2.1, clause b, article 8 , Circular 111/2013/TT-BTC on reasonable expenses deducted when determining income from business and wages, it is stipulated that:
“The cost of uniforms paid to employees shall not exceed VND 5,000,000/person/year. In case of uniforms paid in both cash and kind to employees, the maximum amount to be included in deductible expenses when determining taxable income shall not exceed VND 5,000,000/person/year. For special business sectors, this cost shall be implemented according to the regulations of the Ministry of Finance.”
Thus, it can be understood that expenses for clothing are not included in the taxable income of employees if those expenses are within the following control levels:
- Cash expenditure does not exceed 5 million VND/person/year
- There is no limit on the amount of expenditure in kind (must have clear invoices and documents)
- If the enterprise pays in cash and in kind, the cash payment must not exceed 5 million VND/person/year and the in-kind payment is not controlled.
Accordingly, support in cash or in kind is included in deductible expenses, but what are the documents, whether they are reasonable or not, and whether they are real? Below I will provide the necessary documents for your reference.
- Firstly : The company must have regulations that require employees to wear uniforms when coming to work, clearly specifying which groups must wear uniforms, which groups do not have to wear uniforms, which groups must wear what kind of uniforms... that is, each group has its own regulations regarding uniforms.
So, the first thing is to have rules and regulations on clothing for employees, for each specific group of people.
- Second : The company must have regulations on supporting uniforms in cash or kind; the regulations must be detailed and specific about the level of support.
Example: Granting of physical certificates:
+ Workers: Provided with 5 sets of uniforms/person/year, provided twice a year, each set worth 400,000 VND - 600,000 VND
+ Protection: 3 sets/person/year, each set worth from 300,000 VND to 500,000 VND
Thus, the regulations on granting certificates in kind must be clearly and specifically stated for the target groups and support levels. When applying the above regulations, employees must wear uniforms and the company must sign a contract to make uniforms, have a uniform sewing invoice, and have the warehouse import and export of the uniforms provided by the company itself.
Example: Cash payment
Similar to above, clearly define the target groups and how much support each type of target receives:
+ Workers: 2.5 million/person/year
+ Office staff: 4 million/person/year
+ Head/Deputy Head of Department: 5 million/person
When providing cash, only need to make a support list, the director's decision because there are regulations above. Employees must sign the list of financial support.
- Third: This is the most important thing, when the tax authority comes to inspect and collect information according to its authority during the inspection process but no one answers about the uniform, what color... or no employee wears the uniform during working hours, all of the above documents are meaningless, the Tax will exclude the cost of the uniform from the deductible expenses.
Therefore, when supporting in cash and kind, there must be a specific product, that is, the supported employees must wear the actual uniforms as prescribed by the company.
Conclude:
- With clothing expenses:
- If paid in cash: the amount of expenditure exceeding 5,000,000 VND/year will not be counted as deductible expenses when determining corporate income tax, and the employee must pay personal income tax.
- If the expenditure is in kind : then the amount exceeding 5,000,000 VND/year is still counted as deductible expenses when determining corporate income tax, but the employee must pay personal income tax on the excess over 5,000,000 VND/year.
- Required documents:
· Labor contract
· Collective labor agreement
· Financial regulations
· VAT invoice
· List of employees receiving uniform support
· Labor contract
· Collective labor agreement
· Financial regulations
· VAT invoice
· List of employees receiving uniform support
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