Enterprises can give Mid-Autumn Festival and Tet gifts to employees, however, it is necessary to note the value of the gifts to be included in reasonable deductible expenses when determining corporate income tax.

Legal grounds:

• Circular No. 25/2018/TT-BTC;
• Official Dispatch No. 4003/TCT-CS dated October 17, 2018 of the General Department of Taxation.

During holidays and New Year, businesses can give gifts to employees as a welfare policy to take care of their lives and retain workers.

However, to avoid businesses taking advantage of welfare spending to increase business costs inappropriately. The law sets regulations to control gift payments to employees as follows:

Pursuant to Clause 4, Article 3 of Circular No. 25/2018/TT-BTC as follows:

Welfare expenses paid directly to employees such as: funeral and wedding expenses for the employee and his/her family; vacation expenses, treatment support expenses; Expenses to support additional learning knowledge at training organizations; Expenses to support families of workers affected by natural disasters, enemy sabotage, accidents, and illnesses; Expenses for rewarding employees’ children with good academic achievements; Support for travel expenses on holidays and New Year for employees; Expenses for accident insurance, health insurance, and other voluntary insurance for employees (except expenses for purchasing life insurance for employees and voluntary retirement insurance for employees guided at Point 2.11 Article this) and other Expenditures of a welfare nature. The total amount of welfare expenses mentioned above must not exceed 01 month’s average salary actually made in the enterprise’s tax year.

According to the above regulations, employee gifts on the Mid-Autumn Festival and Tet holidays are welfare expenses, subject to a maximum limit of no more than 1 month’s actual average salary in the enterprise’s tax year.

The actual average monthly salary is determined as follows:

• Equal to the salary fund made in the year divided by (:) 12 months;
• Equal to the salary fund made in the year divided by (:) the number of actual months of operation in the year (if the enterprise operates for less than 12 months).

In addition, Official Dispatch No. 4003/TCT-CS dated October 17, 2018 of the General Department of Taxation also has the following instructions:

In case in 2017, the Company… incurs costs to purchase external goods as Mid-Autumn Festival and Tet gifts for officials and employees without using welfare funds, then if the costs of purchasing goods are used as gifts for If an employee does not exceed 01 month’s average actual salary earned in the tax year according to regulations, the Company… shall be included in deductible expenses when determining income subject to corporate income tax and shall be deducted the corresponding input VAT with the portion included in deductible expenses, and at the same time the Company must issue a VAT invoice according to regulations.

Thus, to include gift expenses for employees as deductible expenses when calculating corporate income tax, it is necessary to note:

• The value of the gift must not exceed 01 month’s actual average salary;
• Enterprises must issue invoices for gift expenses according to regulations;
• Ensure expenses are actually incurred; Have invoices and documents; Comply with regulations on non-cash payments.