In the past 2023, I believe that each of our companies has summarized the work in 2023 in its own way, and at the same time looks forward to 2024, in this process, the annual meeting celebration must be indispensable. So what are the possible tax-related issues regarding the holding of the annual meeting? In this issue of the Voice of Finance and Taxation, let's briefly talk about the tax-related risks of the annual meeting.
1. Enterprise income tax.
Conferences and catering are the standard for almost all annual meetings; Some companies will also hold annual meetings through group travel, which involves hotel accommodation and round-trip transportation costs; Some companies will hold galas, which will involve costs such as clothing rental, stage construction, and audio equipment; Some companies will also arrange other activities such as KTV entertainment in the evening, which will involve entertainment expenses such as singing. There are various expenses of the annual meeting, so can all of them be deducted before corporate income tax, will there be tax-related risks, and how to avoid these risks?
According to Article 8 of the Enterprise Income Tax Law of the People's Republic of China, "reasonable expenses actually incurred by an enterprise in connection with the acquisition of income, including costs, expenses, taxes, losses and other expenses, are allowed to be deducted in the calculation of taxable income." "The purpose of the annual meeting is mainly to summarize the work and encourage the morale of employees to achieve the growth of income in the coming year, so it is a necessary expense in the normal production and operation activities of the enterprise, which is related to the income obtained by the enterprise and is allowed to be deducted before the enterprise income tax. At the same time, according to Article 7 of the Measures for the Administration of Pre-tax Deduction Vouchers for Enterprise Income Tax, "enterprises shall retain the relevant materials of the pre-tax deduction vouchers, including the contract agreement, the basis of expenditure, and the payment vouchers, for future reference, so as to confirm the authenticity of the pre-tax deduction vouchers." "We should pay special attention to the preparation of pre-tax deduction vouchers in accounting to prove the authenticity and reasonableness of the business, otherwise there is a risk of tax adjustment.
In the annual meeting expenditure, most of the invoices obtained are invoices for catering, accommodation, transportation, entertainment, etc., which are highly consistent with the invoices obtained for daily reception expenses. In practice, if the information attached to the voucher is not perfect, it is easy to be identified by the competent tax authorities as entertainment expenses, and the full amount cannot be deducted before the enterprise income tax, which has a greater tax-related risk. In practice, in order to improve the probative power of the voucher, special attention should be paid to the following matters for the annual meeting fee:
1.After the matters of the annual meeting are determined, a formal notice shall be issued, and the notice shall indicate the process, activities, and expenses of the annual meeting, such as whether reimbursement is allowed for rental performance costumes, and what the budget is. At the same time, the annual meeting notice should be attached to the reimbursement of annual meeting expenses, and all expenses should be reimbursed as much as possible to reflect the consistency of annual meeting expenses and processes;
2.If the conference fee is incurred, the hotel shall be required to issue a separate invoice related to the conference;
3.In the case of catering expenses, in addition to obtaining catering invoices, detailed expense documents issued by the hotel or restaurant shall also be attached as a supporting basis;
4.In the case of entertainment expenditures, in addition to obtaining invoices for the entertainment industry, detailed documents of relevant expenses issued by the first merchant shall also be attached, and the situation of the participants shall be explained;
5.It is recommended to shoot the ** of meetings, catering, entertainment and other occasions to further prove the authenticity of the business.
2. Individual income tax.
In the annual meeting activities, most companies will arrange activities, such as sending red envelopes, and the people who participate in the activities may be employees of the enterprise or guests invited by the company. The individual income tax issues involved are different depending on the recipients, but without exception, enterprises need to fulfill the obligation of withholding and paying individual income tax.
According to the relevant provisions of the Individual Income Tax Law of the People's Republic of China and its implementing regulations, the distribution of prizes or red envelopes by enterprises to external persons is "accidental income" and shall be withheld and paid at a rate of 20%; The issuance of prizes or red envelopes to internal employees belongs to the "income from wages and salaries", and shall be incorporated into the monthly salary of the month of payment and the individual income tax shall be withheld and paid according to the regulations. Therefore, in practice, enterprises should pay special attention to the distribution method of prizes or red envelopes, and comprehensively weigh different forms of tax-related risks to choose the best solution.