Are lottery winnings subject to personal income tax in Vietnam? How to calculate personal income tax payable on lottery winnings in Vietnam?

Are lottery winnings subject to personal income tax in Vietnam?

Based on Clause 6, Article 3 of the Personal Income Tax Law 2007 as amended by Clause 2, Article 2 of the Law on Amendments to Tax Laws 2014, taxable income is regulated as follows:

Taxable Income

Taxable income for personal income tax includes the following types of income, except for income exempt from tax as stipulated in Article 4 of this Law:

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6. Income from winning prizes, including:

a) Lottery winnings;

b) Prizes won in promotional schemes;

c) Winnings from betting;

d) Prizes won in games, competitions with prizes, and other forms of prize-winning.

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Additionally, point a, Clause 6, Article 2 of Circular 111/2013/TT-BTC provides guidance on taxable income as follows:

Taxable Income Items

According to Article 3 of the Personal Income Tax Law and Article 3 of Decree No. 65/2013/ND-CP, taxable income includes:

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6. Income from winning prizes

Income from winning prizes refers to any money or objects received by individuals in the following forms:

a) Winnings from lotteries paid by lottery companies.

b) Winnings from promotional activities when participating in buying and selling goods and services as per the Commercial Law.

c) Winnings from betting forms that are legally permitted.

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From the above regulations, it can be seen that income from lottery winnings paid by lottery companies is taxable income, which means lottery winnings are subject to personal income tax.

Are lottery winnings subject to personal income tax in Vietnam? How to calculate personal income tax payable on lottery winnings in Vietnam? (Image from the Internet)

How to calculate personal income tax for Vietnamese residents who win the lottery?

According to Article 15 of Circular 111/2013/TT-BTC, which regulates the basis for tax calculation on prize-winning income as follows:

The basis for tax calculation for income from winning prizes is taxable income and tax rate.

(1) Taxable Income

Taxable income from prizes is the portion of the prize value exceeding 10 million VND that the taxpayer receives each time they win, regardless of the number of times they receive the prize money.

In the case of a prize with multiple winners, the taxable income is divided among the recipients. Those who claim a share of the prize must provide legal documentation as evidence. If no legal documentation is provided, the prize income is attributed to a single individual. In cases where an individual wins multiple prizes in a single game, the taxable income is calculated based on the total value of all prizes.

For lottery winnings, the taxable income is the total prize value exceeding 10 million VND per lottery ticket received in a single draw, without any deductions.

(2) Tax Rate

The personal income tax rate for income from prizes, specifically for lottery winnings, is applied according to the Full Tax Rate Table with a tax rate of 10%.

(3) Tax Calculation Formula

Thus, in the case of winning the lottery, for each prize-winning ticket, the individual must pay personal income tax calculated as follows: (Winning Amount - 10 million) x 10%.

Example: For a special lottery prize of 2 billion VND, for one ticket, the personal income tax payable is: (2,000,000,000 - 10,000,000) x 10% = 199,000,000 VND (199 million VND).

(4) Time of Determining Taxable Income

The time of determining taxable income for winnings is when the organization or individual pays the prize to the winner.

How to calculate personal income tax for Vietnamese residents who win the lottery?

According to Article 23 of Circular 111/2013/TT-BTC, personal income tax for lottery winnings for non-residents is calculated as follows:

Personal income tax for income from winning prizes (lottery) for non-residents is determined by multiplying the taxable income by the tax rate of 10%.

In this context, the taxable income from prizes is the portion of the prize value exceeding 10 million VND for each win in Vietnam.

Income from prizes for non-residents is determined in the same manner as for residents as guided in Clause 1, Article 15 of Circular 111/2013/TT-BTC.

Furthermore, the time of determining taxable income for non-residents is when the organization or individual in Vietnam pays the prize money to the non-resident.

Who is responsible for withholding personal income tax when winning the lottery in Vietnam?

Based on point g, Clause 1, Article 25 of Circular 111/2013/TT-BTC, it is stipulated as follows:

Tax Deductions and Tax Deduction Receipts

1. Tax deduction

Tax deduction is the responsibility of the organization or individual paying the income to withhold the tax from the taxpayer's income before payment. Specifically:

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g) Income from winning prizes

The organization paying the prize money is responsible for withholding personal income tax before paying the prize to the prize winner. The deducted tax is determined according to the guidance in Article 15 of this Circular.

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Additionally, Clause 1, Article 16 of Decree 30/2007/ND-CP provides that:

Prize Payment Implementation

1. The lottery business enterprise is responsible for fully paying the prize value to winning customers according to the announced terms of participation.

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As such, the lottery company has the responsibility to withhold personal income tax before paying the prize to the winning individual.