Meal Allowances and Overtime Pay Under Product-Based Pay Schemes: PIT Treatment and CIT Deductibility
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The Ministry of Finance provided guidance on PIT and CIT treatment for meal allowances and overtime pay where employees are remunerated under a product-based (lump-sum output) pay scheme. From 01/7/2025, meal allowances that do not exceed the limit prescribed by labor law are not counted as taxable PIT income. Reasonable, documented meal allowance payments are deductible for CIT purposes. For overtime pay, the incremental portion of income paid above the normal working day rate is PIT-exempt. Product-based overtime pay is deductible for CIT if supported by full documentation (labor contracts, task assignment decisions, timesheets, payslips, payment vouchers). This guidance is based on Circular 40/2021/TT-BTC and applicable tax regulations effective from 2025.
Meal Allowances and Overtime Pay Under Product-Based Pay Schemes
Legal Basis:
- Circular No. 40/2021/TT-BTC
- Decree No. 49/2025/ND-CP dated 13/3/2025
- Circular No. 80/2021/TT-BTC
- PIT Law and CIT Law
1. Meal Allowances (from 01/7/2025)
PIT Treatment:
- Meal allowances not exceeding the limit prescribed by the Ministry of Labor, Invalids and Social Affairs are not counted as PIT taxable income
- Amounts above the limit are taxable
- Applies to overtime meal allowances as well, provided they do not exceed the prescribed limit
CIT Treatment:
- Meal allowances are deductible for CIT if:
- Supported by valid documentation
- The amount is consistent with the company's financial regulations
- Recorded in labor contracts or collective labor agreements
2. Overtime Income Under Product-Based Pay
PIT Treatment:
- The portion of overtime income paid at a higher rate than the normal working day is PIT-exempt
- Method: compare the per-unit rate for normal hours vs. overtime hours; the incremental difference is exempt
CIT Treatment:
- Product-based overtime wages are deductible CIT expenses if supported by:
- Labor contract
- Product-based task assignment decision for overtime
- Timesheets/completed product logs
- Payslips
- Payment vouchers (bank transfer required for amounts VND 20 million or more per transaction)