4.1听听听听 Valuation of BIKs

Almost all emoluments paid under the contract of employment are subject to tax, including the value of benefits-in-kind (BIKs) that are provided. If an employer provides benefits to their employees, they must (Labour Code, Art 155):

1. 听

   鈥⑻� determine if the benefit is taxable

2. 听

   鈥⑻� calculate the value of the benefit

3. 听

   鈥⑻� calculate payroll deductions (if they can be allocated to the individuals)

4. 听

   鈥⑻� file an information return (see 1.3.3)

Generally, a benefit is taxable if it provides an employee an economic advantage that can be measured in money (and does not qualify as a condition of safe working, like coveralls). So, expense reimbursement will not generally be taxable. Some agreed allowances are provided for the purpose of covering an employee expense. They are also not taxable.

BIKs are valued at fair market value (ie the price that would be obtained in an open market between two individuals dealing at arm's length). This is often not what the employer has paid to provide the BIKs. When