Công văn 3925/CTHN-TTHT

To: VNPT Epay JSC.
(Address: 14^th floor of Handico Tower, Me Tri Ha urban area, Pham Hung street, Me Tri ward,  Nam Tu Liem district, Hanoi; TIN: 0102713659)

Below are opinions of Hanoi Department of Taxation in response to Official Dispatch No. 19/CV/VNPTEPAY dated 20/01/2022 of VNPT Epay JSC regarding recording payment for unspent annual leaves as deductible expenses:

- Pursuant to the Labor Code No. 45/2019/QH14 dated 20/11/2019:

+ Article 98 on work overtime pay and night work pay:

"Article 98. Overtime pay, night work pay

1. An employee who works overtime will be paid an amount based on the piece rate or actual salary as follows:

…

c) During public holidays, paid leave, at least 300%, not including the daily salary during the public holidays or paid leave for employees receiving daily salaries.

…”

+ Article 113 on annual leave:

"Article 113. Annual leave

1. Any employee who has been working for an employer for 12 months is entitled to fully-paid annual leave, which is stipulated in his/her employment contract as follows:

…

3. An employee who, due to employment termination or job loss or other reasons, has not taken or not entirely taken up his/her annual leave shall be paid in compensation for the untaken leave days.

…”

- Pursuant to Article 4 of Circular No. 96/2015/TT-BTC dated 22/6/2015 of the Ministry of Finance on corporate income tax in the Government’s Decree No. 12/2015/ND-CP dated 12/02/2015 elaborating the Law on Amendments to Tax laws and Circulars No. 78/2014/TT-BTC dated 18/6/2014, Circular No. 119/2014/TT-BTC dated 25/8/2014, Circular No. 151/2014/TT-BTC dated 10/10/2014 on amendments to Article 6 of Circular No. 78/2014/TT-BTC (amended by Clause 2 Article 6 of Circular No. 119/2014/TT-BTC and Article 1 of Circular No. 151/2014/TT-BTC):

Article 4. Article 6 of Circular No. 78/2014/TT-BTC (amended by Clause 2 Article 6 of Circular No. 119/2014/TT-BTC and Article 1 of Circular No. 151/2014/TT-BTC) is amended as follows:

"Article 6. Deductible and non-deductible expenses when calculating taxable income

1. Except for the non-deductible expenses prescribed in Clause 2 of this Article, every expense is deductible if all of these following conditions are satisfied:

a) The actual expense incurred is related to the enterprise’s business operation.

b) There are sufficient and valid invoices and proof for the expense under the regulations of the law.

c) There is proof of cashless payment for each invoice for purchase of goods/services of VND 20 million or over (including VAT).

The proof of cashless payment must comply with regulations of law on VAT.

…

2. The expenses below are not deductible when calculating taxable income:

2.1. Expenses that do not meet all of the conditions in Clause 1 of this Article.

…

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

a) Expenditure on salaries, 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.

…”

- Pursuant to Clause 2 Article 3 of Circular No. 25/2018/TT-BTC dated 16/03/2018 on amendments to the first paragraph of Point 2.6.b Clause 2 Article 6 of Circular No. 78/2014/TT-BTC (amended by Article 4 of Circular No. 96/2015/TT-BTC dated 22/6/2015 of the Ministry of Finance):

"2. Amendments to the first paragraph of Point 2.6.b Clause 2 Article 6 of Circular No. 78/2014/TT-BTC (amended by Article 4 of Circular No. 96/2015/TT-BTC dated 22/6/2015 of the Ministry of Finance):

" b) Salaries and bonuses for employees for which the conditions for entitlement and rates of entitlement are not specified in one of the following documents: employment contract; collective labor agreement; financial regulations of the company, corporation or group; reward regulations issued by the President of the Board of Directors, general director or director under the financial regulations of the company or corporation.”.

Pursuant to the above regulations, in case VNPT Epay pays salaries to its employees for unused annual leaves in accordance with regulations of the Labor Code and its guiding documents, it may record these amounts as deductible expenses if the conditions specified in Clause 1 Article 4 are fully satisfied and it is not the case specified in Clause 2 Article 4 of Circular No. 96/2015/TT-BTC dated 22/6/2015 of the Ministry of Finance and its amending documents (if any).

In case of difficulties during implementation of tax policies, please visit http://hanoi.gdt.gov.vn for more instructions of Hanoi Department of Taxation or contact Inspection Department No. 3 for assistance.

For your information and compliance./.