Upon dismissal of an employee, by agreement of the parties, monetary compensation in the amount of 3 average monthly wages is paid. Are these payments subject to personal income tax and insurance premiums?


In accordance with clause 5 of the Accounting Regulations “Expenses of the Organization” PBU 10/99, approved by Order of the Ministry of Finance of Russia dated May 6, 1999 No. 33n, the organization’s expenses for the payment of severance pay upon dismissal by agreement of the parties are expenses for ordinary activities. Such expenses are recognized during the period of accrual of severance pay, regardless of the time of actual payment of funds in the accrued amount (clauses 6, 16, 18 of PBU 10/99).

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