The regulations of personal income tax on phone call and mid-shift meal allowances

On 17 September 2021, the Hanoi Tax Department explained in writing the concerns Giao Hang Tiet Kiem Company regarding personal income tax (PIT) related to phone calls and mid-shift meal allowances. In order to meeting the conditions to exempt the reimbursement of phone calls and mid-shift meals from PIT and to be deductible expense, companies shall follow range of different provisions.

For phone calls, according to Clause 2.dd, Article 2 of Circular No. 111/2013/TT-BTC, the payment for phone calls are types of income from wages and remunerations that the employers paid and are excluded from PIT in some circumstances.

“dd) Other benefits in cash or not in cash apart from wages paid to the taxpayer by the employer in any shape or form:

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.4.2) 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”[1].

There are two scenarios that the payment for phone calls are excludes out of the PIT according to corporate income tax regulations.

Firstly, entitlement conditions and level of the flat expenditure on phone calls shall be specified in Labor Contract, Collective Labor Agreement; Financial Regulations of companies; Bonus Regulation prescribed by the Chairman of the Board Of Directors, the General Director, the Director according to the Financial Regulations of the company according to Clause 2, Article 3, Circular 25/2018/TT-BTC. If the companies spend under or equal to the level of the flat expenditure in accordance with the above documents, the payment will not be subject of the PIT. On the other hand, if the company spend over the flat expenditure prescribed in the above documents, the outstanding will be subject to PIT and are not considered as rational expenses of the companies.    

Secondly, the flat expenditure shall conform to the income that incurs corporate income tax and guiding documents of the Law on Corporate Income Tax. Specifically, company’s expense is deductible and not a subject of PIT if satisfying the conditions: (i) The actual expense incurred is related to the enterprise’s business operation; (ii) There are sufficient and valid invoices and proof for the expense under the regulations of the law; (iii) There is proof of cashless payment for each invoice for purchase of goods/ services of VND 20 million or over (including VAT) according to Article 4, Circular 96/2015/TT-BTC.

For the mid-shift meals, when the employers provide mid-shift meals for the employees in the form of cooking, buying catering services, giving luncheon vouchers, the remuneration for mid-shift meals will not be subject to PIT in accordance with Clause 2.g5, Article 2, Circular No. 111/2013/TT-BTC. In case, the company pays cash for their employees’ meals instead of providing mid-shift meals, such money is not included in the taxable income if it is conformable with the guidance of the Ministry of Labor, War Invalids and Social Affairs. If the payment is higher than the limit imposed by the Ministry of Labor, War Invalids and Social Affairs, the excess shall be included in taxable incomes of PIT. According to Clause 4, Article 22, Circular No. 26/2016/TT-BLDTBXH, the maximum amount of mid-shift meals which is not included in PIT is VND 730,000 per person per month on employees’, in case it is over this amount, the outstanding part shall be subject to PIT.


[1] Clause 2.dd, Article 2 of Circular No. 111/2013/TT-BTC on the implementation of the law on personal income tax, the law on the amendments to the law on personal income tax, and the government’s Decree No. 65/2013/ND-CP elaborating a number of articles of the law on personal income tax and the law on the amendments to the law on personal income tax

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