Is the National Day bonus paid to employees in Vietnam subject to PIT?

Is the National Day bonus paid to employees in Vietnam subject to PIT?

Under point e, clause 2, Article 2 of Circular 111/2013/TT-BTC which stipulates taxable income

Taxable Incomes

According to the provisions of Article 3 of the Law on PIT and Article 3 of Decree 65/2013/ND-CP, taxable personal incomes include:

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2. Incomes from wages and remunerations.

Incomes from wages and remunerations (hereinafter referred to as wages) are incomes paid to employees from employers, including:

a) Wages, remunerations, and the other amounts paid as wages or remunerations in cash or not in cash.

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e) Rewards in cash or not in cash in any shape or form, including rewards in the form of securities, except for:

e.1) Prize money associated with the titles awarded by the State, including the prize money associated with honorary titles as prescribed by law:

e.1.1) Prize money associated with honorary titles awarded by Ministries, central and provincial agencies and associations, excellent employee titles.

e.1.2) Prize money associated with the awards.

e.1.3) Prize money associated with the titles awarded by the State.

e.1.4) Prize money associated with the awards presented by associations and organizations belonging to central and local political organizations, socio-political organizations, social organizations, professional-social organizations that conforms to their charters and the Law on Emulation and Commendation.

e.1.5) Prize money associated with the Ho Chi Minh Prize and National Prize.

e.1.6) Prize money associated with medals or badges.

e.1.7) Prize money associated with certificates of merit

The powers to decide the commendation and prize money associated with the titles and awards above must be conformable with the Law on Emulation and commendation.

e.2) Prize money associated with national prizes and international prizes recognized by Vietnam.

e.3) Rewards for technical innovations and inventions recognized by competent authorities.

e.4) Rewards for reporting violations of law to competent authorities.

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Thus, the National Day bonus paid to employees is considered taxable income.

Is the National Day bonus paid to employees in Vietnam subject to PIT?

Shall employees in Vietnam receive assistance and guidance when paying PIT?

Under Article 16 of the Law on Tax Administration 2019:

Rights of taxpayers

Taxpayers have the right to:

1. Receive assistance and guidance when paying tax; provide information and/or materials to fulfill tax liabilities and exercise tax rights.

2. Receive documents related to tax liabilities from competent authorities upon inspections, reviews and/or audits.

3. Request tax authorities to explain tax calculation and/or tax liability imposition; request assessment of quantity, quality, types of imported and/or exported goods.

4. Have confidentiality of information protected, except information that must be provided for competent authorities or tax-related public information as prescribed by law.

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Thus, employees in Vietnam shall receive assistance and guidance when paying PIT.

What are the instructions on calculating PIT on bonuses in Vietnam?

Under Article 7 of Circular 111/2013/TT-BTC, some content related to PIT for individual businesses is repealed by clause 6, Article 25 of Circular 92/2015/TT-BTC, the calculation of PIT on an employee's bonus is based on the formula as follows:

PIT Payable = Taxable Income x Tax Rate

Where:

- Taxable income = taxable income - deductions under Article 9 of Circular 111/2013/TT-BTC, some content related to PIT for individual businesses is repealed by clause 6, Article 25 of Circular 92/2015/TT-BTC.

- Taxable income = Total income received by the employee - tax-exempt amounts.

Specifically, clause 3, Article 7 of Circular 111/2013/TT-BTC provides the following tax calculation guidance:

PIT is the total tax calculated based on each taxable income level. The tax for each level is calculated by multiplying the taxable income of that level by the corresponding tax rate.

The income tax levels are specified in clause 2, Article 7 of Circular 111/2013/TT-BTC as follows: