First, the answer is yes. It is legal for enterprises to pay wages in cash, but no matter what form they pay wages, they should pay taxes and participate in social insurance. Article 4 of the Provisional Regulations on Wage Payment stipulates that "wages shall be paid in legal tender". As RMB is the legal tender, it is in full compliance with the law for enterprises to pay wages in cash.
Even if the People's Bank of China doesn't change the documents at present, wages can still be paid in cash. This problem can be completely solved through the information exchange between the Social Security Bureau and the tax bureau.
Paying wages in cash, on the one hand, is convenient for enterprises to operate, on the other hand, employees are satisfied with receiving a full bundle of cash, but this form has brought great difficulties to tax inspection. Now is the era of mobile internet payment, and China is vigorously promoting non-cash settlement and fully implementing the mode of bank paying wages. If the enterprise is not in a remote area and obviously has basic households, there will be certain tax risks if it is necessary to pay wages in cash.
What are the tax risks of paying wages in cash?
If an enterprise needs to pay wages in cash, it should pay attention to the following issues to avoid tax risks:
1. The wages paid by enterprises in cash should also be included in the base of social security, because according to the requirements of the labor law, enterprises must withdraw social security based on the wages paid to employees.
2. The part of wages paid by enterprises in cash shall be accounted for in accordance with regulations, included in the total wages of employees, and personal income tax shall be withheld and remitted on the basis of the total wages of employees.
3. The wages paid by enterprises in cash should be deducted according to the facts before the enterprise income tax, and two conditions need to be met:
The wages paid are within a reasonable range.
(2) Can provide effective certificates such as employee's salary signature, enterprise's documents on salary system, and personal income tax withholding certificate.