Is prize money associated with the titles awarded by the State of Vietnam subject to personal income tax?

Is prize money associated with the titles awarded by the State of Vietnam subject to personal income tax?

Based on point e, clause 2, Article 2 of Circular 111/2013/TT-BTC which stipulates that rewards in cash or not in cash in any form, including stock bonuses, except for the following bonuses:

Item (1) Bonuses accompanying titles awarded by the State, including bonuses accompanying emulation titles and reward forms as prescribed by law on emulation and commendation, specifically:

- Bonuses accompanying emulation titles such as National Emulation Soldier; Emulation Soldier of Ministry, sector, central agencies, provinces, and centrally-run cities; Basic Emulation Soldier, Advanced Labor, Advanced Soldier.

- Bonuses accompanying forms of commendation.

- Bonuses accompanying titles awarded by the State.

- Bonuses accompanying awards granted by Associations, organizations belonging to Political organizations, Political-Social organizations, Social organizations, and Social-Professional organizations at the central and local levels, in accordance with the charter of those organizations and in accordance with the Law on Emulation and Commendation.

- Bonuses accompanying the Ho Chi Minh Award, State Award.

- Bonuses accompanying Commemorative Medals, Badges.

- Bonuses accompanying Certificates of Merit, Commendation Certificates.

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

Item (2) Bonuses accompanying national and international awards recognized by the Vietnamese State.

Item (3) Bonuses for technical improvements, inventions, and innovations recognized by competent State authorities.

Item (4) Bonuses for detecting and reporting legal violations to competent State authorities.

Thus, according to the above regulation, the bonus accompanying a national award is among the bonuses not subject to personal income tax.

What 4 types of bonuses are exempted from personal income tax in Vietnam? (Image from the Internet)

What types of bonuses are exempted from personal income tax in Vietnam?

Based on Article 4 of the Personal Income Tax Law 2007 as amended by clause 2, Article 1 of the Amendment to the Personal Income Tax Law 2012 and supplemented by clause 3, Article 2 of the Law on Amendments to Tax Laws 2014, the following are exempt from personal income tax:

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

- Income from the transfer of a house, rights to use homestead land, and assets attached to homestead land in case the individual has only one house, one homestead land.

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

- Income from inheritance, gift of real estate between spouses; biological parents to biological children; adoptive parents to adopted children; parents-in-law to daughters-in-law; parents-in-law to sons-in-law; paternal grandparents to grandchildren; maternal grandparents to grandchildren; between siblings.

- Income of households, individuals directly producing agriculture, forestry, salt making, or aquaculture, fishing unprocessed into other products or just through simple processing.

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

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

- Income from remittances.

- The portion of wages for night work, overtime pay higher than daytime wages under the law.

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

- Income from scholarships, including:

+ Scholarships from the state budget;

+ Scholarships from domestic and foreign organizations under their support programs for learning encouragement.

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

- Income received from charitable funds permitted or recognized by competent state agencies, operating for charitable, humanitarian purposes, not for profit.

- Income from foreign aid for charitable, humanitarian purposes under government or non-government forms approved by competent state agencies.

- Income from wages, salaries of seafarers who are Vietnamese citizens working for foreign shipping companies or Vietnamese shipping companies engaged in international transportation.

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

Are there administrative penalties for failing to declare personal income tax in Vietnam?

Article 13 of Decree 125/2020/ND-CP stipulates:

Penalties for Late Submission of Tax Declaration Dossiers

1. A warning for late submission of tax declaration dossiers from 01 day to 05 days with mitigating circumstances.

2. A fine ranging from 2,000,000 VND to 5,000,000 VND for late submission of tax declaration dossiers from 01 day to 30 days, except for the case specified in clause 1 of this Article.

3. A fine ranging from 5,000,000 VND to 8,000,000 VND for late submission of tax declaration dossiers from 31 days to 60 days.

4. A fine ranging from 8,000,000 VND to 15,000,000 VND for any of the following acts:

a) Late submission of tax declaration dossiers from 61 days to 90 days;

b) Late submission of tax declaration dossiers for over 91 days but without any tax payable;

c) Failure to submit tax declaration dossiers but no tax payable;

d) Failure to submit appendices as prescribed regarding tax management for enterprises with associated transactions along with corporate income tax settlement files.

5. A fine ranging from 15,000,000 VND to 25,000,000 VND for late submission of tax declaration dossiers over 90 days from the deadline, with taxes payable, and the taxpayer has paid the full tax amount, late payment into the state budget before the tax authority announces a tax inspection or tax audit decision or before the tax authority draws up a record on late submission of tax declaration dossiers according to clause 11, Article 143 of the Law on Tax Administration.

If the penalty amount under this clause exceeds the payable tax amount on the tax declaration dossier, the maximum penalty is equal to the payable tax amount on the tax declaration dossier but not less than the average fine framework specified in clause 4 of this Article.

6. Remedial measures:

a) Compelling the full payment of late tax into the state budget for violations specified in clauses 1, 2, 3, 4, and 5 of this Article if late submission of tax declaration dossier leads to late tax payment;

b) Compelling the submission of tax declaration dossiers, appendices for violations specified at points c, d clause 4 of this Article.

Thus, depending on the time of late submission of tax declaration dossiers, one may receive a warning or a monetary fine (ranging from 2 million VND to 25 million VND).