VI In calculating Corporate Income Tax, the question of whether the salary paid by employees voluntarily working overtime is counted as a tax deductible expense for the business or not? Through today’s article, let’s learn more about this issue with Pham Consult!
What are the overtime regulations for employees?
Currently, overtime work of employees is regulated by the 2019 Labor Code in Article 107 as follows:
Overtime
1. Overtime is the period of time worked outside of normal working hours as prescribed by law, collective labor agreement or labor regulations.
2. Employers are allowed to employ employees to work overtime when they fully meet the following requirements:
a) Must have the consent of the employee;
b) Ensure that employees’ overtime hours do not exceed 50% of normal working hours in a day; In case the regulation on normal weekly working hours is applied, the total number of normal working hours and overtime hours must not exceed 12 hours in 1 day; no more than 40 hours in 1 month;
c) Ensure that the overtime hours of employees do not exceed 200 hours in 1 year, except for the cases specified in Clause 3 of this Article.
3. Employers are allowed to employ employees to work overtime for no more than 300 hours in a year in the following industries, occupations, jobs or cases:
a) Production, processing and export of textile, garment, leather, shoe, electrical, electronic products, agricultural, forestry, salt and fishery products;
b) Production, supply of electricity, telecommunications, oil refining; water supply and drainage;
c) In case of solving tasks that require workers with high professional and technical qualifications that the labor market does not provide fully and promptly;
d) In cases where urgent work must be resolved that cannot be delayed due to the seasonal nature or timing of raw materials or products, or to resolve work arising due to unforeseen objective factors or consequences. weather consequences, natural disasters, fires, enemy sabotage, lack of electricity, lack of raw materials, technical problems of the production line;
d) Other cases prescribed by the Government.
4. When organizing overtime according to the provisions of Clause 3 of this Article, the employer must notify in writing the specialized labor agency under the Provincial People’s Committee.
5. The Government regulates this Article in detail.
In addition, Clause 1, Article 98 of the 2019 Labor Code stipulates that employees’ overtime wages are calculated as follows:
Wages for overtime and work at night
1. Employees who work overtime are paid based on the salary unit price or actual salary paid according to the job being performed as follows:
a) On weekdays, at least 150%;
b) On weekly holidays, at least 200%;
c) On holidays, New Year, paid days off, at least equal to 300%, not including the salary for holidays, New Year, paid days off for employees receiving daily wages.
Accordingly, employees working overtime must ensure the principle of not exceeding 200 hours/year and in some special occupations, they are allowed to work overtime no more than 300 hours/year and are paid overtime wages according to regulations. Labor Code 2019.
Is paying overtime wages in excess of the prescribed limit included in deductible expenses from corporate income tax?
Pursuant to Article 4 of Circular 96/2015/TT-BTC guiding expenses that are deductible from corporate income tax as follows:
Deductible and non-deductible expenses when determining taxable income
1. Except for non-deductible expenses mentioned in Clause 2 of this Article, enterprises can deduct all expenses if they fully meet the following conditions:
a) Actual expenses incurred related to production and business activities of the enterprise.
b) Expenses have enough legal invoices and documents according to the provisions of law.
c) Expenditures if there are invoices for each purchase of goods and services with a value of 20 million VND or more (price includes VAT) must have non-cash payment documents when paying.
…
Thus, the overtime salary expenditure according to the provisions of the 2019 Labor Code will be deducted when determining the taxable income of the enterprise, if such expenditure has enough legal invoices and documents.
Overtime expenditure exceeding 200-300 hours/person/year is a violation of labor law, so it does not meet the conditions to be included in deductible expenses when determining taxable income.
Cases of corporate income tax exemption in 2024?
Cases of exemption from corporate income tax in 2024 are based on the provisions of the Law on Corporate Income Tax 2008 amended and supplemented by the Law on Corporate Income Tax amended in 2013, the Law amending Tax Laws 2014 in Law Medical examination and treatment in 2023 are as follows:
(1) Income from farming, animal husbandry, farming, processing agricultural and aquatic products, and salt production of cooperatives; Income of cooperatives operating in the fields of agriculture, forestry, fishery, and salt production in areas with difficult socio-economic conditions or in areas with extremely difficult socio-economic conditions towel;
Enterprise income from farming, animal husbandry, farming, and processing of agricultural and aquatic products in areas with particularly difficult socio-economic conditions; income from fishing activities.
(2) Income from performing technical services directly serving agriculture.
(3) Income from the performance of scientific research and technology development contracts, products in the trial production period, products made from new technology applied for the first time in Vietnam.
(4) Income from production and business activities of goods and services of enterprises with 30% or more of the average number of employees in the year being disabled people, people recovering from drug addiction, or people infected with the virus causing the disease. acquired immunodeficiency syndrome in humans (HIV/AIDS) and has an average number of employees per year of twenty people or more, excluding businesses operating in the fields of finance and real estate business.
(5) Income from vocational training activities reserved for ethnic minorities, disabled people, children in extremely difficult circumstances, and subjects of social evils.
(6) Income is divided from capital contribution activities, joint ventures, and associations with domestic enterprises, after paying corporate income tax according to regulations.
(7) The grant received is to be used for educational activities, scientific research, culture, art, charity, humanitarian and other social activities in Vietnam.
(8) Income from the transfer of emission reduction certificates (CERs) of enterprises that are granted emission reduction certificates.
(9) Income from performing State-assigned tasks of the Vietnam Development Bank in development investment credit and export credit activities; income from credit activities for the poor and other policy beneficiaries of the Bank for Social Policies;
Income of state financial funds and other state funds operating for non-profit purposes according to the provisions of law; income of organizations whose charter capital is 100% owned by the State established by the Government to handle bad debts of Vietnamese credit institutions.
(10) The undivided income of the medical examination and treatment facility is left to invest in the development of that medical examination and treatment facility;
The undivided income of a medical facility that carries out socialization but is not a medical examination and treatment facility and the undivided income of an establishment that carries out socialization in the field of education – training, other socialized fields left to invest in developing that facility according to the provisions of specialized laws on education – training, health and other socialized fields;
The income forms undivided assets of cooperatives established and operating in accordance with the provisions of the Cooperative Law.
(11) Income from technology transfer in priority areas for transfer to organizations and individuals in areas with particularly difficult socio-economic conditions.
So, through the article on Pham Consult, we have helped you learn more about whether an employee’s voluntary overtime salary is included in the cost of Corporate Income Tax deduction? Hope the above information will help your work.
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