Does the New Year's lucky money given by the employer to employees incur personal income tax in Vietnam?

Does the New Year's lucky money given by the employer to employees incur personal income tax in Vietnam?

According to point e, clause 2, Article 2 of Circular 111/2013/TT-BTC, it is stipulated:

Taxable Income Items

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2. Income from wages, remuneration

Income from wages and remuneration is income received by employees from employers, including:

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e) Rewards in cash or non-cash forms in any manner, including rewards in securities, except for the following rewards:

e.1) Rewards attached to titles conferred by the State, including rewards attached to emulation titles, forms of rewards according to the provisions of the law on emulation and rewards, specifically:

e.1.1) Rewards attached to emulation titles such as National Emulation Fighter; Sector, ministry, central unions level Emulation Fighter; Local Emulation Fighter, Advanced Laborer, Advanced Fighter.

e.1.2) Rewards attached to forms of commendation.

e.1.3) Rewards attached to titles conferred by the State.

e.1.4) Rewards attached to awards from associations and organizations of political, socio-political, social, social-professional organizations at central and local levels, in accordance with their charters and the provisions of the Law on Emulation and Rewards.

e.1.5) Rewards attached to the Ho Chi Minh Prize, State Prize.

e.1.6) Rewards attached to commemorative medals, badges.

e.1.7) Rewards attached to certificates of merit, acknowledgments.

The authority to decide on commendations and the reward levels attached to these emulation titles and forms of commendation must comply with the provisions of the Law on Emulation and Rewards.

e.2) Rewards attached to national and international awards recognized by the Government of Vietnam.

e.3) Rewards for technical innovations, inventions, and discoveries recognized by competent state agencies.

e.4) Rewards for detecting and reporting law violations to competent state agencies.

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Thus, the New Year's lucky money from the employer is considered a form of reward, and this reward does not belong to the types exempted from personal income tax. Therefore, the New Year's lucky money from the employer is taxable income for personal income tax purposes.

Does the New Year's lucky money given by the employer to employees incur personal income tax in Vietnam? (Image from the Internet)

What are responsibilities of the employer in declaring and paying taxes for New Year's lucky money in Vietnam?

Article 24 of the Personal Income Tax Law 2007 amended by clause 6, Article 1 of the Amended Personal Income Tax Law 2012 stipulates the responsibilities of organizations and individuals in declaring, deducting, paying taxes, and finalizing taxes as follows:

Responsibilities of organizations and individuals paying income and responsibilities of resident taxpayers

1. The responsibility for declaring, deducting, paying taxes, and finalizing taxes is specified as follows:

a) Organizations and individuals paying income have the responsibility to declare, deduct, pay taxes into the state budget, and finalize taxes for taxable incomes paid to taxpayers;

b) Individuals with taxable income are responsible for declaring, paying taxes into the state budget, and finalizing taxes according to the law.

2. Organizations and individuals paying income must provide information about income and the taxpayer's dependents under their management according to the provisions of the law.

3. The Government of Vietnam regulates the tax deduction rate appropriate for each type of income specified in point a, clause 1 of this Article and tax finalization as specified in clause 1 of this Article.

Thus, when a employer gives New Year's lucky money to its employees, the employer is responsible for declaring, deducting, paying taxes into the state budget, and finalizing tax on this wage and salary-type income.

Is the lucky money subject to personal income tax in Vietnam?

Based on the provisions of clause 10, Article 2 of Circular 111/2013/TT-BTC regarding income from gifts subject to personal income tax as follows:

Taxable Income Items

...

10. Income from receiving gifts

Income from receiving gifts is the income of individuals received from organizations and individuals both inside and outside the country. To be specific:

a) Regarding gifts that are securities including: shares, the right to purchase shares, bonds, treasury bills, fund certificates, and other types of securities according to the Law on Securities; shares of individuals in joint-stock companies as per the Law on Enterprises.

b) Regarding gifts that are stakes in economic organizations or business establishments including: stakes in limited liability companies, cooperatives, partnerships, business cooperation contracts, individual enterprises, business establishments of individuals, stakes in associations, and legally established funds according to the law or the entire business establishment if it is a private enterprise or individual business establishment.

c) Regarding gifts that are real estate including: land use rights; land use rights with attached assets; house ownership, including future housing; infrastructure and constructions attached to land, including future constructions; land leasing rights; water body leasing rights; other incomes received from inheritance as real estate in any form; except the income from gifts as real estate guided at point d, clause 1, Article 3 of this Circular.

d) Regarding gifts that are other assets requiring registration of ownership or use rights with state management agencies such as: automobiles; motorcycles, mopeds; watercraft, including barges, canoes, tugboats, pushboats; boats, including yachts; aircraft; hunting guns, sporting guns.

Thus, the individual's income from gifts subject to personal income tax includes only gifts that are securities, stakes in economic organizations or business establishments, real estate, and other assets requiring registration of ownership or use.

The above regulation does not stipulate that income from gifts in cash must incur personal income tax. Therefore, if you receive lucky money as a gift from relatives, you are not required to pay personal income tax.