Is the expense of purchasing health insurance for the employee’s relatives included in deductible expenses when calculating corporate income tax?

Can companies buy health insurance for employees’ relatives?

Can the company buy health insurance for employees’ relatives? Pursuant to Article 34 of the Law on Insurance Business 2022 as follows:

Insurable benefits of life insurance contracts and health insurance contracts

1. The insurance buyer has insurable interests towards the following people:

a) The insurance buyer himself;

b) The insurance buyer’s wife, husband, father, mother, children;

c) Brother, sister, younger sibling or other person having a nurturing and supporting relationship with the policy buyer insurance;

d) A person who has a financial interest or labor relationship with the insurance buyer;

đ) The insured person agrees in writing to the insurance buyer to buy health insurance for him/her.

2. At the time of entering into an insurance contract, the insurance buyer must have insurable interests.

For example, a company can buy life insurance for an employee’s relatives if that person agrees in writing for the insurance buyer to buy health insurance for him or her.

Is the cost of purchasing health insurance for employees’ relatives included in deductible expenses when calculating corporate income tax?

Whether the cost of purchasing insurance for employees’ relatives is included in deductible expenses when calculating corporate income tax, based on Article 6 of Circular 78/2014/TT-BTC, amended by Article 4 of Circular 96/2015/TT-BTC, amended by Clause 4, Article 3 of Circular 25/2018/TT-BTC as follows:

Deductible and non-deductible expenses when determining taxable income

1. Except for non-deductible expenses mentioned in Clause 2 of this Article, enterprises can deduct all expenses if they fully meet the following conditions:

a) Actual expenses incurred related to production and business activities of the enterprise.

b) Expenses with sufficient legal invoices and documents according to the provisions of law.

c) Expenditures if there are invoices for each purchase of goods and services worth 20 million VND or more (price includes VAT) must have non-cash payment documents when paying.

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2. Expenses that are not deductible when determining taxable income include:

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2.30. Expenditures that do not correspond to taxable revenue, except for the following expenses:

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– Welfare expenses paid directly to employees such as: expenses for funerals and weddings of the employee and his/her family; vacation expenses, treatment support expenses; Expenses to support additional learning knowledge at training establishments; Expenses to support families of workers affected by natural disasters, enemy sabotage, accidents, and illnesses; Expenses for rewarding employees’ children with good academic achievements; Support for travel expenses on holidays and New Year for employees; expenses for accident insurance, health insurance, and other voluntary insurance for employees (except expenses for purchasing life insurance for employees and voluntary retirement insurance for employees guided at Point 2.11 of this Article) and other welfare expenses. The total amount of welfare expenses mentioned above must not exceed 01 month’s actual average salary made in the enterprise’s tax year.

At the same time, in Official Dispatch No. 9294/CT-TTHT of 2015 on tax policy on insurance product purchase fees issued by the Ho Chi Minh City Tax Department.

Welfare expenses for employees themselves, if they meet the conditions to be included in deductible expenses and the total welfare expenses do not exceed 1 month of the Company’s actual average salary during the year, will be included in deductible expenses when determining income subject to corporate income tax. Expenses for purchasing insurance for employees’ relatives are not included in deductible expenses when calculating corporate income tax.

Thus, the cost of purchasing insurance for employees’ relatives is not included in deductible expenses when calculating corporate income tax.

How long does it take to consider joining health insurance?

According to Article 35 of the Law on Insurance Business 2022, for health insurance contracts with a term of more than 1 year, within 21 days from the date of receiving the insurance contract, the insurance buyer has the right to refuse to continue participating in insurance.

In case the insurance buyer refuses to continue participating in health insurance, the insurance contract will be canceled, the insurance buyer will be refunded the premium paid after deducting reasonable expenses (if any) as agreed in the insurance contract; Insurance companies do not have to compensate or pay insurance when an insured event occurs.