Are the 2025 Tet bonus in kind subject to personal income tax in Vietnam?

Are the 2025 Tet bonus in kind subject to personal income tax in Vietnam?

Point e, Clause 2, Article 2 of Circular 111/2013/TT-BTC stipulates that bonuses in wages or salaries will not be subject to personal income tax:

Taxable Incomes

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2. Income from wages and salaries

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e) Bonuses in cash or non-cash forms in any manner***, including bonuses in securities, except for the following bonuses:*

e.1) Bonuses accompanied by titles conferred by the State, including bonuses with competition titles, reward forms according to the law on emulation and commendation, specifically:

e.1.1) Bonuses accompanied by emulation titles such as National Emulation Soldier; Ministry, sector, central union, province, and city-level Emulation Soldier; grassroots Emulation Soldier, Excellent Worker, Advanced Soldier.

e.1.2) Bonuses accompanied by forms of commendation.

e.1.3) Bonuses accompanied by titles conferred by the State.

e.1.4) Bonuses associated with awards presented by organizations such as political organizations, socio-political organizations, social organizations, and social-professional organizations at the central and local levels conforming to their regulations and the Law on Emulation and Commendation.

e.1.5) Bonuses associated with the Ho Chi Minh Award and State Award.

e.1.6) Bonuses associated with Commemorative Medals and Badges.

e.1.7) Bonuses associated with Certificates of Merit and Commendation Certificates.

The authority to make commendation decisions, the bonus levels attached to the emulation titles, and commendation forms above must comply with the Law on Emulation and Commendation.

e.2) Bonuses associated with national and international awards recognized by the Government of Vietnam.

e.3) Bonuses related to technical improvements, inventions, and innovations recognized by competent State authorities.

e.4) Rewards for discovering and reporting legal violations to competent State authorities.

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According to the above regulations, bonuses in cash or non-cash forms in any manner, if not falling under the cases specified in Point e, Clause 2, Article 2 of Circular 111/2013/TT-BTC, are subject to personal income tax.

Thus, employees receiving Tet 2025 bonuses as company products must still pay personal income tax if the value of the bonus reaches the taxable level.

Are the 2025 Tet bonus in kind subject to personal income tax in Vietnam? (Image from Internet)

Which entities are personal income taxpayers in Vietnam?

Based on Article 2 of the Personal Income Tax Law 2007, the subjects required to pay personal income tax are specified as follows:

Subjects required to pay personal income tax include resident individuals with taxable incomes specified in Article 3 of the Personal Income Tax Law 2007 arising inside and outside the territory of Vietnam and non-resident individuals with taxable incomes specified in Article 3 of the Personal Income Tax Law 2007 arising within the territory of Vietnam.

A resident individual is one who meets one of the following conditions:

- Being present in Vietnam for 183 days or more during a calendar year or 12 consecutive months from the first day of presence in Vietnam;

- Having a regular place of residence in Vietnam, including a permanent residence registration or a rented house in Vietnam according to a lease contract with a term.

A non-resident individual does not meet the conditions prescribed in Clause 2 of the Personal Income Tax Law 2007

What incomes are exempt from personal income tax in Vietnam?

According to Clause 1, Article 3 of Circular 111/2013/TT-BTC (supplemented by Clauses 4 and 5, Article 12 of Circular 92/2015/TT-BTC), the following incomes are exempt from tax:

- Income from the transfer of real estate (including future houses, future construction works under the law on real estate business) between husband and wife; biological parents and children; adoptive parents and adopted children; parents-in-law and daughters-in-law; parents-in-law and sons-in-law; paternal grandparents and grandchildren; maternal grandparents and grandchildren; and siblings.

Real estate (including future houses, future construction works under real estate business law) formed during the marriage considered common property of the husband and wife, when divided upon divorce according to the agreement or court's decision, is tax-exempt.

- Income from the transfer of houses, residential land use rights, and assets associated with residential land where the transferor has only one house, residential land use right in Vietnam.

- Income from the value of land use rights allocated by the State to individuals without land payment or with reduced land levy under the law.

Individuals exempt or reduced from land levy when allocated land, if transferring the land area exempt or reduced from land levy, must declare and pay tax on income from the transfer of real estate as guided in Article 12 of Circular 111/2013/TT-BTC.

- Income from inheritance or gifts being real estate (including future houses and construction works under real estate business law) between: husband and wife; biological parents and children; adoptive parents and adopted children; parents-in-law and daughters-in-law; parents-in-law and sons-in-law; paternal grandparents and grandchildren; maternal grandparents and grandchildren; siblings.

- Income from the conversion of agricultural land to rationalize agricultural production without changing the land use purpose for households and individuals directly engaged in agricultural production, as allocated by the State for production.

- Income of households or individuals directly involved in agricultural production, forestry, salt production, aquaculture, and catching unprocessed or simply processed aquatic products not converted into other products.

- Income from interest on deposits at credit institutions, foreign bank branches, interest from life insurance contracts; income from interest on bonds of the Government of Vietnam.

- Income from remittances exempt from tax is the amount received from abroad by individuals sent by relatives who are overseas Vietnamese, Vietnamese laborers, personnel, or students working, or studying abroad sent back home.

If individuals receive remittances from foreigners sent back, complying with the regulations on encouraging remittances home by the State Bank of Vietnam, they are also exempt from tax as prescribed at this point.

The basis for determining exempt income at this point includes documents proving the source of money received from abroad and any payment documents by organizations paying on behalf (if any).

- Income from wages and salaries for night work, overtime paid higher than regular daytime work according to the Labor Code.

- Retirement pensions paid by the Social Insurance Fund according to the Social Insurance Law; monthly retirement pensions from a voluntary pension fund.

Individuals residing and working in Vietnam are exempt from tax on pensions paid from abroad.

- Income from scholarships.

- Income from compensation for life insurance, non-life insurance, health insurance contracts; compensation for labor accidents; compensation, support according to law on compensation, support, resettlement; state compensation and other compensation according to law.

- Income received from charitable funds established or recognized by competent State authorities and operating for charitable, humanitarian, or educational promotion purposes without profit.

- Income received from foreign aid for charitable and humanitarian purposes in the form of the Government of Vietnam and non-the Government of Vietnam approved by competent State authorities.

The basis for determining exempt income at this point is the document from competent State authorities approving the receipt of aid.

- Income from the salaries and wages of Vietnamese seamen received for working for foreign shipping lines or Vietnamese shipping lines engaged in international transportation.

- Income of individuals who are ship owners, individuals with the right to use the ship, and individuals working on ships obtained from providing goods and services directly serving offshore fishing activities.