Is the income from lottery winning subject to personal income tax in Vietnam?

Is the income from lottery winning subject to personal income tax in Vietnam?

Based on point a, clause 6, Article 2 of Circular 111/2013/TT-BTC, taxable income is defined as follows:

Taxable Income

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

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6. Income from Lottery Winnings

Income from lottery winnings comprises the money or property individuals receive in the following forms:

a) Winning lottery prizes paid by lottery companies.

b) Promotional winnings when participating in the purchase or sale of goods and services as stipulated by the Commercial Law.

c) Winnings from betting, wagering in forms permitted by law.

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From the above regulation, it is clear that income from lottery winnings, paid by lottery companies, is subject to personal income tax.

Is the income from lottery winning subject to personal income tax in Vietnam? (Image from the Internet)

How to calculate personal income payable for Vietnamese resident winning the lottery?

Based on Article 15 of Circular 111/2013/TT-BTC, the basis for calculating tax on income from lottery winnings is outlined as follows:

The tax basis for income from lottery winnings includes taxable income and the tax rate.

(1) Taxable Income

Taxable income from winnings is the portion of the prize value exceeding 10 million VND that the taxpayer receives per each winning instance, regardless of the number of times winnings are received.

In the case of a single prize won by multiple individuals, the taxable income is divided among the prize winners. The winners are required to provide legal grounds for verification. If no legal grounds are provided, the prize winnings are attributed to a single individual. If a person wins multiple prizes in one game, the taxable income is calculated on the total value of all prizes.

For lottery winnings, taxable income is the entire value of the winnings exceeding 10 million VND per a single lottery ticket in a draw, without deducting any costs.

(2) Tax Rate

The personal income tax rate for income from winnings, specifically in the case of lottery winnings, is applied according to the full tax schedule with a rate of 10%.

(3) Tax Calculation Formula

Therefore, when winning the lottery, for each winning ticket, the taxpayer must pay the personal income tax amount: (Winning Prize - 10 million) x 10%.

Example: For a special lottery prize of 2 billion VND, for each winning ticket, the personal income tax payable would be: (2,000,000,000 - 10,000,000) x 10% = 199,000,000 (199 million VND).

(4) Timing of Taxable Income Determination

The timing for determining taxable income from lottery winnings is when the organization or individual pays the prize to the winner.

How to calculate personal income payable for non-Vietnamese resident winning the lottery?

According to Article 23 of Circular 111/2013/TT-BTC, personal income tax on lottery winnings for non-Vietnamese resident is calculated as follows:

The personal income tax for winnings (lottery) of non-Vietnamese resident is determined by multiplying the taxable income by a tax rate of 10%.

Here, taxable income from winnings is the portion of the prize value exceeding 10 million VND per each win in Vietnam.

Income from the winnings of non-Vietnamese resident is determined as it is for Vietnamese resident according to guidelines in clause 1, Article 15 of Circular 111/2013/TT-BTC.

Additionally, the timing for determining taxable income for non-Vietnamese resident is when the organization or individual in Vietnam pays the prize money to the non-resident.

What are the responsibilities and rights of lottery participants?

Lottery participants have responsibilities and rights stipulated in Article 5 of Decree 30/2007/ND-CP as follows:

- Lottery participants are responsible for complying with the State's regulations on lottery business, the rules provided by lottery enterprises, and fulfilling tax obligations to the State as prescribed by law.

- Lottery participants have the following rights:

+ To be paid in full for prizes they have won by the lottery business enterprise. In case of objective reasons (illness, health issues, etc.) that prevent them from claiming the prize directly, they may authorize a legal representative to claim the prize on their behalf;

+ Foreign individuals, overseas Vietnamese entering Vietnam legally, upon winning, are allowed to purchase foreign currency and transfer it abroad in accordance with the State's foreign exchange management regulations;

+ To request the lottery business enterprise to keep confidential their winning information and prize collection details;

+ To enjoy other lawful benefits according to the participation rules published by the lottery business enterprise.