How to do tax treatment for paid vacation?

According to the provisions of the Labor Law and the Regulations on Paid Annual Leave for Employees, employees in China can enjoy annual leave, sick leave, short-term disability, marriage leave, maternity leave, funeral leave and family leave, and enterprises should compensate employees for their absence during the statutory absence.

According to whether the paid rights and interests can be carried forward to the next period, the Accounting Standards for Enterprises No.9-Employee Remuneration divides paid leave into two categories: non-cumulative paid leave and cumulative paid leave.

Non-cumulative paid absence rights cannot be carried forward to the next period.

Accounting regulations: non-cumulative paid absences, such as marriage leave, maternity leave, funeral leave, sick leave and other paid leave rights are not deferred, paid rights cannot be carried forward to the next period, and employees' own services cannot increase the amount of benefits they can enjoy. Generally speaking, when wages and salaries payable are accumulated during absence, they are handled together. Therefore, at the end of the accounting period, it is not necessary to treat non-cumulative paid absences that enterprises do not enjoy as liabilities.

If employees give up the right to non-cumulative paid leave, the enterprise will not make any monetary compensation. If there is a certain amount of monetary compensation, a liability shall be recognized during the current compensation period and included in the current cost.

According to the tax law, the "reasonable wages and salaries" mentioned in Article 34 of the new Regulations on the Implementation of Enterprise Income Tax refers to the wages and salaries actually paid to employees by enterprises in accordance with the wage and salary system formulated by the shareholders' meeting, the board of directors, the remuneration committee or the relevant management institutions. The "total wages and salaries" mentioned in Articles 40, 46 and 42 of the Regulations on the Implementation of Enterprise Income Tax refers to the total wages and salaries actually paid by enterprises in accordance with Item (4) of Article 65 of this Notice, and the wages and salaries of state-owned enterprises shall not exceed the limits given by relevant government departments; The excess shall not be included in the total wages and salaries of the enterprise, nor shall it be deducted when calculating the taxable income of the enterprise.

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