PIT on vacation (team building) expenses for employees

Issuance Basis: Circular No. 111/2013/TT-BTC dated August 15, 2013, provides guidance on the implementation of the Law on Personal Income Tax, the law amending and supplementing certain articles of the Law on Personal Income Tax, and Government Decree No. 65/2013/NĐ-CP, which details several provisions of the Law on Personal Income Tax and the law amending and supplementing certain articles of the Law on Personal Income Tax.

According to Point đ.3.2, Clause 2, Article 2 of Circular 111/2013/TT-BTC, if a company covers travel expenses for its employees and the expenses specify the names of the beneficiaries, these amounts must be included in the taxable income of the employees.

If the vacation expenses are collectively provided for a group of employees without specifying individual names, these amounts do not need to be included in the taxable income of the employees.

Additionally, Official Letter No. 51438/CTHN-TTHT of 2021 provides guidance on personal income tax policy as follows:

• In cases where a company has policies for vacation expenses, lunch allowances, and mid-shift meals for employees (with specific conditions and entitlement levels detailed in documents such as labor contracts, collective labor agreements, the financial regulations of the company, general company, or corporation, or reward regulations issued by the Chairman of the Board, General Director, or Director according to the company's financial regulations):

• Regarding vacation expenses:

If the vacation expenses paid by the company specify the individual beneficiaries, these amounts are included in the taxable income of the employees. If the expenses are collectively provided for a group of employees without specifying individual names, these amounts are not included in the taxable income of the employees.

If an individual actually receives vacation expenses from the company, these amounts are included in the taxable income of the employee as stipulated in Clause 2, Article 2 of Circular 111/2013/TT-BTC of the Ministry of Finance.

Thus, vacation (e.g. team building) expenses for employees are still subject to personal income tax if the specific conditions and entitlement levels are detailed in the labor contract, reward regulations, collective labor agreement, financial regulations, etc., and if the payment details specify the names of the beneficiaries.

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