Continue to week 42nd issue, today’s main topic is about staff welfare purchased from third party:

1.    Accounting method on Value Added Tax:

Article 10 of “the Provisional Regulations on Value Added Tax” stipulates that the amount of input tax shall not be deducted from the output tax amount when the goods purchased by the enterprise are used for the exemption of value-added tax items, collective welfare or personal consumption.

2.    Accounting method on Income Tax:

Article 2 of "Circular of the State Administration of Taxation on the Disposal of Enterprise Income Taxes" (Guo Shui Han [2008] No. 828) stipulates: the enterprise transfer the assets to the employees for the reward or welfare, due to the ownership of the assets has been changed and it is not belong to the internal disposal of assets, so it should be determined as sales to determine the sale income

3.    Accounting method on Individual Income Tax:

Per the "The State Administration of Taxation on the scope of the scope of the provisions of the notice of income" (Guo Shui Fa [1998] No. 155) , the following income is not belong to tax-free range which  shall be incorporated into the taxpayer’s salary, salary income levy individual income tax) stipulates: The allowance, the subsidy which is paid by the company welfare or Labor union funds.

To be continued...