The Interpretation of the Regulations on the Implementation of the Enterprise Income Tax Law explains Article 40 of the Regulations: "In order to achieve fair tax burden, the Enterprise Income Tax Law unifies the pre-tax deduction policies of domestic and foreign-funded enterprises, including the pre-tax deduction policies of employee welfare funds.

This article further clarifies that the employee welfare expenses of all taxpayers, including domestic and foreign-funded enterprises, do not exceed 14% of the total wages and salaries and are allowed to be deducted. Although the deduction ratio is consistent with the original domestic and foreign tax law, the "taxable salary" as the deduction benchmark is changed to "total wages and salaries", which actually increases the deduction limit.

The total wages and salaries here shall refer to the total wages and salaries paid by the enterprise before tax according to the relevant provisions of document No.3 of the State Administration of Taxation [2009].

According to Article 2 of Announcement on Pre-tax Deduction of Wages and Salaries of Enterprises and Employee Welfare Expenses (People's Republic of China (PRC) State Taxation Administration of The People's Republic of China Announcement No.34, 20 15), "The annual wages and salaries actually paid by enterprises to employees before the end of annual settlement are allowed to be deducted according to regulations in the year of final settlement".

Extended data

According to Article 4 of the Constitution of Total Wages in China, total wages are composed of hourly wages, piecework wages, bonuses, allowances and subsidies, overtime wages and wages paid under special circumstances, as follows:

1. hourly wage: refers to the labor remuneration paid to individuals according to the hourly wage standard (including regional living allowance) and working hours.

2. Piece rate: refers to the labor remuneration paid by piece rate for the completed work.

3. Bonus: refers to the excess labor remuneration paid to employees and the labor remuneration for increasing income and reducing expenditure.

4. Allowance and subsidy: refers to the allowance paid to employees for special reasons such as special or extra labor consumption, and the price subsidy paid to employees to ensure that the salary level of employees is not affected by prices.

5. Overtime and overtime pay: refers to overtime pay and overtime pay paid according to regulations.

6. Wages paid under special circumstances: refers to wages that must be paid under special circumstances, such as family leave and maternity leave.

Baidu encyclopedia-total wages