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The ceiling of entertainment expenses of a corporation in2020
Date: June 25, 2021
I. Introduction
This post will briefly look into the limit of entertainment expenses of a corporation in 2020.
II. Entertainment Expense
"Entertainment expense" meansentertainment expense, social expense, honorarium, or other expenses of asimilar nature, however named, spent by a domestic corporation for smoothlyconducting business with those directly or indirectly related to its business.
III. Cultural Entertainment Expenses
The interim payment system could help taxpayers by easing their tax burden which should be paid in May and thegovernment could secure tax revenue in advance.
IV. The ceiling of Corporate entertainment Expenses
Basic limit + additional limit based on amountof income + cultural entertainment expenses
1) The ceiling of general entertainmentexpenses
Existing limit |
Renewed limit |
General corporations: 12 million SMEs:24 million |
General corporations: the same SMEs: 36 million |
2) Limits based on the amount of income
Existing limit |
Renewed limit | ||||||||||||||||
|
|
* It is applied to corporations which start itsbusiness after Jan 1, 2020
2-1) Temporary expansion of the limit ofentertainment expenses
Existing system |
Current system | ||||||||
√ ceiling of deductible expenses |
√ temporary expansion of deductible expenses ★ additional ceiling of the amount of income
|
* It is applied to corporations which start itsbusiness after Mar 23, 2020
2-2) Application rate of income amountgenerated from transactions with special related party
Income amount |
Rate |
Less than 10 bil |
10 percent of application rate of general income amount |
10 bil ~50 bil | |
Above 50 bil |
3) The ceiling of cultural entertainmentexpenses
For cultural entertainment expenses,entertainment expenses should be adjusted adding the ceiling of generalentertainment expenses to that of cultural entertainment expenses.
① cultural entertainment expenses
② the ceiling of generalentertainment expenses x 20%
4) The ceiling of entertainment expenses ofcorporations whose major business is leasing service
Entertainment expenses of businesses whosemajor business is leasing service is acknowledged 50 percent of generalentertainment expenses.
5) The ceiling of entertainment expenses ofgovernment-invested institutions
In terms of government-invested institutions,70 percent of the entertainment expenses are acknowledged.
① Government-invested institutions
② Corporations invested by thegovernment-invested institutions as a largest shareholder
Government-invested institutions refers tothe ones that government makes more than 20 percent of investment.
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이전글 | Filing Non-resident Tax Returns for Income from Salary and Real-estate Rental Business | ||||
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다음글 | Allocation of Common Expenses of Foreign Corporation |