How much is the Tet bonus for meeting KPIs in Vietnam? Does the KPI bonus subject to personal income tax in Vietnam?

How much is the Tet bonus for meeting KPIs in Vietnam?

KPI (Key Performance Indicator) is a core performance metric used to assess the effectiveness of an individual, team, or organization in achieving set goals. KPIs help track progress, determine success levels, and make improvement decisions based on specific data.

The Tet bonus is an amount of money or asset that companies and businesses give to employees at the end of the year, often before the Tết Nguyên Đán holiday. It is considered a reward to acknowledge employees' contributions throughout the year.

Accordingly, the amount of Tet bonus for employees who meet KPIs can be based on the following regulation:

According to Article 104 of the Labor Code 2019 regarding bonuses:

Bonus

1. A bonus is a sum of money, assets, or other forms awarded by the employer to the employee based on the production, business results, and the level of task completion by the employee.

2. The bonus regulations are determined by the employer and publicly announced at the workplace after consulting with the employee representative organization at the establishment, where such an organization exists.

The law does not mandate that employers must give a Tet bonus to employees. However, based on production and business results and the level of task completion of the employee, the company may consider awarding a Tet bonus.

Therefore, whether an employee meeting KPIs receives a Tet bonus or how much the bonus is depends on the company’s decision.

How much is the Tet bonus for meeting KPIs in Vietnam? Does the KPI bonus subject to personal income tax in Vietnam? (Image from Internet)

Does the KPI bonus subject to personal income tax in Vietnam?

According to Point e, Clause 2, Article 2 of Circular 111/2013/TT-BTC, regulations on types of bonuses not subject to personal income tax are as follows:

Taxable Income

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2. Income from salaries and wages

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e) Bonuses in cash or non-cash in any form, including stock-based bonuses, except for the following bonuses:

e.1) Bonuses that accompany titles awarded by the State, including bonuses accompanying emulation titles, and commendations as per legal regulations on emulation and commendation, specifically:

e.1.1) Bonuses accompanying emulation titles such as National Emulation Soldier; Emulation Soldiers at the ministry, sector, central organization, province, city under central authority; basic-level emulation soldiers, Advanced Worker, Advanced Fighter.

e.1.2) Bonuses accompanying commendation forms.

e.1.3) Bonuses with titles awarded by the State.

e.1.4) Bonuses accompanying awards given by associations, organizations of political, socio-political, social, and social-professional organizations at central and local levels in accordance with that organization’s charter and with the provisions of the Law on Emulation and Commendation.

e.1.5) Bonuses accompanying the Ho Chi Minh award, State award.

e.1.6) Bonuses with commemorative medals, insignia.

e.1.7) Bonuses accompanying Certificates of Merit, Commendation Letters.

The authority to issue commendation decisions, the level of bonuses accompanying emulation titles, and commendation forms must comply with the Law on Emulation and Commendation.

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

e.3) Bonuses for technical improvements, inventions, and innovations recognized by competent State agencies.

e.4) Bonuses for detecting and reporting legal violations to competent State agencies.

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Thus, according to the above regulations, the KPI bonus does not belong to the type of bonuses exempt from personal income tax, so KPI bonuses for employees must still be subject to personal income tax.

What types of income are exempt from personal income tax in Vietnam?

According to Article 4 of the Personal Income Tax Law 2007 (supplemented by Clause 3, Article 2 of the Law Amending Tax Laws 2014 and Clause 2, Article 1 of the Amended Personal Income Tax Law 2012), income exempt from personal income tax is as follows:

- Income from the transfer of real estate between spouses; 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 transfer of residential houses, homestead land use rights, and assets attached to homestead land of individuals in cases where individuals have only one home, homestead land.

- Income from the transfer of land use rights allocated by the State to individuals.

- Income from inheritance or gifts of real estate between spouses; biological parents and children; adoptive parents and adopted children; parents-in-law and daughters-in-law; parents-in-law and sons-in-law; grandparents and grandchildren; siblings.

- Income of households and individuals directly engaged in agricultural, forestry production, salt-making, aquaculture, and fishing that has not been processed into other products or only undergone preliminary processing.

- Income from the conversion of agricultural land allocated by the State to households and individuals for production.

- Income from interest on savings deposits at credit institutions, interest from life insurance contracts.

- Income from remittances.

- Salary for night work or overtime wage paid higher than that for working during the day or regular working hours as per the law.

- Retirement pensions paid by the Social Insurance Fund; pensions paid monthly by a voluntary pension fund.

- Income from scholarships, including:

+ Scholarships granted from the state budget;

+ Scholarships awarded by domestic and international organizations under their educational promotion support programs.

- Income from compensation for life insurance, non-life insurance, accident compensation, state compensation, and other compensations as per the law.

- Income received from charity funds permitted or recognized by competent state authorities that operate for charitable, humanitarian purposes not intended for profit.

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

- Income from salaries or wages of Vietnamese crew members working for foreign ships or Vietnamese ships in international transportation.

- Income from primary ship owners, ship users, and ship crew members from the provision of goods and services directly serving offshore fishing activities.