Are scholarships from 02 schools exempted from personal income tax in Vietnam?

Are scholarships from 02 schools exempted from personal income tax in Vietnam?

Based on Clause 11 Article 4 of the Law on Personal Income Tax 2007, the regulations are as follows:

Tax-Exempt Income

1. Income from the transfer of real estate between spouses; biological parents and their children; adoptive parents and their adopted children; parents-in-law and daughters-in-law; parents-in-law and sons-in-law; paternal grandparents and their grandchildren; maternal grandparents and their grandchildren; siblings.

2. Income from the transfer of residential houses, homestead land use rights, and assets attached to the homestead land of individuals, in cases where the individual owns only one residential house and homestead land.

3. Income from the value of land use rights granted to individuals by the State.

4. Income from inheritance, gifts in the form of real estate between spouses; biological parents and their children; adoptive parents and their adopted children; parents-in-law and daughters-in-law; parents-in-law and sons-in-law; paternal grandparents and their grandchildren; maternal grandparents and their grandchildren; siblings.

5. Income of households and individuals directly producing agriculture, forestry, salt-making, aquaculture, and fishing not processed into other products or only through preliminary processing.

…

11. Income from scholarships, including:

a) Scholarships received from the state budget;

b) Scholarships received from domestic and international organizations under the scholarship support programs of such organizations.

12. Income from compensation for life and non-life insurance contracts, compensation for work accidents, state compensation, and other compensation as prescribed by law.

13. Income received from charitable funds permitted or recognized by competent state authorities to be established, operating for charitable, humanitarian purposes and not for profit.

14. Income received from foreign aid for charitable, humanitarian purposes in the form of governmental and non-governmental aid approved by the competent state authority.

Therefore, one of the cases of tax exemption is income from scholarships, including those received from the state budget, and scholarships from domestic and international organizations under the scholarship support programs of such organizations.

There is no regulation restricting or prohibiting this kind of support from up to 03 schools. Hence, the principle of exemption remains applicable.

Are scholarships from 02 schools exempted from personal income tax in Vietnam? (Image from the Internet)

Is income from capital investment subject to personal income tax in Vietnam?

Based on Clause 3 Article 3 of the Law on Personal Income Tax 2007 (amended by Clause 4 Article 2 of Decree 12/2015/ND-CP) the regulations are as follows:

Taxable Income

Taxable income of individuals includes the following types of income:

….

2. Income from wages and salaries received from employers, including:

a) Salaries, wages, and amounts of similar nature received in the form of cash or non-cash.

…

3. Income from capital investment, including:

a) Loan interest income;

b) Dividend profits;

c) Income from other forms of capital investments, including investment in capital contributions by physical assets, reputation, land use rights, inventions, and patents; except income received from interest on bonds issued by the Government of Vietnam, and income after corporate income tax has been paid by private enterprises and one-member limited liability companies owned by individuals.

Therefore, according to the regulations, not only capital investment is subject to personal income tax, but also investment by physical assets, reputation, land use rights, inventions, and patents falls under taxable cases.

What incomes from business activities are subject to personal income tax in Vietnam?

According to Clause 1 Article 2 of Circular 111/2013/TT-BTC, incomes from business activities that is subject to personal income tax includes income derived from production, business activities in the following fields:

(1) Income from the production and trading of goods and services in all fields and business sectors in accordance with the law, such as: production and trading of goods; construction; transportation; food and beverage services; service businesses, including real estate leasing, land use rights, and water surfaces, and other assets.

(2) Income from independent professional activities of individuals in fields and sectors where a practice license or certificate is issued according to the provisions of the law.

(3) Income from production and business activities in agriculture, forestry, salt making, aquaculture, and fishing that do not meet the conditions for tax exemption as guided at Point e, Clause 1 Article 3 of Circular 111/2013/TT-BTC.