Deductible Expenses for Compensation Paid to Employees Suffering from Workplace Accidents

The content mentioned in Official Dispatch No. 28811/CTHN-TTHT (2024) regarding the determination of deductible expenses for compensation paid to employees suffering from workplace accidents, issued by the Hanoi Tax Department.

Guidelines for Determining Deductible Expenses for Compensation Paid to Employees Suffering from Workplace Accidents (Image from the Internet)

Determining Deductible Expenses for Compensation Paid to Employees Suffering from Workplace Accidents

Accordingly, the Hanoi Tax Department provided clarification on determining deductible expenses for compensation paid to employees suffering from workplace accidents as follows:

- Clause 8, Article 3 of the 2015 Law on Occupational Safety and Hygiene defines a workplace accident as an accident that causes injury to any part or function of the body or results in death, occurring during work and directly related to the performance of job duties.

Furthermore, Article 38 of the 2015 Law on Occupational Safety and Hygiene stipulates the responsibilities of employers toward employees who suffer from workplace accidents or occupational diseases:

"The employer is responsible for employees suffering from workplace accidents and occupational diseases as follows:

...2. Pay medical expenses from first aid and emergency treatment to full recovery for employees suffering from workplace accidents or occupational diseases as follows:

a) Cover the co-payment costs and expenses not included in the list covered by health insurance for employees participating in the health insurance scheme;

b) Pay for the medical assessment fee to determine the level of work capacity reduction in cases where the reduction is determined to be less than 5%, if the employer refers the employee for an assessment by the Medical Examination Council;

c) Fully cover medical expenses for employees who do not participate in health insurance;

3. Pay full wages to employees suffering from workplace accidents or occupational diseases who must take leave for treatment and functional recovery;

4. Compensate employees for workplace accidents that are not entirely caused by their own fault and for those with occupational diseases, with the following compensation levels:

a) At least 1.5 months' salary for employees with a 5% to 10% reduction in work capacity; for each additional 1% reduction (from 11% to 80%), an extra 0.4 months' salary is added.

b) At least 30 months' salary for employees with a work capacity reduction of 81% or more, or for the next of kin of an employee who dies due to a workplace accident or occupational disease;…"

Conditions for Receiving Workplace Accident Benefits

Article 45 of the 2015 Law on Occupational Safety and Hygiene stipulates that employees participating in occupational accident and disease insurance are entitled to workplace accident benefits if they meet the following conditions:

An employee suffers an accident under one of the following circumstances:

- At the workplace and during working hours, including when attending to necessary personal needs at the workplace or during working hours as permitted by the Labor Code and workplace regulations. This includes break time, mid-shift meals, meal allowances in kind, menstrual hygiene, showering, breastfeeding, and using the restroom;

- Outside the workplace or outside working hours while performing work as required by the employer or a person authorized in writing by the employer to manage labor directly;

- On the route between their residence and workplace or vice versa, within a reasonable time and route;

Deductible and Non-Deductible Expenses in Determining Taxable Income

According to Article 4 of Circular 96/2015/TT-BTC, which amends and supplements Article 6 of Circular 78/2014/TT-BTC (as amended and supplemented by Clause 2, Article 6 of Circular 119/2014/TT-BTC and Article 1 of Circular 151/2014/TT-BTC), except for non-deductible expenses listed in Clause 2 of this Article, enterprises are allowed to deduct all expenses if they meet the following conditions:

- The expense actually arises and is related to the production and business activities of the enterprise.

- The expense has valid invoices and supporting documents as required by law.

- If the expense includes an invoice for goods or services with a value of 20 million VND or more per transaction (including VAT), payment must be made via a non-cash payment method.

Non-cash payment methods must comply with regulations stated in legal documents on value-added tax (VAT).

Based on the above regulations, compensation payments for employees suffering from workplace accidents are considered deductible expenses if they comply with the conditions specified in Article 38 and Article 45 of the 2015 Law on Occupational Safety and Hygiene and Article 4 of Circular 96/2015/TT-BTC.

Source: thuvienphapluat