Is scholarship subject to personal income tax in Vietnam?

What is Personal Income Tax in Vietnam?

Based on Article 3 of the Tax Administration Law 2019, taxes are mandatory payments that organizations, households, business households, and individuals must submit to the state budget.

Personal income tax can be understood as a direct tax levied on a portion of an individual's income after deducting tax-exempt and dependent relief amounts. In other words, it is the amount of money that individuals with income must pay into the state budget.

Is scholarship subject to personal income tax? (Image from the Internet)

Is scholarship subject to personal income tax in Vietnam?

Pursuant to Article 4 of the Personal Income Tax Law 2007, amended by Clause 2, Article 1 of the Amended Personal Income Tax Law 2012 and Clause 3, Article 2 of the Law on Amending Various Tax Laws 2014, the regulations state as follows:

Tax-Exempt Income

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

2. Income from the transfer of houses, rights to use homestead land, and assets attached to homestead land of individuals in the case where the individual has only one house or homestead land.

3. Income from the value of land-use rights of individuals allocated land by the state.

4. Income from inheritance, gifts which are real estate between spouses; biological parents and biological children; adoptive parents and adopted children; parents-in-law and daughters-in-law; parents-in-law and sons-in-law; paternal grandparents and paternal grandchildren; maternal grandparents and maternal grandchildren; siblings.

5. Income of households and individuals directly producing agriculture, forestry, making salt, aquaculture, fishing which has not been processed into other products or has only undergone simple processing.

6. Income from the change of agricultural land of households and individuals allocated land by the state for production.

7. Income from savings interest in credit institutions, interest from life insurance contracts.

8. Income from remittances.

9. Wages for night shifts and overtime that are higher than wages for day shifts as stipulated by law.

10. Retirement pension paid by the Social Insurance Fund; monthly retirement pension paid by the voluntary pension fund.

11. Income from scholarships, including:

a) Scholarships from the state budget;

b) Scholarships from domestic and foreign organizations under their scholarship support programs.

12. Income from compensations of life and non-life insurance contracts, labor accident compensations, state compensations, and other compensations as stipulated by law.

13. Income from charitable funds established or recognized by competent state agencies operating for charitable, humanitarian purposes, not for profit.

14. Income from foreign aid for charitable, humanitarian purposes in the form of government and non-governmental aid approved by competent state agencies.

15. Income from wages and salaries of Vietnamese crew members working for foreign or Vietnamese companies in international transportation.

16. Income of individuals owners, individuals with ship use rights, and individuals working on ships from providing goods and services directly serving offshore fishing and catching activities.

Income from scholarships, including scholarships from the state budget and from domestic and foreign organizations under their scholarship support programs, will be exempt from personal income tax.

What income is subject to personal income tax in Vietnam?

Based on Article 3 of the Personal Income Tax Law 2007 amended by Clause 2, Article 2 of the Law on Amending Various Tax Laws 2014 and Clause 1, Article 1 of the Amended Personal Income Tax Law 2012, taxable income includes the following types of income, excluding tax-exempt income stipulated at Article 4 of the Personal Income Tax Law 2007:

(1) Income from business activities, including:

- Income from production and business activities of goods and services;

- Income from independent professional activities of individuals having licenses or practicing certificates as stipulated by law.

Income from business activities stipulated in this clause does not include income of business individuals with annual revenue of 100 million VND or less.

(2) Income from salaries and wages, including:

- Salaries, wages, and other amounts of similar nature;

- Allowances and subsidies, excluding:

Allowances and subsidies as stipulated by law on preferential treatment for meritorious persons; national defense and security allowances; hazardous and dangerous job allowances for sectors, occupations, or jobs in a hazardous and dangerous working environment; attraction allowances, area allowances as stipulated by law; sudden difficulty allowances, labor accident allowances, occupational disease allowances, one-time childbirth or adoption allowances, allowances for reduced working capacity, one-time retirement allowances, monthly survivor pensions, and other allowances as stipulated by the social insurance law; severance allowances, job-loss allowances as stipulated by the Labor Code 2019; allowances of a social protection nature and other allowances and subsidies of a non-salary nature as stipulated by the Government of Vietnam.

(3) Income from capital investments, including:

- Loan interest income;

- Share dividends;

- Income from capital investments in other forms, except for interest from bonds of the Government of Vietnam.

(4) Income from capital transfers, including:

- Income from transferring capital in economic organizations;

- Income from transferring securities;

- Income from transferring capital in other forms.

(5) Income from real estate transfers, including:

- Income from transferring land use rights and properties attached to land;

- Income from transferring house ownership or use rights;

- Income from transferring land lease rights, water surface lease rights;

- Other incomes from real estate transfers in all forms.

(6) Income from winnings, including:

- Lottery winnings;

- Winnings from promotional campaigns;

- Winnings from betting activities;

- Other winnings from games, contests with prizes, and other forms of winnings.

(7) Income from royalties, including:

- Income from transferring and granting the right to use intellectual property objects;

- Income from technology transference.

(8) Income from franchising.

(9) Income from inheritance of securities, capital in economic organizations, business establishments, real estate, and other assets required to be registered for ownership or use rights.

(10) Income from gifts of securities, capital in economic organizations, business establishments, real estate, and other assets required to be registered for ownership or use rights.