Constitutional Court upholds income tax on corporate welfare points

The Constitutional Court ruled that employee welfare points provided by private companies constitute taxable labor income under current laws. The justices rejected a constitutional complaint arguing that the statutory definition of wages was unconstitutionally vague.

The case centered on whether flexible benefit systems, where employees select specific perks from a pre-assigned point allowance, should be exempt from income tax. Petitioners had withheld taxes on these points between 2015 and 2019 but later sought refunds, claiming the benefits did not fit the legal criteria for compensation derived from work. After tax authorities denied their requests for correction, the companies challenged the underlying statute itself.

Critics argued that the phrase "payments of a similar nature" failed to clearly define the scope of taxable income, potentially allowing arbitrary enforcement by tax officials. They further contended that government employees receive similar welfare points without tax liability, creating an unfair disparity for workers in the private sector.

In its unanimous decision, the court found that the terms used in the Income Tax Act are sufficiently clear when interpreted alongside legislative intent and existing judicial precedents. The ruling emphasized that the law requires a connection between the provision of labor and the receipt of payment, which limits the scope of taxable income.

The justices noted that the Supreme Court has established that any economic benefit received as compensation for labor, regardless of its name or form, falls within the category of labor income.