Employee benefits and subsidies are paid in the form of "actual reimbursement", which may have the risk of missing individual income tax.
The "actual reimbursement" model should be for the expenses related to the production and operation of the enterprise, and the employee shall be reimbursed within the specified limit after advancing funds in the early stage and obtaining an invoice with the name of the company. Enterprises shall not disguise the welfare subsidies issued to employees related to their positions and employment as reimbursement of business expenses.
At the same time, the Individual Income Tax Law and relevant provisions further clarify that the welfare subsidies issued by enterprises to employees related to their positions and employment, whether in the form of cash, in-kind or actual reimbursement, shall be included in the income items of wages and salaries for taxation in accordance with the principle of substance over form.
Reimbursement means reimbursement according to the actual expenses incurred, that is, the amount reimbursed is exactly the same as the actual expenses incurred. This reimbursement method requires the reimburser to provide accurate expense vouchers, such as invoices, receipts, etc., to prove the authenticity and legitimacy of the expense. Reimbursement according to the actual means that the reimbursement is made according to a reasonable expense standard, that is, there may be a certain difference between the amount of reimbursement and the actual expenses incurred. This reimbursement method does not require the reimburser to provide specific expense vouchers, but reimburses according to the expense standards stipulated by the company or organization.
In general, the requirements for reimbursement are more stringent, requiring the reimburser to provide accurate expense vouchersHowever, reimbursement based on facts is relatively flexible, and only needs to be reimbursed according to a reasonable expense standard. Which method to use is usually determined by the management regulations of the company or organization.