Newsletter
CONDITIONAL DECLARATION OF TAXES PAID ON BEHALF OF FOREIGN EMPLOYEES AS SALARY EXPENSE
The Ministry of Finance (MOF) used to prohibit profit-seeking enterprises from declaring the taxes paid on behalf of their foreign employees as expenses or losses. However, in order to be in line with the practices on international assignment, the MOF issued a ruling on 12 March 2010 stated that a profit-seeking enterprise may declare the taxes paid on behalf of a foreign employee as salary expenses, provided that it can provide documentation, such as an employment contract, to prove that the taxes paid are part of the salary of the foreign employee, and that it has withheld income tax on the salary and has duly filled out a withholding tax statement. In other words, taxes paid on behalf of a foreign em-ployee not constituting part of the foreign employee's salary may not be declared as a profit-seeking enterprise's expenses or losses.