Is receiving a yacht as a gift subject to personal income tax in Vietnam?

Is receiving a yacht as a gift subject to personal income tax in Vietnam?

Based on the regulations specified in Clause 10, Article 2 of Circular 111/2013/TT-BTC concerning income from receiving gifts, which is subject to personal income tax, as follows:

Taxable Income

As stipulated in Article 3 of the Personal Income Tax Law and Article 3 of Decree No. 65/2013/ND-CP, taxable personal income includes:

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10. Income from receiving gifts

Income from receiving gifts is the income received by individuals from organizations or individuals inside and outside the country. Specifically:

a) For gifts received in the form of securities, including: stocks, stock subscription rights, bonds, treasury bills, fund certificates, and other types of securities as regulated by the Securities Law; shares of individuals in joint-stock companies as regulated by the Enterprise Law.

b) For gifts received as capital in economic organizations or business establishments including: capital in limited liability companies, cooperatives, partnerships, business cooperation contracts, capital in private enterprises, business establishments of individuals, capital in associations, and legally established funds, or entire business establishments if they are private enterprises or individual business establishments.

c) For gifts received in the form of real estate including: land use rights; land use rights with assets attached to the land; ownership rights over houses, including houses formed in the future; infrastructure and construction works attached to land, including construction works formed in the future; land rental rights; water surface rental rights; other income received from inheritance in the form of real estate under any form; excluding income from gifts in the form of real estate as guided in Point d, Clause 1, Article 3 of this Circular.

d) For gifts received as other assets that must be registered for ownership or usage rights with state management agencies such as: automobiles; motorcycles, motorbikes; watercraft, including barges, canoes, tugboats, pushers; boats, including yachts; aircraft; hunting rifles, sports guns.

Hence, based on the aforementioned regulation, the income from receiving a yacht as a gift is subject to personal income tax.

Is receiving a yacht as a gift subject to personal income tax in Vietnam? (Image from the Internet)

Vietnam: When is personal income tax from receiving a yacht as a gift determined?

* For resident individuals:

Based on the regulations in Point c, Clause 3, Article 16 of Circular 111/2013/TT-BTC, the time to determine taxable income from receiving gifts is when the individual registers ownership or usage rights for the asset in Vietnam.

* For non-resident individuals:

Based on the regulations in Point c, Clause 3, Article 23 of Circular 111/2013/TT-BTC, the time to determine taxable income from receiving gifts is when the individual registers ownership or usage rights for the asset in Vietnam.

Therefore, the time to determine taxable income from receiving a yacht as a gift is when the individual registers ownership or usage rights for the asset in Vietnam.

What income is exempt from personal income tax in Vietnam?

Based on the provisions of Article 4 of the Personal Income Tax Law 2007 (amended by Clause 2, Article 1 of the Amended Personal Income Tax Law 2012 and supplemented by Clause 3, Article 2 of the Amended Tax Law 2014) on income exempt from personal income tax, includes:

- Income from transferring real estate 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 transferring residential houses, land use rights, and assets attached to residential land of individuals in cases where individuals only have one residential house or residential land.

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

- Income from inheritance and gifts in the form of real estate 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 of households and individuals directly engaged in agricultural and forestry production, salt making, aquaculture, and fishing that have not been processed into other products or have only undergone simple processing.

- Income from converting agricultural land allocated by the State for production.

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

- Income from remittances.

- Night work and overtime pay that is higher than the daytime, regular hours pay as stipulated by law.

- Pensions paid by the Social Insurance Fund; monthly pensions paid from voluntary pension funds.

- Income from scholarships, including:

+ Scholarships received from the state budget;

+ Scholarships received from domestic and foreign organizations under their scholarship promotion programs.

- Income from compensation under life insurance and non-life insurance contracts, compensation for occupational accidents, state compensation, and other compensations as stipulated by law.

- Income received from charitable funds permitted or recognized by competent state agencies, operating for charitable, humanitarian, and non-profit purposes.

- Income from foreign aid for charitable and humanitarian purposes in governmental and non-governmental forms approved by competent state agencies.

- Income from wages and remuneration of Vietnamese seafarers working for foreign shipping companies or Vietnamese shipping companies engaged in international transportation.

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