Is it safe to pay your phone bill using your corporate bank account? Way to Avoid potential risks.

 

1.Welfare expense Vs Employee's Salary

 

"Welfare expense" refers to money that a company spends on employee benefits such as meals, snacks, or company dinners. "Salary" encompasses an employee's basic pay and any financial benefits they receive.

To determine whether an employee's phone bill payment should be included as part of their salary or welfare expense, it's important to clarify whether it is a part of their basic pay or a company-provided benefit.

If the phone bill payment is considered part of the employee's salary, even if it is paid for by the company through a corporate bank account, it should be included in the employee's salary details. This means the employee's salary will increase, and they will be required to pay taxes on the phone bill payment.

On the other hand, if the phone bill payment is considered a benefit or welfare expense, then it does not need to be added to the employee's salary, and they will not be required to pay taxes on it.

To determine which category the phone bill payment falls under, it's important to refer to the Income Tax Article, which defines "salary" as including an employee's pay and benefits. 

Income tax act

 

This definition can be somewhat abstract and comprehensive, so it's essential to clarify the nature of the payment in question.

 

2.Criterion: Common Expense or Not

 

There are no specific criteria to determine whether an expense is considered welfare expense or not. Generally, if an expense benefits all employees and cannot be separated to benefit only specific employees, it can be considered welfare expense.

For example, corporate tax laws often list welfare expenses as activities or dining that benefit all employees.

These types of expenses are usually considered welfare benefits.

 

3.The expense could result in an increase in both corporate and employee taxes.

When some expense is salary, but if your corporate accounted as welfare expense and didn't included it to employees's salary than NTS(Korea National tax service) might rasie a claim about it and your corporate's welfare expense might denied(that means you should pay more taxes than you already paid) and your employee might pay taxes for the benefit that got but didn't inlcuded to their salary.

 

it's just not phone bill, it could be rent, car lease or other things.

so importance bookkeeping is very important to operate you business in Korea well!

 

 

 

 
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