Tax Exemption-Salary and Fringe Benefit

Tax Exemption for Tax on Salary and Fringe Benefit

Some expenses may be benefits for company or law is required for tax exemption.

Below expenses are exempt Tax on Salary and Fringe Benefit Tax:

• -Reimbursement of employee-related expense
• -Some travel allowance
• -NSSF (National Social Security Fund) or social welfare fund contributions are required by law
• -Infant allowance or nursery expenses in accordance with the Labour Law
• -Meal allowances provided to all employees.
• -Salaries of certain employees of approved diplomatic, international and aid organizations.
• -Salaries of non-resident employees subject to certain conditions.
• -Some redundancy payment
• -Accommodation support in accordance with the Labour Law. For example, Company sent its staff to work in the provinces. Company has a policy to provide its staff a mission allowance (including travel,meals and accommodation) for such assignments. If flat allowances provided to employees for mission and travel expenses that are comparable to the government allowances provided for similar work are exempt from ToS and ToFB.
• -Salaries of members of the National Assembly and Senate
• -Some uniform entitlements
• -Health or life insurance premiums provided to all employees. Life and health insurance premiums provided to employees are exempt from ToFB if the same benefits are provided equally to all employees regardless of employment or job classification.

Example 1

XYZ Company provided the following benefits for Mr.B, employee during October:

• – Basic Salary of $2,000.
• -Provided $200 for entertainment at holiday.
• -Provided meal allowances of $90, but the meal allowances provided to all employees.

Required:

Which one of expenses above is tax: tax on salary, tax on fringe benefit and exempt Tax on Salary and Fringe Benefit Tax.

Answer 

• – Amount of $2,000 under tax on salary.
• -Amount of $200 under tax on fringe benefit.
• -Amount of $90 is exemption from tax on salary and fringe benefit because meal allowances provided to all employees.