To: Department of Taxation of Binh Dinh province

Below is the response of General Department of Taxation to Official Dispatch No. 113/CT-TNCN dated 25/01/2016 of Department of Taxation of Binh Dinh province enquiring about incomes subject to personal income tax:

- Pursuant to Point dd.4 Clause 2 Article 2 of Circular No. 111/2013/TT-BTC, the following incomes are not subject to personal income tax:

"dd.4) Flat expenditures on stationery, business trips, phone calls, costumes, etc. that are in excess of the limits prescribed by the State. Flat expenditures are not included in taxable income in the cases below:

dd.4.1) For the officials and employees in public service agencies, communist party’s agencies, associations: the flat expenditure shall apply guiding documents promulgated by the Ministry of Finance.

dd.4.2) For the employees working in businesses and representative offices: the flat expenditure shall conform to the income that incurs corporate income tax and guiding documents of the Law on Corporate Income Tax.

dd.4.3) For the employees in international organizations and representative offices of foreign organizations: the flat expenditure shall comply with regulations of such international organizations and representative offices of foreign organizations."

- Pursuant to Point 2.9 Clause 2 Article 6 of Circular No. 78/2014/TT-BTC, which is amended by Article 4 of Circular No. 96/2015/TT-BTC, the following expenses are not deductible when calculating taxable income of the enterprise:

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Allowance for employees on business trips, allowance for travelling and accommodation of employees on business trips will be deductible expenses when calculating taxable income if they have adequate invoices. If the enterprise pays for the traveling, accommodation, and allowance of employees on business trips in accordance with its financial regulations or rules, such amounts will be deductible..."

- Pursuant to Point 2.6 Clause 2 Article 6 of Circular No. 78/2014/TT-BTC, which is amended by Article 4 of Circular No. 96/2015/TT-BTC, the following expenses are not deductible when calculating taxable income of the enterprise:

"2.6. Expenditures on wages and bonus for employees in one of the following cases:

a) Expenditure on wages and other payables to employees that have been included in operating costs in the period but are not actually paid or do not have proof of payment as prescribed by law.

b) Wages, bonuses, life insurance premiums for employees that are not specified in one of the following documents: employment contract, collective bargaining agreement, financial regulation of the company, general company, corporation, reward scheme issued by the President of the Board of Directors, General Director, or Director in accordance with the financial regulation of the company or general company..."

Pursuant to the regulations above:

- Regarding payments for business trips: If the payments for the costs incurred by employees during business trips such as air tickets, lodging, taxi, meals are recorded as deductible expenses when determining incomes subject to corporate income tax according to the Law on Corporate Income Tax and its guiding documents, they are also deductible when determining incomes subject to personal income tax.

- Regarding payments for phone call: If there are specific conditions and levels of payments for phone calls in one of the following document: employment contract; collective bargaining agreement; financial regulation of the company, general company, corporation; reward scheme issued by the President of the Board of Directors, General Director, or Director in accordance with the financial regulation of the company or general company, and these payments are recorded as deductible expenses when calculating incomes subject to corporate income tax, they are also deductible when determining incomes subject to personal income tax. The payment for phone calls of employees in excess of the predetermined flat expenditure (if any) shall be included in the income subject to personal income tax (not deductible).

For your information and compliance./.

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ON BEHALF OF GENERAL DIRECTOR
PP DIRECTOR OF PERSONAL INCOME TAX DEPARTMENT
DEPUTY DIRECTOR




Nguyen Duy Minh

Công văn 1166/TCT-TNCN năm 2016 hướng dẫn về thuế thu nhập cá nhân đối với tiền công tác phí, tiền điện thoại do Tổng cục Thuế ban hành