Is personal income tax required when winning a prize of 20 million VND but paid in two installments in Vietnam?
Is personal income tax required when winning a prize of 20 million VND but paid in two installments in Vietnam?
Based on Clause 1, Article 15 of Circular 111/2013/TT-BTC, it is stipulated as follows:
Basis for tax calculation for income from prizes
The basis for tax calculation for income from prizes is the taxable income and tax rate.
1. Taxable income
Taxable income from prizes is the value of the prize exceeding 10 million VND that the taxpayer receives for each winning occurrence, regardless of the number of times the prize money is received.
In the case of a prize having multiple winners, the taxable income is divided among the prize recipients. The winners must present legal evidence. In the absence of legal evidence, the prize income is calculated for an individual. If an individual wins multiple prizes in one game, the taxable income is calculated based on the total value of all the prizes.
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In reference to the above regulations, the basis for tax calculation for income from prizes relates to taxable income being the prize value exceeding 10 million VND received for each winning occurrence, regardless of the number of times the prize money is received.
Thus, it can be understood that when winning a prize of 20 million VND, even though it is received in two installments, the winner is still required to pay Personal Income Tax on the total amount of 20 million VND.
Is personal income tax required when winning a prize of 20 million VND but paid in two installments in Vietnam? (Image from the Internet)
When is the time for determining taxable income for a prize winning of 20 million VND in Vietnam?
Based on Clause 3, Article 23 of Circular 111/2013/TT-BTC, it is stipulated as follows:
For income from prizes, inheritance, gifts
1. Personal income tax on income from prizes, inheritance, or gifts of a non-resident individual is determined by taxable income based on the guidance in Clause 2 of this Article times (×) the tax rate of 10%.
2. Taxable income
a) Taxable income from prizes for non-residents is the prize value exceeding 10 million VND for each winning occurrence in Vietnam.
The income from foreign prizes is determined as for resident individuals, following the guidance in Clause 1, Article 15 of this Circular.
b) Taxable income from inheritance or gifts for non-residents is the asset value exceeding 10 million VND for each occasion of income generation received in Vietnam.
Income from inheritance or gifts for non-residents is determined as for resident individuals, following the guidance in Clause 1, Article 16 of this Circular.
3. Timing for determining taxable income
a) For income from prizes: The timing for determining taxable income is the time when the organization or individual in Vietnam pays the prize money to the non-resident individual.
b) For income from inheritance: The timing for determining taxable income is when the individual completes the registration procedures for ownership or usage rights of the asset in Vietnam.
c) For income from gifts: The timing for determining taxable income is when the individual completes the registration procedures for ownership or usage rights of the asset in Vietnam.
Accordingly, regarding the above regulations, the timing for determining taxable income for a prize winning of 20 million VND is when the prize money is paid.
Is there a tax deduction for income from prizes in Vietnam?
Based on Point g, Clause 1, Article 25 of Circular 111/2013/TT-BTC, it is stipulated as follows:
Tax deduction and tax deduction certificates
1. Tax deduction
Tax deduction involves the organization or individual paying the income, deducting the tax payable from the payer's income before paying the income. Specifically:
a) Income of non-residents
The organization or individual paying taxable income to non-residents must deduct personal income tax before paying the income. The amount to be deducted is determined according to the guidelines in Chapter III (from Article 17 to Article 23) of this Circular.
b) Income from salaries and wages
b.1) For residents signing labor contracts of three (03) months or more, the organization or individual paying the income applies tax deduction according to the progressive tax rate, even in cases where individuals sign contracts of three (03) months or more at multiple places.
b.2) For residents signing labor contracts of three (03) months or more but resigning before the labor contract ends, the organization or individual paying the income still applies tax deduction according to the progressive tax rate.
b.3) For foreigners working in Vietnam, the organization or individual paying the income bases the tax deduction on the taxpayer's duration of work in Vietnam listed on the Contract or dispatch document to Vietnam, either according to the progressive tax rate (for individuals in Vietnam for 183 days in the tax year) or the flat rate (for individuals in Vietnam for less than 183 days in the tax year).
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g) Income from prizes
The organization paying the prize money has the responsibility to deduct personal income tax before paying the prize to the winner. The amount to be deducted is determined according to the guideline in Article 15 of this Circular.
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Thus, income from prizes will be subject to Personal Income Tax deduction, and the deduction will be implemented before the prize money is paid to the winner.
