1. In the process of production and operation, in order to strengthen the cohesion of the employee team, create a better working atmosphere, and establish a good corporate image, enterprises often carry out a series of employee welfare activities, such as annual physical examinations for employees, the organization of various festival welfare activities, and the distribution of gifts, etc., thus causing the enterprise to incur employee welfare expenses.
2. However, not all of the employee welfare expenses actually incurred by the enterprise can be deducted before tax when the annual corporate income tax is settled. The deduction rules are:
According to Article 40 of the "Regulations on the Implementation of the Enterprise Income Tax Law of the People's Republic of China" (Order No. 512 of the State Council of the People's Republic of China), employee welfare expenses incurred by an enterprise shall be deducted if they do not exceed 14% of the total wages and salaries. According to this regulation, the upper limit of pre-tax deductions is no more than 14% of total wages and salaries. If it is less than 14%, the actual deduction will be made.
3. The above-mentioned total wages and salaries refer to: all cash or non-cash labor remuneration paid by an enterprise to employees who serve or are employed by the enterprise in each tax year, including basic wages, bonuses, allowances, subsidies, year-end salary increases, overtime wages, and other expenditures related to employees' employment or employment.
4. Employee welfare expenses that can be deducted before tax are actually incurred, and the upper limit is 14% of total wages and salaries. If the employee welfare expenses accrued by the company in the current year have not actually been incurred, they cannot be deducted before tax.
5. Although the above regulations stipulate the proportion that can be deducted, there is also a prerequisite that the employee welfare expenses incurred must obtain a compliant pre-tax deduction certificate, otherwise they cannot be deducted before tax.
