Nguyen Van Chi, Director of the Tax Policy Department under the General Department of Taxation, granted the Đầu Tư (Investment) Newspaper an interview on the impact of new tax policies which take effect this month.
As regulated in Government Decree No. 91/2014/ND-CP of October 1, 2014, and Finance Ministry Circular No. 151/2014/TT-BTC of October 10, 2014, enterprises may now account welfare expenses into deductible costs. How will be this implemented when such expenses are not listed in the Circular?
From November 15, 2014, staff welfare expenses will be accounted into deductible costs when calculating corporate income tax. These include expenses for funerals and weddings of employees or their families; vacations; medical treatment; support for families of employees affected by natural disasters, sicknesses or accidents; reward for children of employees with outstanding performance at school, etc.
When making the Circular, it was impossible to list all expenses of welfare nature as they are numerous ranging from gifts for employees’ children on the International Children’s Day and Mid-autumn Festival to bonus for female employees on the International Women’s Day and so on.
Hanoi Tax Department assists taxpayers in tax procedures__Photo: VNA
Thus, enterprises can account expenses of welfare nature into reasonable expenses even if they are not listed in the Circular when determining corporate income tax. If other generated welfare expenses struggle enterprises and local tax agencies during the implementation of new tax policies, the General Department of Taxation will provide specific guidance on problems arising in localities upon the implementation of the Circular.
Businesses may decide on the level of welfare expenses which, however, must not exceed their actual average monthly salary paid in the tax year.
How will welfare expenses spent by enterprises before the effective date of the new law be handled?
Though new tax policies take effect from November 15, welfare expenses directly paid to employees in 2014 are reasonable and valid as provisions on corporate income tax apply to the tax period from 2014.
The additional deductible costs will reduce the actual payable tax amounts. How will this affect this year’s state budget revenues?
State budget revenues will surely be affected, but not much.
How will enterprises with overpaid tax amounts as calculated under the new tax policies be handled?
At present. enterprises temporarily pay tax quarterly and finalize tax yearly. As it is now the beginning of the fourth quarter, which means only tax amounts of three quarters have been paid and, if being overpaid, will remain low.
Any overpaid tax amounts after finalization for 2014 will be cleared against payable amounts in the next tax period or refunded by tax agencies under the Law on Tax Administration.
Under new regulations, value-added tax (VAT) declaration on a quarterly basis instead of monthly as currently, applies to enterprises having total turnover of up to VND 50 billion in the preceding year. How many enterprises will enjoy this preferential policy and how will it affect budget revenues?
Currently, enterprises having total sales from goods and services of up to VND 20 billion in the preceding year may declare VAT on a quarterly basis. Around 84 percent of enterprises will benefit from the new law which will apply to even enterprises having earning up to VND 50 billion from goods and services in 2013.
The new law, which may see a temporary decrease for three months as a result of delayed remittances, will not affect budget revenues.-