Is the year-end bonus subject to PIT in Vietnam?

Is the year-end bonus for 2024 subject to PIT in Vietnam?

Pursuant to point e, clause 2, Article 2 of Circular 111/2013/TT-BTC, regulations are set out concerning bonuses, whether in cash or in kind, in any form, including those in the form of stocks, which are subject to personal income tax, except for the following bonuses:

- Bonuses accompanied by titles awarded by the State, including bonuses associated with emulation titles and forms of commendation according to legal provisions on emulation and commendation:

+ Bonuses that accompany emulation titles such as National Emulation Soldier; Ministry, sector, central body, provincial, city under central command Emulation Soldier; grassroots Emulation Soldier; Advanced Worker, Advanced Soldier.

+ Bonuses accompanying forms of commendation.

+ Bonuses accompanied by titles awarded by the State.

+ Bonuses related to prizes awarded by Associations or organizations under central and local political organizations, socio-political organizations, social organizations, socio-professional organizations that align with the organization's charter and legal provisions on emulation and commendation.

+ Bonuses accompanying the Ho Chi Minh Prize, the State Prize.

+ Bonuses accompanying Commemorative Medals, Badges.

+ Bonuses accompanied by Certificates of Merit or Commendations.

- Bonuses related to national prizes or international awards recognized by the Vietnamese State.

- Bonuses for technical innovations, inventions, and patents recognized by a State authority.

- Bonuses for reporting and exposing legal violations to competent State authorities.

Thus, the employee's year-end bonus is not excluded from taxation. Employees are required to pay personal income tax on the year-end bonus if their total year-end received income (including salary and year-end bonus) reaches the taxable threshold.

Is the year-end bonus subject to PIT in Vietnam? What type of income is exempt from PIT in 2024? (Image from the Internet)

What type of income is exempt from PIT in Vietnam in 2024?

According to Article 4 of the Law on Personal Income Tax 2007, amended by clause 3, Article 2 of the Law amending various tax laws 2014 and modified by Clause 2, Article 1 of the Law on Amendments to Law on Personal Income Tax 2012, which specifies the exempt personal incomes as follows:

- Income from the transfer of real estate between husband and wife; 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 grandchildren; maternal grandparents and grandchildren; siblings.

- Income from the transfer of residential houses, land use rights, and assets attached to land in the case where the individual only possesses one property.

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

- Income from inheritance or gifts being real estate between husband and wife; 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 grandchildren; maternal grandparents and grandchildren; siblings.

- Income of households and individuals directly involved in agriculture, forestry, salt-making, aquaculture, and fisheries that have not been processed into other products or only subjected to basic processing.

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

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

- Income from remittances.

- The portion of night shift and overtime wages that is higher than the daytime or regular working hours according to legal stipulations.

- Retirement pensions paid by the Social Insurance Fund; retirement pensions paid monthly by voluntary pension funds.

- Income from scholarships, including:

+ Scholarships received from the state budget;

+ Scholarships received from domestic and foreign organizations based on their scholarship programs.

- Income from compensation for life insurance contracts, non-life insurance contracts, compensation for labor accidents, compensation by the state and other compensation as prescribed by law.

- Income from charitable funds established or recognized by competent state bodies that operate for charitable, humanitarian, non-profit purposes.

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

- Income from salaries and wages of Vietnamese sailors working for foreign shipping companies or Vietnamese shipping companies engaged in international transport.

- Income of individuals being ship owners, individuals allowed to use ships and individuals working on ships from providing goods and services directly serving offshore fishing activities.

What are regulations on PIT period in Vietnam?

According to Article 7 of the Law on Personal Income Tax 2007, amended by clause 3, Article 1 of the Law on Amendments to Law on Personal Income Tax 2012, the tax periods are defined as follows:

- The tax period for resident individuals is defined as:

+ Annual period applicable to income from business; income from salaries and wages.

+ Each occurrence of income generation applies to income from investment; income from capital transfer, excluding securities transfer; income from real estate transfer; winnings; royalties; franchising; inheritances; and gifts.

+ Every securities transfer or annually for income from securities transfer.

- The tax period for non-resident individuals is calculated for each occurrence of income generation applicable to all taxable income.